When you’re writing a Florida contract with a foreign (Canadian) seller, you want to allocate responsibility, protect your buyer, and give flexibility for withholding reductions—all without derailing the deal. In Florida, this is typically handled through a FIRPTA addendum or special clause to the standard Florida Realtors®/Florida Bar contract.

Here’s how to structure it in a clean, enforceable way:

1. Establish Seller’s Foreign Status (or Not)

Start by forcing clarity upfront.

Key Clause Concept:

• Seller must declare whether they are a “foreign person” under the Foreign Investment in Real Property Tax Act

• If non-foreign, require a certification affidavit at closing

• If foreign, FIRPTA withholding applies

Practical Language Intent:

• “Seller shall provide certification of non-foreign status or be subject to FIRPTA withholding”

👉 This prevents last-minute surprises at closing.

2. Assign Withholding Responsibility (Protect the Buyer)

Even though FIRPTA legally places responsibility on the buyer, your contract should:

• Direct the closing agent/title company to handle withholding

• Make it clear withholding comes from seller’s proceeds

Key Structure:

• Buyer authorizes escrow agent to withhold

• Funds deducted from seller at closing

• Escrow agent remits to IRS

👉 This avoids buyer writing a separate check or being exposed operationally

3. Specify Withholding Amount (or Formula)

Include a clear default:

• “15% of the gross sales price unless reduced by IRS withholding certificate”

This ensures:

• No ambiguity

• Everyone (buyer, seller, title) is aligned

4. Build in Withholding Certificate Flexibility (Very Important)

This is where deals are won or lost.

Include:

• Seller has the right to apply for IRS Form 8288-B

• Closing agent may delay remittance if application is pending

• Funds can be held in escrow until IRS determination

Why this matters:

Without this clause:

• Title may automatically send full 15%

• Seller may push back hard or delay closing

5. Address Closing Timing (Avoid Delays)

You want to prevent FIRPTA from blowing up your timeline.

Include:

• FIRPTA processing does not automatically extend closing

• Or specify a limited extension window if needed

Example concept:

• “Closing shall not be delayed due to FIRPTA unless mutually agreed”

6. Include Indemnification (Critical Protection)

Protect your buyer from mistakes or misrepresentation.

Include:

• Seller indemnifies buyer for:

  • Incorrect foreign status

  • Failure to pay required tax

  • Any IRS claims post-closing

👉 This is your buyer’s legal shield

7. Identify Who Files and Handles Compliance

Be explicit:

• Closing agent prepares and files:

  • Form 8288

  • Form 8288-A

• Funds remitted within required timeframe

This avoids confusion between:

• Title company

• CPA

• Attorney

8. Optional: Add Cooperation Clause

Especially useful with foreign sellers.

Include:

• Seller agrees to:

  • Provide tax ID (ITIN)

  • Sign FIRPTA documents

  • Cooperate with withholding certificate process

Sample Clause Structure (Condensed)

Here’s a clean, deal-ready version you can adapt:

FIRPTA Provision (Sample)

Seller represents that Seller [is / is not] a “foreign person” as defined under FIRPTA.

If Seller is not a foreign person, Seller shall deliver a certification of non-foreign status at closing.

If Seller is a foreign person, Buyer and closing agent are authorized to withhold from Seller’s proceeds an amount equal to 15% of the gross sales price, unless a reduced withholding certificate is obtained from the IRS.

Seller may apply for a withholding certificate (IRS Form 8288-B), and closing agent may hold withheld funds in escrow pending IRS determination.

Seller agrees to indemnify and hold Buyer harmless from any liability arising from FIRPTA withholding obligations or Seller’s misrepresentation of status.

Seller agrees to cooperate with all FIRPTA requirements, including providing necessary documentation and tax identification numbers.

Practical Tips (From the Field)

• Always ask listing agent early: “Is seller foreign?”

• Loop in title company before offer is accepted

• If seller is Canadian:

  • Assume FIRPTA applies unless proven otherwise

• Set expectations early so seller isn’t shocked by 15%

Bottom Line

A strong FIRPTA clause does three things:

1. Confirms status early

2. Protects the buyer legally

3. Keeps the deal moving even with IRS involvement