Seller financing (a.k.a. owner financing) - FLORIDA

Seller financing (a.k.a. owner financing) - FLORIDA

Seller financing (a.k.a. owner financing) can be a strong tool for your buyer, but in Florida, it needs to be structured carefully and documented correctly. Below is a practical, transaction-ready roadmap you can follow as the agent.
1. Confirm the Seller Can Legally Offer Financing
Before writing anything:
  • Title status
    • Is the property free and clear?
    • If there’s an existing mortgage, verify whether it contains a due-on-sale clause (most do). If so, seller financing may trigger payoff unless the lender consents.
  • Seller intent
    • Are they offering:
      • Full owner financing?
      • Partial financing with a down payment?
      • A wraparound (⚠️ higher risk)?
  • Seller frequency
    • If the seller finances more than 3 properties per year, federal Dodd-Frank/SAFE Act rules may apply.
👉 Many one-off sellers are exempt, but you should flag this early.
2. Negotiate the Financing Terms (Up Front)
These terms should be agreed upon before drafting contracts:
  • Purchase price
  • Down payment amount
  • Interest rate
  • Amortization period (e.g., 30 years)
  • Balloon payment (common: 3–7 years)
  • Monthly payment amount
  • Prepayment penalty (yes/no)
  • Who services the loan (seller or servicing company)
  • Security (mortgage vs. deed of trust → Florida uses mortgages)
3. Use the Correct Florida Contract
In most cases, you will still use:
FAR/BAR Residential Contract for Sale and Purchase
In the Financing Section:
  • Check “Seller Financing”
  • Attach a Seller Financing Addendum (see below)
Do not leave financing vague. The addendum must be specific.
4. Attach a Seller Financing Addendum
Florida does not have a mandatory FAR/BAR seller-financing addendum, but common approaches are:
Option A – Attorney-Drafted Addendum (Best Practice)
Highly recommended. The addendum should address:
  • Interest rate
  • Payment terms
  • Balloon date
  • Default provisions
  • Late fees
  • Right to prepay
  • Escrow requirements (taxes/insurance)
Option B – Standardized Custom Addendum
Some brokerages maintain an internal seller-financing addendum. If used, confirm:
  • Broker approval
  • Legal review
⚠️ Avoid writing promissory note language directly into the contract body.
5. Closing Documents Required
At closing, the following are typically prepared by the closing attorney or title company:
  • Promissory Note (sets repayment terms)
  • Mortgage (records lien against property)
  • Mortgage Note Addendum (if balloon or special terms)
  • Truth-in-Lending disclosures (if applicable)
  • Loan servicing agreement (optional but recommended)
👉 As the agent, you coordinate, not draft these.
6. Recommend Loan Servicing (Strongly)
Encourage both parties to use a third-party loan servicer:
Benefits:
  • Payment collection
  • Escrow management
  • Year-end tax statements
  • Default tracking
This reduces disputes and liability for everyone involved.
7. Compliance & Risk Issues to Flag (Important)
As the agent, you should disclose and document that:
  • Seller financing carries risk to both parties
  • Buyer should consult:
    • A real estate attorney
    • A CPA (especially if balloon or investor buyer)
  • You are not providing legal or lending advice
This protects you.
8. Practical Agent Checklist
✔ Confirm seller’s mortgage status
✔ Confirm seller exemption under Dodd-Frank
✔ Negotiate clear financing terms
✔ Use FAR/BAR contract + addendum
✔ Involve title/attorney early
✔ Recommend loan servicing
✔ Document disclosures
Bottom Line
Seller financing in Florida is absolutely workable, but the key success factors are:
  • Clear terms
  • Proper addenda
  • Attorney/title involvement
  • Compliance awareness

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