USA – FLORIDA Law and Practice Contributed by: Eduardo M. Soto and Fabio Giallanza, Weiss Serota Helfman Cole + Bierman, P.L
creditors or subsequent purchasers for a valuable consideration and without notice” (Fla. Stat. § 695.01). Therefore, recording is meant to provide “construc - tive notice” to third parties of a conveyance. Without such constructive notice, a conveyance cannot be enforced against creditors and subsequent purchas - ers for value. To be valid against creditors and subsequent pur - chasers for value, deeds are recorded in the Official Records maintained by the office of the Clerk of the Circuit Court in the county where the land is located (Fla. Stat. § 28.222). To achieve constructive notice, the deed must be drafted in a way that allows proper indexing by the clerk in the proper “chain of title”. Furthermore, a deed is entitled to recording only if it meets the acknowledgment requirements set forth in Fla. Stat. § 695.03. Specifically, the grantor must acknowledge the deed before a notary public or other official listed in the statute. Additional technical requirements for recording can be found in Fla. Stat. § 695.26. In light of Florida’s recording system, complex chains of title, and high volume of transactional activity, title insurance is very common in Florida, and it contin - ues to play a vital role in facilitating transactions. In financed transactions, all lenders require a loan policy covering the mortgage. Title insurance is also gen - erally required by purchasers in cash transactions. Florida’s title insurance regulations, contained in Rule 69O-186.003, Florida Administrative Code Rates, establish rates for title insurance, which are common among all underwriters. 2.4 Real Estate Due Diligence The due diligence process for a real estate purchase or financing transaction generally covers the areas of title review, property condition, tenant screening, envi - ronmental due diligence, land use and zoning approv - als, insurance and service contracts review. The type of property being acquired informs the scope of due diligence carried out by the buyer. Due diligence is performed by the buyer’s counsel with the support of external consultants such as civil engineers, property inspectors and environmental consultants.
The process begins as soon as possible, often even before a binding contract is signed. The contract will establish a due diligence period (generally 30, 60 or 90 days) during which time the buyer can terminate the contract for convenience. The buyer’s counsel gener - ally includes a list of requested due diligence docu - ments in the purchase agreement. These generally include: governmental notices to the property owner, prior title insurance policies, any title exceptions, sur - veys, site plans, plats, permits, environmental reports, engineering reports, leases, service contracts, insur - ance policies and loss reports. The buyer’s counsel is in charge of the review and analysis of these docu - ments as well as co-ordinating the activities of any outside experts. 2.5 Typical Representations and Warranties In a typical Florida commercial real estate transac - tion, property is sold “as-is”, that is in its present condition and with no representations and warran - ties other than those expressly made by seller. Sell - er representations and warranties focus on matters uniquely within the seller’s knowledge and that materi - ally affect value or risk allocation. These include rep - resentations regarding title and authority; the status of leases and rent rolls; the absence of undisclosed service or management contracts; compliance with laws; liens and mechanics’ liens; and environmental matters. Environmental representations are heavily negotiated and often limited by knowledge, time and scope, with liability frequently addressed through a separate indemnity. As a general matter, there are no broad statutory seller warranties in commercial real estate sales as to building condition or the presence of hazardous materials such as asbestos; instead, these risks are addressed contractually through disclosures, diligence (eg, Phase I/II ESAs) and negotiated repre - sentations and indemnities. Buyer remedies for misrepresentation or breach typi - cally include contract damages and indemnification claims, subject to negotiated limitations, and in limited pre-closing circumstances, termination rights. Post- closing equitable remedies are uncommon absent fraud. To secure enforcement, it is customary for sell - ers – particularly single-purpose entities – to provide credit support in the form of an escrow holdback, a guaranty or a letter of credit. Seller representations
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