Article 10 of 10 in the Florida Real Estate Contracts Series
A Florida purchase price does not tell either party how much cash will change hands at closing. Documentary stamp taxes, title charges, lender fees, recording costs, association charges, tax prorations, seller credits, and brokerage compensation can materially change the buyer’s cash to close and the seller’s net proceeds.
The contract should allocate these expenses before the parties sign—not leave them for the closing table. This final article in our Florida Real Estate Contracts series explains the principal cost categories, contribution limits, and commission provisions buyers and sellers should review.
Who Pays Florida Closing Costs?
There is no universal rule that “the buyer pays” or “the seller pays” every closing cost. Florida contract forms allocate many items, allow parties to select title-related options, and permit additional negotiated terms. County custom may influence an offer, but the executed contract controls the parties’ obligations.
| Cost category | Common allocation | Contract-review question |
|---|---|---|
| Documentary stamp tax on deed | Often seller | Does the contract expressly assign it? |
| Owner’s title policy and title search | Depends on selected contract option and local practice | Who selects the closing/title agent and pays the premium? |
| Lender’s title policy, loan fees, appraisal | Usually financed buyer | Which charges may the seller credit cover? |
| Recording deed and mortgage | Often allocated by instrument | Are recording and e-recording charges itemized? |
| Mortgage documentary stamp and intangible tax | Usually borrower | Were Florida loan taxes calculated on the correct debt? |
| HOA/condo estoppel, application, approval, transfer fees | Contract and governing documents control | Who pays each association charge? |
| Real-estate taxes and assessments | Prorated or allocated under contract | What date and tax estimate are being used? |
| Brokerage compensation | Negotiated agreements and contract terms | Who owes what amount, and is seller payment requested? |
“Common allocation” is not a substitute for reading the executed contract and closing statement.
Florida Taxes That Appear at Closing
Documentary stamp tax on the deed
Florida Statutes § 201.02 imposes documentary stamp tax on deeds and other instruments conveying Florida real property. The statewide rate stated in the statute is $0.70 per $100, or fraction thereof, of consideration. Miami-Dade County transactions require separate analysis because a discretionary surtax can apply, subject to statutory exceptions.
Taxes on financed transactions
A financed purchase may also generate documentary stamp tax on the note or mortgage under F.S. § 201.08, generally $0.35 per $100 or fraction of taxable indebtedness. Florida also imposes a one-time, two-mill nonrecurring intangible tax on obligations secured by Florida real property under F.S. § 199.133.
These are legal taxes, not negotiable “junk fees.” The contract determines which party bears them, while the statutes determine whether and how they are imposed.
Title Insurance and Closing-Service Charges
Florida title insurance premiums are regulated. Florida Administrative Code Rule 69O-186.003 establishes title insurance rates, while endorsements, reissue credits, simultaneous-issue treatment, and transaction facts can affect the final premium.
Florida Statutes § 627.7711 defines “closing services” to include services such as preparing documents necessary to close, conducting the closing, and handling disbursement when a title commitment or policy will be issued. Review the estimate for separately stated settlement, closing, search, municipal-lien, wire, courier, storage, and document charges. Ask what each charge covers and whether it is required, optional, governmental, lender-imposed, association-imposed, or provider-imposed.
How Seller Credits Work
A seller credit is a negotiated amount the seller agrees to contribute toward specified buyer expenses. It can help with allowable closing costs, prepaid taxes and insurance, discount points, or an interest-rate buydown, depending on the loan program and approval. It is not automatically cash back to the buyer.
- State a dollar amount, percentage, or clearly calculable cap.
- Identify the permitted uses rather than writing “seller pays all costs.”
- Obtain lender approval before finalizing the offer or amendment.
- Confirm the credit does not exceed actual eligible costs.
- Address what happens to any unused amount.
- Make sure the appraisal and underwriting can support the transaction structure.
Example: Fannie Mae Financing-Concession Limits
The loan program—not Florida contract law—usually controls the maximum allowable contribution. Under Fannie Mae’s current Interested Party Contribution guidance, maximum financing concessions are calculated from the lower of the sales price or appraised value:
Primary residence/second home — LTV above 90%
3%
Primary residence/second home — LTV 75.01%–90%
6%
Primary residence/second home — LTV 75% or less
9%
Investment property — all CLTV ratios
2%
This chart summarizes one conventional-loan framework, not every loan. FHA, VA, USDA, portfolio, private, and investor programs may differ. Lender overlays can also be stricter.
