Navigating Real Estate Law: Insider Tips from Attorney Reid McCullough

Show Notes:
In this episode of Jim Sells the Suncoast, Jim is joined by real estate attorney Reid McCullough, who brings clarity to the often-confusing world of HOAs, disclosures, and contract pitfalls. Whether you’re buying, selling, or managing property, Reid’s insights will help you avoid legal hurdles, protect your investment, and maintain good neighborly relations.

Key Highlights

1. HOA Insights
   • HOA Requirements & Approvals: From application fees to background checks and financial disclosures, buyers need to stay proactive to ensure a smooth closing.
   • Rules & Restrictions: Architectural review committees often have broad authority to maintain the community aesthetic—making major modifications can be a legal minefield.
2. Disclosure Duties & Misrepresentations
   • Why Inspections Matter: Seller disclosures can miss key issues; hiring a qualified inspector and possibly an appraiser is well worth the cost.
   • Legal Consequences for Non-Disclosure: Failing to reveal known defects (e.g., major flood damage) can lead to lawsuits, punitive damages, and costly legal battles.
3. Boundary Disputes & Easements
   • Neighbor Disputes: Overlapping fences or unclear lot lines can often be resolved by communication and a fresh survey rather than heading straight to court.
   • Title Insurance Claims: Undisclosed easements that devalue property may trigger a title insurance claim—especially if they weren’t mentioned before closing.
4. Contracts & the Statute of Frauds
   • Put It in Writing: Verbal agreements or informal add-ons can create misunderstandings at closing. Use official forms (e.g., FAR/BAR contracts) to cover contingencies properly.
   • Custom Contracts = Caution: Two-page “simple” deals often lack important protections for both parties. When in doubt, consult an attorney or push for standard contract terms.
5. Common Real Estate Myths
   • Enforcing Verbal Promises: Anything not in the written contract is essentially unenforceable.
   • Surprises at Closing: Make sure any extras—like furnishings or special concessions—are spelled out clearly in the contract.

What’s Next?

Need help demystifying contracts, HOAs, or other real estate legalities? Reach out to Jim at jim.ahearn@gmail.com or visit Jim Sells the Suncoast. Whether you’re buying your first home or expanding your real estate portfolio, understanding the law can save you stress—and money—in the long run.

A Personal Note from Jim:

Hey there, I’m Jim Ahearn, your go-to real estate guide and host of Jim Sells The Suncoast podcast! 🎙️✨ Dreaming of Florida life? I’ve got you covered! As your dedicated buyer's agent, I’ll handle everything from walk-throughs to closing, making your home-buying journey as smooth as a Florida breeze.

Whether you're local or tuning in from afar, I’ll bring the Suncoast to you with virtual tours and expert advice. Let’s chat about your dream home and I'll connect you with all the right people to make it happen.

Ready to move to paradise? Drop me a line – I can’t wait to help! 🌴🏡

Transcript

Jim: 0:54

Okay. Cool. And good morning to the Suncoast today. I am. It's my pleasure to have Reed McCullough on. He is the epitome of your neighborhood lawyer. He's been in the area for quite a while, been practicing law for 11 years, focused on real estate, and he makes the complex palatable when we're talking law, maybe palatable is the right word, and brings a little bit of passion to this passion. So welcome, Reed. Thanks for being here.

Reid: 1:20

Jim, thank you so much for having me. I really appreciate getting the chance to share what I do and what I've been working on lately with you.

Jim: 1:28

Fantastic. I know when we look at real estate law and real estate in general, the experts can really contribute quite a bit because most people will do two, three, four transactions in a lifetime and you might do that in a week. So there's a lot of insight that can be gained from. Just what and what's going on. So I've got a little bit of list of questions. Hopefully we can walk through some of these and we can expand on them and see what kind of insight can you bring to the table on that to help the average person is going through this transaction. All right, first one, let's talk HOAs, homeowner associations. Every HOA is a little different. There's a lot in there, but what should buyers know about purchasing a property within an HOA and how can they avoid potential legal disputes with the association?

Reid: 2:15

Absolutely. When people are thinking about buying, they're doing one of two things. They're applying to a homeowner association or a condo association which share a lot of the same DNA. But their authority is derived from two different statutes.

