LEGAL CORNER with ANDREW PINEIRO, Esq.
If you have been in Iceland for the last 16 months seeking to hide from the Covid pandemic and are just returning to your home in northern Palm Beach County, you might be surprised by the brisk real estate market. Some have opined that we are even more heated now than we were just prior to the great recession of 2008/2009.
There are many reasons for this. Palm Beach County has long been a landing spot for retirees from the Northeast and other parts of the country. But, as a result of the limitations on the deductibility of state and local taxes (SALT) that were part of the 2017 Tax Cuts and Jobs Act, taxpayers in the Northeast and other states that levy state income taxes (i.e., California), people are moving to Florida at a velocity that I have not witnessed in my entire career as a real estate lawyer.
Compounding the activity of these internal migrants was the pandemic. Suddenly, in the face of quarantines, people living in urban areas wanted to be in suburbia, and people in all areas needed more space to conduct work from home.
In the face of all of this demand for housing is a market with very limited supply. Simple economics tells us that when demand is high and supply is short, prices increase – and this is what has happened and continues to happen in our north Palm Beach County real estate market.
The dynamics of this market allow for sellers to be rigid and unyielding. And, this market forces buyers to make less complicated offers (no contingencies) and to be more flexible in accepting a seller’s terms.
As an example, I have seen sellers reject offers that contain financing contingencies. I have seen sellers shift closing cost expenses to buyers. I have seen sellers refuse post-occupancy arrangements. I have seen sellers require larger earnest money deposits.
Likewise, I have seen buyers waive inspection periods (and thus waiving the right to cancel the contract under the standard As Is contract). I have seen buyers agree to pay for the cost of title insurance (it is customary – but not required – for the seller to pay for the cost of title insurance in Palm Beach County). I have seen buyers who require financing agree to waive financing contingencies.
This is a 2006/2007 redux. Sellers have the upper hand and some might argue are getting unreasonable. I have had sellers contact me asking if they can cancel a binding, pending contract because they received an unsolicited offer for substantially more than the pending contract. Likewise, I’ve had buyers suddenly “wake up” after the right to cancel has expired and realize that they are overpaying for a property and seeking counsel on whether they can cancel the contract and get their earnest money deposit back.
Now more than ever it is pertinent to have a strong realtor guiding you through the Byzantine process of buying or selling a home. And, if things get sticky, get a real estate lawyer involved quickly to learn your rights under the contract.
Andrew Pineiro, Esq., Pineiro Byrd PLLC, 4600 Military Trail, Suite 212, Jupiter,