Fannie Mae also limits financing concessions to the buyer’s actual closing costs. An excess can become a sales concession affecting underwriting. Legitimate customary seller-paid fees may receive different treatment, and seller-paid buyer-broker compensation may be excluded from IPC treatment when it remains customary under applicable guidance. Confirm the structure with the lender before signing.
Brokerage Commissions After the NAR Settlement
Real-estate commissions remain negotiable; they are not set by law. The nationwide settlement produced practice changes for participating MLSs and NAR members—not a Florida statute establishing a commission rate.
According to the current Florida Realtors settlement guidance:
Covered MLS participants working with buyers must use a written buyer agreement before touring a home;
Offers of buyer-broker compensation cannot be placed in the MLS;
A seller may still agree to pay buyer-broker compensation;
A buyer may request seller payment through the purchase offer; and
Compensation must be objectively ascertainable in the written buyer agreement—not an open-ended amount such as “whatever the seller offers.”
Florida licensing law also matters. F.S. § 475.41 addresses the validity of commission contracts involving unlicensed persons, and F.S. § 475.42 restricts a sales associate’s collection and enforcement of compensation outside the registered employer relationship.
Do Not Mix Up These Three Negotiations
| Negotiation | Primary purpose | Common mistake |
|---|---|---|
| Price reduction | Lowers contract price | Assuming it reduces cash to close dollar-for-dollar |
| Seller closing-cost credit | Pays approved buyer costs | Requesting more than the lender or actual costs allow |
| Seller-paid buyer-broker compensation | Satisfies negotiated brokerage obligation | Failing to coordinate purchase contract, buyer agreement, and lender treatment |
One structure may be more valuable than another depending on financing, appraisal, cash, tax, and brokerage terms.
Audit the Numbers Before Closing
For most covered mortgage transactions, the federal Closing Disclosure itemizes loan costs, other costs, seller credits, deposits, prorations, and cash to close. The Consumer Financial Protection Bureau’s (CFPB) Closing Disclosure explainer specifically directs buyers to confirm that seller credits match the agreement.
- Compare the contract and every amendment with the latest settlement statement or Closing Disclosure.
- Verify the sales price, deposit, financing amount, seller credits, commission payments, and repair escrows.
- Check documentary stamps, intangible tax, recording charges, title premiums, endorsements, and closing-service fees.
- Confirm tax, rent, HOA, condo, assessment, and utility prorations use the correct date and figures.
- Review loan payoffs, lien releases, association estoppels, and seller obligations.
- Trace every credit to a signed contract provision, amendment, invoice, lender approval, or other documented basis.
- Resolve discrepancies before funds are wired and documents are signed.
Contract Drafting Tips for Buyers and Sellers
For buyers
Obtain an early lender estimate and identify the needed credit before making the offer;
Coordinate the buyer-broker agreement with any requested seller-paid compensation;
Make credits specific enough to enforce but flexible enough to cover allowable costs; and
Do not assume unused credits will be paid to you.
For sellers
Evaluate the offer by projected net proceeds, not price alone;
Cap credits and compensation obligations clearly;
Avoid duplicating the same concession in the contract, addendum, and brokerage documents; and
Require lender confirmation when a contribution could affect financing or appraisal.
The Contract Series: From Offer to Closing
Before closing, review Article 1 on contract review, Article 2 on deadlines, Article 3 on names and property details, Article 4 on riders and blanks, Article 5 on contract forms, Article 6 on disclosures, Article 7 on financing, Article 8 on associations, and Article 9 on post-inspection cancellation.
Know the Real Cost Before You Sign or Close
A Florida real estate attorney can review cost allocations, seller credits, buyer-broker compensation, title charges, tax calculations, and closing figures before a surprise becomes a dispute. The best time to negotiate these terms is before signing; the next-best time is before the money moves.
Buying, selling, or negotiating credits and commissions in Florida? Call Attorney Shah today at 754-888-2726 to discuss flat-fee contract review or buyer and seller representation.
This article provides general educational information, not legal, tax, lending, or financial advice. Laws, loan guidelines, contract forms, charges, and industry rules may change and vary by transaction. Reading this article does not create an attorney-client relationship.