How to Safeguard Against Fraud When You Buy Property In Florida.

In Blog, Legal Advice, News by redsocks

Table of contents:

Know the costs.
Do your homework.

Deposits and Escrow accounts.
Sales techniques.
Getting help.

Anyone considering buying property or land in Florida should investigate and research the property carefully on a legal basis, on a financial basis and by inspection. This advice applies to any land purchase, whether a single lot or a large tract.

Decisions should be based on facts, not on get-rich-quick promises. Remember that the value of an improved lot depends on the developer’s fulfilling promises as well as other market considerations such as location, growth potential, the general economy and resale value.

As a prospective buyer, you must determine what utilities are available, when they will be available and who will pay for their installation. You should find out the cost of any “special taxing districts” that may have been formed to install roads or provide water, for example.

Know the costs:

If your plan is to build a home, then you must explore financing and insurance costs. Fire and flood insurance, for example, may be expensive. You also must examine such possible costs as property taxes or special assessments levied against the property by private and governmental entities. You should thoroughly understand these costs. Inquirer whether the property is located in a flood area. If so, what safeguards exist? Are there adequate drainage facilities to render the property useable for the purpose for which it was offered? Will flood insurance be required and, if so, at what cost? Is the property even buildable? Are there sinkholes on the property? All of these items pose challenges to purchasing land.

If you are buying from a developer, you should not purchase an interest in any subdivision unless you first see and carefully read a public offering statement filed with the Division of Florida Land Sales, Condominiums and Mobile Homes as required by law. A public offering statement is basically a disclosure document for the buyer.


When you are buying a home in South Florida, there are certain things that are automatic in every residential transaction. The buyer makes an offer and the seller either counters or accepts. A purchase agreement gets signed. A deposit is put down, a mortgage is sought.

An Escrow account, is part of every Florida residential real estate transaction. And like most things, escrow deposits goes smoothly … until they don’t.

What is an Escrow Account?

An escrow account is a bridge of sorts between the buyer and seller whenever a Florida home or condo is being sold. It is an account where the money that is being transferred from buyer to seller is held. The “escrow agent” oversees the account, and is responsible not only for the money itself but also the documentation that relates to the money.

Funding Escrow in a Residential Real Estate Transaction: Earnest Money

When someone is purchasing a Florida home or condo, they begin by providing a sum of money that is defined in the purchase agreement as the “earnest money.” The earnest money is given by the buyer as evidence that the buyer is serious about buying the real estate; earnest money allows the seller to remove that property from the open marketplace (and from the possibility of other buyers making offers) because the buyer is serious about purchasing the house.

The buyer doesn’t hand over the earnest money to the seller. (If the seller asks you to pay the full purchase amount in one go, be afraid. Be very afraid). The buyer hands over the earnest money to the escrow agent who puts it into an escrow account.

Usually, buyers will put up to 10% of the asking price of the home as a deposit towards the purchase. It’s this earnest money – a sum that demonstrates to the seller that the buyer is “earnest” or in good faith about wanting to buy the property – that goes into the hands and control of the escrow agent until the closing is completed and ownership of the real estate transfers from the seller to the buyer.


Do your homework:

You must demand a full Purchase disclosure Document.

The statement is not a recommendation for or against the property, but it will disclose the physical characteristics of the subdivided land and all of its unusual and material circumstances or features. The statement must include the size and location of the land, and information regarding improvements, zoning and restrictions affecting the use of the land. Any subdivision that is divided or is prepared to be divided into 50 or more lots, parcels or units must be registered. The seller of subdivided land is required by law to deliver a current public-offering statement to each prospective buyer before the prospective buyer signs a purchase contract. You must be afforded a reasonable opportunity to examine the public offering statement before a final settlement, and you can cancel the agreement without cause until midnight of the seventh business day after the purchase contract is signed. You also must sign a receipt for the public offering statement. Never rely on unwritten promises. Everything should always be in writing and signed by the seller if it is to be enforceable concerning the sale of land.