Jim: 2:29

great editor,

Reid: 2:31

Fantastic. If you're applying to homeowners associations, what you should. expect is a comprehensive financial disclosure. many people are broadsided by the depth to which the associations want to ensure that they can collect money So often you see bank statements, credit checks, criminal background checks and fees that must be paid up front. This is 1 of the biggest things I see people flood when they're coming to the closing table is that they've done all their due diligence. They got the property appraised. The lender is happy. But, they just never turned in that 150 check to the condo association or the homeowner association, and as a result, the homeowner association hasn't done anything. 1 of the biggest things I would admonish people is not just to have your financial stuff ready for the for the bank or for the lenders to buy it. But also to make sure that the community knows who you are and that they've got your check for 100 or 150 bucks that they need to do their research on to make sure you're not accredited.

Jim: 3:35

Okay, so that's something particularly your agent should be making sure that you're aware of what's going on. So what else in an HOA? What kind of power do they have and what kind of limit do they have when you've moved in? And hey, I want to paint my house purple.

Reid: 3:50

Ah, yes. The rules and restrictions. So part of every contract for sale in an HOA comes with certain sellers disclosures, which include copies of the HOA rules and regs. Generally the managers of HOAs, even if you are an owner in the community will answer some limited questions for you. So your plan is to. Let's say you want to move in and build a shed or detached garage they'll give you the broad strokes as to what you can and can't do within the rules,

Jim: 4:23

right?

Reid: 4:24

I would caution any prospective buyer that's looking to make significant exterior modifications that it is like navigating the landmine minefield park, the Many associations have architectural review committees, which are like municipal government in many respects, and that they have promulgated rules that they want the community to follow in terms of how it looks and feel. And they have plenary power to say, no, it doesn't really fit the spirit of the community which sort of leads you down the road of starting a purchase by suing your HOA, which is not a great place for anyone to be. I generally discourage lawsuits against associations in all but the most extreme circumstances.

Jim: 5:13

You like that neighborhood for a certain reason or for a certain aesthetic and they want to maintain that same thing. So it's good and bad, I guess that it's going to prevent people from changing it.

Reid: 5:24

There are some changes in recent years. To allow for superseding rules to override nature. For instance, Governor DeSantis last year signed some legislation that allows homeowners to provide hurricane protection. For their houses. And the HOA isn't really allowed to argue with you about, your storm shutters or the style of your hurricane impact windows, for instance so there has been some retraction of power from the HOAs in favor of the state and in favor of the individual homeowners, but by and large, fighting with an HOA is almost always an uphill battle. I generally stack up the cost against, the cost of buying a comparable property somewhere else.

Jim: 6:12

And then to your point, you have certain rights. You want to protect your house from damage. That's great, but you can't leave them up year round. They're going to make sure that we have that aesthetic when there's not something imminent.

Reid: 6:25

correct.

Jim: 6:25

Okay. Let's slide over to disclosures and misrepresentations. How can buyers ensure they are fully formed about a property's history before closing?

Reid: 6:35

Oh, that's a great question. The, by and large, you what I, what that means is that unless the unless the seller is also the builder. There's and, there's been continuity of ownership. So new construction, you've got a pretty comprehensive idea of what's going on with the property, but after that 1st owner, you're generally you generally have to take someone's word for it. If they accept the seller disclosures and you say, okay. You checked not applicable or no knowledge to many things I've seen most sellers disclosures and I find that the best you can do is your own research, I wouldn't recommend anyone buy a property without a, an inspection. And even if you're buying cash, it's worth it. Sometimes it's worth getting an appraisal too. Especially if you're considering like a for sale buying owner transaction where nobody involved knows the nature of the property or the nature of the market conditions, it's worth, obviously, first and foremost, it's worth having the advice of a licensed realtor to guide your valuation and your estimates to help you prepare that offer. When you're considering the nature of the property you're buying, the physical characteristics, I generally treat seller's disclosures as about worth the paper they're printed on. In my personal purchases in the past, I always do, to the nth degree, my own inspections, my own walkthroughs. Sometimes worth even taking a contractor to think about making improvements to property, taking a contractor to those inspect inspections to say, okay, Jim from ABC contracting companies here, he's going to tell me what he thinks, the interior renovation is it's going to need to update this 1950s kitchen. I always, when it comes to seller's disclosures and how to really get a feel for the property you're buying. The number one thing you can do is to hire your own racer.

Jim: 8:33

Okay. So when you're looking at a purchase, that's going to be, could be several hundred thousand to a million plus spending a thousand dollars on inspection and appraisal is a pretty smart investment going into it. Third party that somebody that's not invested. They have no skin in the game can step back and go, here's what I think it is objectively.

