Residential Real Estate Update
by Cynthia A. Riddell, Esq. Riddell Law Group
The area of Florida real estate transactions has seen many changes in the recent few years. This article will provide a brief overview of some of the more significant changes effecting real estate transactions, particularly, residential real estate transactions in Florida.
Condominium Act. Since 2021. Florida has enacted significant amendments to its condominium statute to enhance building safety, financial transparency, and operational efficiency within the condominium associations. Senate Bill 4-D( Passed May 2022): Established a statewide“ milestone inspection” program for condominium buildings taller than three stories; Required initial inspections at 30 years of age, or 25 years if within three miles of the coast, with subsequent inspections every 10 years thereafter. Reserve Funding was also implicated in this legislation and mandated that condominium associations maintain sufficient reserves to cover structural integrity repairs, prohibiting the waiver of these reserves by unit owners. In 2023, amendments to Senate Bill 4-D were passed which removed the mandatory 25-year inspection requirement for buildings within three miles of the coast. Standardizing the initial inspection timeline to 30 years statewide and clarified that buildings reaching 30 years of age before December 1, 2024, must complete a milestone inspection by the end of 2024 and provided local jurisdictions to impose the 25-year inspection requirement at their discretion. Senate Bill154 enacted in 2023 permits condominium associations to waive full funding of reserves through the end of 2024 but to do so required approval from a majority of the entire voting interests of the condominium unit owners which is more stringent of a standard. Alternative Funding of Reserves was also clarified to allow for associations to fund certain reserve items through alternative secured financing. Effective Dec. 31, 2024 mandatory funding of reserves for maintenance and repair of critical structural components which safeguard long term viability of the condominium buildings is required and non-waivable.
NAR Settlement and Realtor Compensation. In response to the National Association of Realtors’( NAR) settlement and subsequent policy changes, Florida has implemented several key modifications to real estate broker compensation practices: Elimination of mandatory commission offers on the Multiple Listing Service( MLS). This change shifts the responsibility of negotiating compensation directly to the parties involved rather than responding to the Listing Agent’ s unilateral offer of compensation. Offers of compensation may be disclosed offline and not on the MLS. Additionally, Buyer broker compensation must be negotiated between Buyers and their Broker and provide that Buyer are required to pay their Broker directly and this compensation agreement must be memorialized in writing between the parties prior to commencing to work for and showing properties to a prospective Buyer. All compensation agreements must state,“ broker compensation is not set by law and fully negotiable.” The agreements must also specifically state the compensation amount, describe the scope of work, duration of the agreement.
Financial Crimes Enforcement Network( FINCEN). The Financial Crimes Enforcement Network’ s( FinCEN) final rule on real estate reporting will replace the Geographic Targeting Orders( GTOs) on December 1, 2025. Yes, the rule applies nationwide. The rule requires certain real estate professionals to report information about nonfinanced residential real estate transfers that involve an entity or trust as transferee and an exemption under the final rule does not apply. The purpose of the final rule is to increase transparency in the real estate sector and combat money laundering. The final rule requires reporting:( i) information about the property;( ii) identifying information about the entity or trust acquiring the property;( iii) identifying information about the transferor; and( iv) identifying information about the person filing the report and maintaining records of certain non-financed transfers. The burden of making such reporting is determined through a“ waterfall” of professionals involved in such a transaction from closing agents, title insurers to the person identified as preparing the deed conveying the real property. The report is to be filed within thirty( 30 days of the closing on the transaction. Luckily, for our estate planning attorneys and business law attorneys there are purported exemptions to this reporting requirement for certain transactions such as a transfer from a Settlor under a trust agreement of certain real property to themselves as Trustee of a Trust for their benefit and certain transactions undertaken as part of a 1031 exchange under certain principal and agency theories. It is best to consult the Federal Register promulgating the requirements and exemption under the final rule to confirm whether the reporting applies to your specific transaction; see 31 CFR Chapter X. �
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