Remember, if you decide to buy land, it is important that you read the entire purchase contract carefully and contact an attorney to review the contract before you sign it. Also, consider obtaining title insurance and a professional survey so that you are aware if anyone else is claiming an interest in the property. If you have any questions concerning any real estate transaction, you should contact an attorney before making a final and binding decision.

Florida, like many other states, now requires sellers of homes and other residential properties to make certain disclosures to buyers about the property’s condition and history.

This is a shift from the traditional legal principle of “let the buyer beware,” which basically made it the buyer’s responsibility to inspect the home and discover whether there are any unacceptable conditions or defects before closing the deal. However, in an ever-increasing number of states, courts and lawmakers have held that sellers are in the best position to know all material facts relating to their properties, especially those that are not visible to the naked eye, and should disclose these to the buyer – or face legal liability.

How Florida Sellers Must Make Disclosures to Prospective Home Buyers:

Florida law provides that, with some exceptions, you (as a home seller) must disclose any facts or conditions about your property that have a substantial impact on its value or desirability, and that others cannot easily see for themselves (This comes from the court case of Johnson v. Davis, 480 So.2d 625 (Fla. 1985)).

To assist sellers in making all relevant disclosures, the Florida Association of Realtors® provides a standard form, which covers many common property characteristics about which buyers want to know. (This is separate from the standard contract that is used in most residential real estate transactions to bring about the purchase and sale of the home.)

The categories covered on the standard Florida disclosure form include, for example:

  • whether any actual or potential claims, complaints or court proceedings affect the property
  • whether the property is subject to the rules of a condominium or condominium association
  • whether any disputes have arisen regarding the property’s boundaries
  • whether the property contains any past or present sinkholes (a frequent hazard in Florida)
  • whether the property contains any environmental hazards such as asbestos, lead, mold, Chinese drywall (another hot-button problem in Florida), and others
  • whether any infestations or damage have occurred from wood-destroying organisms such as termites and carpenter ants, and
  • whether there are any problems with essential components of the home, such as the roof, plumbing, electrical wiring, major appliances, HVAC, and more.

Some sources claim that, as a seller, you may make disclosures either verbally or in writing. Florida law does not definitively direct sellers either way. However, if you make oral disclosures without any written confirmation, you may have a difficult time proving later that you made them, which is especially problematic if the buyer purchases the property and later finds problems with the home. As a common sense and good business practice measure, it is best to make your property disclosures in writing.

Florida statutory law also requires that you present the buyer with a property tax disclosure summary (Fla. Stat. § 689.261). This summary may be included within the standard disclosure form described above or as a separate document, as long as it contains the language required by the statute. The language essentially states that a buyer cannot assume that the amount of property taxes currently paid by the seller will remain the same after the sale.

Dodgy Sales techniques:

In addition to this general advice about the land itself, there is something to be said about sales techniques. Don’t let sales agents pressure you into making hasty decisions, no matter how intense and skillful the sales pitch. Some agents operate on the theory that, if you have time to think things over, chances are you won’t be back.

Some sales agents attempt to create an atmosphere of buyer anxiety by the use of gimmicks. For instance, on a tour of the site, the two-way radio in the sales agent’s car may announce loudly the lot numbers that are sold or deposits taken on certain lots. The sales agent may point out to you that these people realize that this is a surefire investment and are buying several lots before prices go up or before the choice lots are gone. Be warned against such sales tactics. A reputable sales agent would not pressure a customer with such hard sell. Statements regarding future price increases should not be an inducement to purchase. If possible, do comparative shopping.

Getting help:

If you believe you are a victim of fraud, misrepresentation or deceit in the purchase of any lot in any subdivision, contact H&G without delay. H&G have a trusted, professional and very experienced Lawyer / Attorney in Florida whom we work with on a daily / weekly /monthly bases.

If you feel that you have been the victim of land sales fraud, in addition to H&G, you may wish to contact the Florida Attorney General’s Office, Economic Crimes Unit at

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