Reid: 8:56

When it comes down to the reports because there's so much that's part of a property that you just won't see, you

Jim: 9:02

know,

Reid: 9:03

you think about latent water leak, for instance, you might have water that's trickling down the interstices of the walls. And you wouldn't see that on the face. It doesn't show on the paint until it really starts to rot but Many inspectors have infrared cameras. They would disclose they would show you any moisture or water leaks within the property Similarly, you know if you're doing a deal and you don't know what the value is You get an appraisal that says it's you know, this property should be going for twenty or thirty thousand dollars less But not only have you paid for, the appraiser's time, but you want to save yourself a pile of money and giving yourself a strong position to negotiate the

Jim: 9:41

Yep. And I think having worked with some inspectors before, they go places that I wouldn't normally go and they have the knowledge that I wouldn't have,

Reid: 9:48

I don't have the physique for that anymore.

Jim: 9:52

So when looking at a seller, we talked about the disclosure and how to take that. But what are the legal consequences for a seller who fails to disclose material defects of a property?

Reid: 10:05

the downside can be dramatic. So if you're selling a property and. You know that back in 2005 when all the hurricanes came through town, that property flooded, and you don't indicate that on your seller's disclosures, then if a buyer subsequently experiences problems with that, whether it's rot or subsequent flooding that they could have known about. It could have anticipated if they knew the property flooded in the past. Your damages don't just run to the cost to make it right, but you could be on the hook for. A lot. There's punitive damages are capped at treble compensatory damages. So let's say it costs 50, 000 to fix a defect. But, you knew about that and you fraudulently failed to disclose it. A court can find you liable for 150, 000 punitives as well as the cost of an attorney's fee. Suddenly a fix that was 50, 000. Palatable during the contract and negotiation phase subsequently becomes like the cost of another house. most homeowners are not inspectors. Most homeowners are not contractors. And the burden to prove that someone knew or should have known about a defect and affirmatively failed to disclose it is a pretty high bar. So when buyers come to me and say, Hey, there's a plumbing problem in my new house and, it wasn't disclosed to me by the seller. I said, okay. And what do we do? We have any evidence or do you think you can find any evidence that the seller knew about that? without that collateral evidence, because you very rarely get direct evidence of fraud, nobody writes an email to their banker saying, Oh, I deceived these people because I covered up the evidence without that circumstantial evidence, it's pretty obvious. It's a pretty high bar is the the bar is either, either intentionally conceal the defect or you you made representations with, reckless disregard for the truth and falsity of the statement. If you just, it's a very high bar to clear to get that fraud, that specific intent necessary to get those damages. Oftentimes, simple negligence might get you there, but I don't whenever I'm talking about the cost of a lawsuit, that's got to be a financial choice. When i'm thinking about what it costs to get relief from a court i'm thinking about that compared to the cost of fixing Because there's no guarantee that the seller still has money after a transaction is done

Jim: 12:42

So I think what i'm hearing is On major issues, flooding came through like with Hurricane Debbie, and it wasn't disclosed. That's something we should talk about and possibly investigate further. Or, your home inspector might find that and that's something you negotiate before you close.

Reid: 12:57

Absolutely.

Jim: 12:59

Right.

Reid: 12:59

So if it comes to it and you find out that. Your roof was unpermitted. The cost of a new roof is you're looking at 20, 25, 000, sometimes a lot more depending on the size of your house. That's worth asking for. Hey, Mr. Seller, when you have this roof done, you didn't pull any permits and it wasn't inspected. So I need to throw a new one on there in order to not get violations. that's the kind of thing I would push for him. I push might even push pretty hard for it. When the rubber hits the road, whether or not you want to drop, 10 or 15, 000 to get the seller in front of a judge, that's a that's a financial decision, because at the end of the day, a judgment in court is not money in your pocket. It's just the right to collect. So I always, one of the things, the expressions we have around the offices. It's better to have a good life than a good case.

Jim: 13:55

How should a property owner handle boundary disputes or challenges within easements on their property?

Reid: 13:59

The answer is the worst lawyer answer in the world. Depends on who is asking. As far as a boundary dispute with Your neighbor. it's the nexus of legal reality and real politics, because if you sue your neighbor, you get to live next to the guy you sued until one of you moves. Which is not fun. The answer I would have is depends on the nature and depends on who's asking. If you're talking about let's say there was a seller has a utility easement crossing the middle of the property and it completely derails your construction plans. Because, FPL wants the right to throw power line across

Jim: 14:43

for free.

