How Do Seller Financing Deals Work in Florida Real Estate?
How Do Seller Financing Deals Work in Florida Real Estate?
Quick Answer
Seller financing in Florida real estate means the seller acts as the lender, allowing the buyer to pay over time using a promissory note and a mortgage or other recorded security instrument. The deal is governed by Florida documentary stamp tax rules, mortgage-lending statutes, and usury laws, each of which can trigger real cash costs and legal exposure. Most deals require documentary stamp tax on both the deed (usually 70 cents per $100 in Sarasota and Manatee) and the note or mortgage (35 cents per $100), according to the Florida Department of Revenue. If the documents are incomplete, or the terms violate Florida Statute Chapter 687 on interest rates, the seller may not be able to enforce the debt or could face penalties. Buyers and sellers who miss these steps often discover too late that their deal is unenforceable, exposes them to unexpected tax bills, or triggers a due-on-sale clause with the existing lender. Call me at 941.400.8735 or reach out directly to Michael Renick – I’ll share my approach with you.
How Do Seller Financing Deals Work in Florida?
In a typical Florida seller-financed purchase, the buyer signs a promissory note and a mortgage securing the debt. The mortgage is recorded and the lender retains the original note. Florida Department of Revenue explains the deed and debt documentary-stamp taxes; tax paid on a mortgage securing a note can satisfy the tax on that same obligation. A secured obligation may also be subject to Florida’s nonrecurring intangible tax. Have the closing agent calculate the actual charges. An attorney should review interest limits, any existing lender’s due-on-sale clause, and applicable seller-financing and loan-originator rules before either party commits.
Questions Clients Actually Ask
What documents are required for seller financing in Florida?
A typical seller-financed purchase uses a promissory note setting out the debt and a mortgage securing it against the property. The mortgage is recorded; the original note is generally retained by the lender rather than recorded. Have a Florida real estate attorney prepare the documents and have the closing agent confirm the taxes. Florida Department of Revenue distinguishes promissory notes from recorded mortgages; do not assume the same debt is taxed twice.
Mike Renick represented us, in both a sell and buy transection. One of the transactions was complicated as the sell portion of the transaction involved a foreign buyer. Mike arranged that both transactions would close the same day. Which they did without a hitch.
– Lee Diznoff, Google Review
Who pays the documentary stamp tax in a seller-financed deal?
Allocate closing charges in the purchase contract. The FR/BAR contract ordinarily assigns deed documentary stamps to the seller, but the signed agreement controls the allocation between the parties. Mortgage documentary stamps and any applicable nonrecurring intangible tax should be itemized by the closing agent. Payment responsibility between buyer and seller is different from statutory tax liability.
Can a seller finance a property if there is still a mortgage on it?
If the existing mortgage has a due-on-sale clause, a transfer can trigger the lender’s right to demand repayment. Have an attorney review the loan documents, any applicable exceptions, and the proposed arrangement before agreeing to seller financing.
What interest rate can a seller charge in Florida?
Florida Statute Chapter 687 sets limits on interest rates and fees to prevent usury. If a seller charges above the legal maximum, the note may be unenforceable and the seller could face penalties or lose their right to collect interest.
We bought two units from Mike and Eric and sold one over the last four years. One thing that made life much easier for us was how they understood our feelings and situation regarding pricing. They knew where the other party was coming from, which made the process faster without all the back and forth. Once the contract was signed, their staff was great; I literally had to do nothing other than decide what color pen to sign with. Eric wasn’t just out to make a sale; he was tremendously helpful to us. Every week, he checks our apartment without asking for money, and when we had a storm, he even moved our car to safety. It wasn’t just about the sale; he became a friend and helped us out after the sale, just because we don’t live here.
– Mindy and Joe, Customer Review
What happens if the buyer defaults on a seller-financed mortgage?
If the buyer defaults, the seller may need to foreclose to recover the property, which can take months and cost thousands in legal fees. The process and timeline depend on how well the documents were drafted and recorded at closing.
What To Do Right Now
Before you sign or accept any seller financing deal in Florida, have a local real estate attorney review the proposed documents, tax obligations, and compliance with Florida Statute Chapter 687.
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Michael Renick · Licensed Florida Real Estate Broker
License #BK3241900 · Verify on Florida DBPR
Mangrove Realty Associates Inc / Team Renick · Serving Sarasota & Manatee Counties since 2011
About the Author
I’m Michael Renick — a Florida West Coast broker with over 15 years guiding families through some of the biggest decisions of their lives. I’ve built my practice on hard work, honesty, and total transparency. No shortcuts, no spin — just straight answers, deep market knowledge, and the dedication my clients deserve from start to close.
Equal Housing Opportunity. This article is general information only, not legal, tax, insurance, or financial advice. Market conditions, insurance requirements, and costs vary by property and transaction; confirm your specific situation with the appropriate licensed professional. Michael Renick, Licensed Florida Real Estate Broker, License #BK3241900, licensed by the Florida Department of Business and Professional Regulation (DBPR). Mangrove Realty Associates Inc — each office is independently owned and operated.
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