Foreign Buyers, F.I.R.P.T.A., and Avoiding Legal Pitfalls: A Deep Dive with Attorney Reid McCullough

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In this follow up to their first conversation, Jim welcomes back real estate attorney Reid McCullough for another round of legal insights—from handling foreign investors under FIRPTA to navigating local restrictions and homestead nuances. Get an inside look at how to protect yourself from common contract mistakes and ensure a smooth closing process, whether you’re buying or selling on Florida’s Suncoast.

Key Highlights

1. FIRPTA & Foreign Sellers
   • What It Is: The Foreign Investment in Real Property Tax Act (FIRPTA) requires buyers to withhold a percentage of the sale proceeds if the seller is not a U.S. resident.
   • Buyer Beware: Penalties for non-compliance fall on the buyer. Proper disclosure and documentation are vital—often handled by the closing attorney.
2. Local Regulations & Homestead
   • Rental Rules: Sarasota County generally enforces a 30-day rental minimum; the City of Sarasota has a 7-day minimum. Violations can risk homestead exemptions and code enforcement complaints.
   • Partial Homestead: Renting out any portion of your primary residence may reduce your homestead benefit, as the county adjusts taxable value accordingly.
3. New FAR/BAR Contract Updates
   • Closing Costs Split: The latest version allows title agents to allocate closing fees to both buyer and seller, reflecting shared benefits and clearer cost breakdowns.
   • Financing Tweaks: “Loan approval” and conditions replaced the older “loan commitment” language, streamlining financing contingencies.
4. Title & Closing Process
   • Timeline: Within hours of receiving a signed contract, your title agent orders searches (title, lien, utility) and begins clearing title issues, often requiring 30 days or more.
   • Complex Cases: Expect longer closing windows for short sales or commercial/SBA financing—sometimes up to 90 days or more.
5. Negotiating Repairs Post-Inspection
   • Contract Timelines: Missing escrow deposits or inspection deadlines can put you in default, costing you your deposit.
   • Documentation & Maintenance: Document the property’s condition early and verify repairs/condition changes before closing to avoid unwanted surprises.
6. Working with an Attorney
   • When to Consult: For FSBO deals, foreign sellers/buyers, or complex negotiations, bringing an attorney on board early can save you costly pitfalls.
   • Added Value: Attorneys can connect you with inspectors, negotiate lien payoffs, and clarify legal obligations for all parties before closing.

What’s Next?

Looking to buy or sell property on Florida’s Suncoast without falling into legal traps? Reach out to Jim at [e-mail] or visit Jim Sells the Suncoast. For deeper legal guidance, contact Reid at [phone]. Safeguard your real estate deal—know the regulations, meet the deadlines, and close with confidence!

A Personal Note from Jim:

Hey there, I’m Jim Ahearn, your go-to real estate guide and host of Jim Sells The Suncoast podcast! 🎙️✨ Dreaming of Florida life? I’ve got you covered! As your dedicated buyer's agent, I’ll handle everything from walk-throughs to closing, making your home-buying journey as smooth as a Florida breeze.

Whether you're local or tuning in from afar, I’ll bring the Suncoast to you with virtual tours and expert advice. Let’s chat about your dream home and I'll connect you with all the right people to make it happen.

Ready to move to paradise? Drop me a line – I can’t wait to help! 🌴🏡