Reid: 14:43

That's a title claim, especially if it wasn't disclosed in the corollary documents. Title insurance claim is My house, I have lost the value of my purchase by X dollars because of this recorded easement. I need to be compensated and the underwriter looks at that and if they can't terminate or relocate the easement to make it better for you, then they pay you the value of your claim, which is the depreciation in value for what you expect to be purchased and paid for and

Jim: 15:12

what

Reid: 15:13

The you would also, I would submit probably have a Davis claim against the seller because that, the defect in title that was known to the seller, but unknown to you becomes an issue. And the seller is not around anymore. So you're not pissing off the neighborhood. If it came, if we're talking instead about the location of offense, that's the much more common one. My neighbor's got the ugly side of the fence facing me and he built it on my, over on my property. That's a conversation I've had with a lot of people. The first thing I would suggest is, all right get a survey and make sure you're right. Because sometimes that causes those conversations to go away. I never hear from him again. And I was like I guess on his side of the property, if it turns out they're right, I think the best thing to do is just have everybody sit down for a nice conversation. I've entertained a couple of those in my office to say, hey, it sounds like there's a fence on your side of the yard. Maybe drop something up and says, okay, we acknowledge that. This sense is on this property. Nobody's, nobody's pursuing adverse possession or anything like that. Generally anxiety about adverse possession, just an escalation of existing neighborhood tensions. Maybe there's something else that's in that. Guys, I understand that you're looking at 8 inches of boundary line and, soil shifts over time. Maybe this property was on yours and there was a flood or something. I don't know. or maybe the fencing guy is not a licensed surveyor. He's certainly not. Keep in the forest for the trees, remembering that it's better to have a neighborhood where people like you than eight inches of dirt on one side of the fence.

Jim: 16:57

Let's talk about that a little more and what that is and how that impacts people.

Reid: 17:01

Yeah, absolutely. It explains it's a shorthand from a Florida Supreme Court case, where they ruled that the seller property who Conceals. Knowledge of a latent defect from a buyer is liable for the damages that result in, and I believe including tentative damages in the event, if you're able to establish that intent, The requirement of some, affirmative acts to conceal the defects of knowledge or constructive knowledge of the

Jim: 17:33

defense

Reid: 17:34

like new or should have known this was a problem that you didn't say anything about it and a latent defect that isn't immediately apparent. The latency of a defect is. Something that you can't see when you walk into a house and you say, Oh, that stove is on its face, let's. That is an obvious defect.

Jim: 17:51

house, but maybe access to the lake behind you ran through the yard and nobody told you.

Reid: 17:56

That would be a defect that, if you thought you were buying the clean title with no easements whatsoever, and it turns out, your neighbor has the right to to skinny dip in your pool. This is a little bit hyperbolic, but beach access is a real one that comes up a lot and that does and that does get litigated and argued about. There's been a couple of cases come through Sarasota just recently, especially the, pardon me, related to the Longboat Key. There's a couple of beach accesses there that's owned by Sonoma. Latent defect that causes no damage is not something you would litigate. Frankly, it's not something that would come to light in the first place because it didn't cause any problems, but that's one of the elements. every lawyer loves tests. The seller's knowledge the latency of the defect the causation of harm in the actual damages. that's the four steps to recovery. And if you can't get all of those. Then you don't get damages. So it's important to think about all of them when you're trying to decide whether or not to buy or sell it. Alright, let's

Jim: 18:57

talk a little bit about maybe some real estate myths and misconceptions.

Reid: 19:02

Oh God bless, Get it

Jim: 19:03

Yes.

Reid: 19:04

Get it in writing. If you get anything out of this presentation, verbal agreements are worth the paper they're printed on.

Jim: 19:11

Yes.

