Buying new construction in Florida

Finished, or nearly

New construction here means a condominium or a house bought from its developer or builder once it is complete, or close to it. There is little or no wait, and little of your money sits in a deposit while the building goes up.

Many of the protections in our pre-construction guide still apply. A condominium bought from its developer still carries the 15-day right to cancel under section 718.503 (Florida Statutes, opens in a new tab), counted from signing the contract and receiving the documents, whichever comes later.

What the developer warrants

Section 718.203 (Florida Statutes, opens in a new tab) gives buyers of a new condominium unit warranties from the developer that the law implies whether or not the contract mentions them. For the unit itself, the warranty runs three years from completion of the building. For the roof, the structure and the plumbing, electrical and mechanical systems that serve the building, it runs three years from completion or one year after the owners take control of the association, whichever ends later, and never more than five years.

For a house, the builder’s written warranty sets most of what is covered and for how long. Read it with the contract, including how a claim must be made.

Before closing, walk through the home with the developer’s representative and agree a written list of anything to finish or repair, with a date. Confirm that the home has its certificate of occupancy, or a temporary one.

The reserves behind the monthly fee

Florida has tightened its rules on condominium reserves since the Surfside collapse. Under section 718.112 (Florida Statutes, opens in a new tab), each condominium building three habitable stories or taller needs a structural integrity reserve study at least every ten years, and the owners cannot vote to waive or reduce the reserves it calls for. While the developer controls the association it cannot waive or cut reserves either, and before handing control to the owners it must deliver a turnover inspection report for each such building.

So the monthly fee in a new building’s budget should already carry real reserves. Ask for the budget and the study, and compare the two.

Closing costs

In a resale, Florida custom has the seller pay the documentary stamp tax on the deed, set at 70 cents per $100 of the price by section 201.02 (Florida Statutes, opens in a new tab), with a different rate in Miami-Dade. Developers often write their contracts so that the buyer pays it instead, along with costs such as title charges and a contribution to the association’s working capital. The closing cost section of the contract says who pays what. Read it before you sign, not at the closing table.

Homestead, from the first January

If the home will be your permanent residence, Florida’s homestead exemption under section 196.031 (Florida Statutes, opens in a new tab) takes up to $25,000 off the assessed value for every property tax, and up to a further $25,000, adjusted for inflation, off the value above $50,000 for all but school taxes. You must own the home and live in it on January 1, then apply to the county property appraiser by March 1. Once it is granted, the yearly rise in a homestead’s assessed value is capped at 3 percent or the change in consumer prices, whichever is lower.

Flood, and community districts

Under section 689.302 (Florida Statutes, opens in a new tab), a seller of a home must disclose, at or before signing, any flood damage it knows of and any flood insurance claims or federal flood assistance. A new building has little history to disclose, so ask instead for the flood zone, the elevation certificate and a quote for flood insurance, which a standard homeowner’s policy does not include.

Houses in newer planned communities are often inside a community development district, which pays for roads and utilities through a yearly assessment on the tax bill. The contract must disclose it. Ask for the yearly amount and how many years it runs.

Questions to ask before you sign

1. Who pays the documentary stamp tax, the title charges and the developer’s own closing costs?
2. What does the warranty cover, for how long, and how is a claim made?
3. What does the latest structural integrity reserve study call for, and does the budget fund it?
4. Has the developer handed control of the association to the owners, and if not, when will it?
5. What are the leasing rules, including minimum lease terms?
6. What is the flood zone, and what will flood insurance cost?
7. Is there a community development district assessment, and for how many years?

Why an advisor helps

A finished building shows you exactly what you are buying, and so does every finished building near it. A buyer’s advisor knows which developers still hold inventory, how their prices have moved and where there is room to talk. If you are weighing a new home in South Florida, we are glad to talk it through. 

General information only, not legal or tax advice. Florida law changes often, and every contract is different. Review your documents with a Florida real estate attorney before you sign.