Reid: 19:11

Harold, there's so this statute of fraud is is what controls this in Florida. This. Section of clauses is a catch all term that covers a bunch of different areas of law, which says that agreements aren't good in the absence of a written instrument. And the Florida statutes are explicit about this, is that A an agreement for for the sale and purchase of real property must be in writing, signed by the parties. It doesn't need to be notarized, but it needs to be in writing. It needs to be signed and it needs to contain material terms to a a contract that doesn't have if I say to you, Jim, I am willing to sell you my property on Arlington street for 1M. And you say great and I text you just confirming that I'll sell Arlington for one million dollars and you say Acknowledged in receipt you can argue that We're inferring material terms, inferring a reasonable timeline inferring a standard closing costs and yeah but if you came down to a lawsuit if you tried to sue me and say hey Really? He promised to sell the Arlington for a million bucks I say, yeah, when I'm done with the place, 30 years from now, or yeah, but you're going to cover this, that, and the other, and 6 percent for my wheelchair, whatever. the court would generally find that there wasn't a meeting of the minds. that's what the FAR BAR contracts do. The as is and the residential contracts for sale and purchase of real estate. FAR BAR contracts are so important because they are facially neutral, because they contain all of the necessary ingredients, all the secret sauce you need to sell and purchase a property, and everybody knows them. You can't be a realtor in Florida if you don't know the promulgated contract. And as a result and they get revised. They get regularly revisited as new stuff comes up. Like you talked about the condo assessments in the wake of the tragedy over at Surfside. There's a whole bunch of new stuff in the condo disclosures regarding milestone inspections and structural reports. the biggest red flag I have for purchasers and sellers of real estate is trying to enforce stuff that never made it into the contract and creepy custom contracts.

Jim: 21:30

and I think that's why when people look at a contract and it's 21 pages and they're like, yeah, I read it, here you go, that covers all those nuances that you just talked about, Hey, when is this going to happen? Where is it going to happen? What are the terms of the contract, what are the contingencies or what are the outs for anybody who wants them or what are the specific terms? Utilizing something like that's been formalized and structured really protects everybody that's using it because everybody knows what's supposed to go on.

Reid: 21:55

Yeah. And on

Jim: 21:58

a custom contract, you're like you didn't mention this or what's the fallback on this?

Reid: 22:03

If a lot of like wholesale investors and. These, flippers as they're called they love to have these two page contracts and they're like, look, it's real simple. It's money for property, every single one of those is a get out of jail free card for the wholesalers whenever they want on the contract and they get all their money back and you get nothing. And there's a complete absence of really important material terms like, Hey, if this buyer defaults on the contract, what's my recourse? What can I do? If the escrow agent discovers a title defect, what happens then? And yeah, the FAR BAR contract seems daunting to the layperson. This 15 page contract, because, I'm worried it's, it's going to lock me into something I don't want. The thing is, contracts, the as is bar in particular, is is broadly buyer friendly. And it's it allows the seller to, to have certainty that, all right, after the inspection period, and after the contingency has expired, I know I'm getting a sale out of this. And the contingency periods are listed right there page page two. Yeah,

Jim: 23:18

gives a little surety to either side, you can go in going, Hey, sign the contract, but I get to check everything. And once you've checked everything, the seller says, we're going forward.

Reid: 23:27

Happy days. Yeah. And verbal agreements. God bless, if somebody makes you a verbal agreement then I would go about your day until you see something in writing backing it up. And if what in writing is, does not say FARBAR on it, I would run down the street to your favorite local lawyer and say, this guy gave me an offer, but it's on a weirdo custom contract. If your lawyer's worth is salt or her salt what you, what they should do is call up and say, Hey, dear creepy investor, we'll be happy to help you with this contract on a Florida to Far Bar form.

Jim: 24:02

I think the other area that this comes in, and I had this discussion with somebody earlier. Which is interesting is when you're in the middle of negotiation, counter offers a verbal counter offer or an email really isn't going to cut it until you see the contract. So you may think you've got something coming in, but until that contract comes back, everybody signed, there's nothing.

Reid: 24:24

Unsigned contract is no good. There's an active conversation about missing initials and I take the middle of the road approach to that. If you change a material term that is a counteroffer that negates the initial document until that portion is signed. However, if I get a contract that has, no changes to the material terms is signed by both buyers and sellers, but say the buyer does an initial page 8 for whatever reason. It just wasn't populated on the document. I've had a lot of questions from realtors as to whether or not that changes the effective date or whether or not that's a fully executed contract. The contract signed at the end by the parties intending to be found constitutes an effective contract, but you should still chase down that initial just so there's no argument or disagreement regarding the pages, the language on that.

Jim: 25:24

What do you think in your experience as a lawyer dealing with the legal aspect of this is the biggest misconception people have about real estate law?

Reid: 25:34

Oh let's see, it's it probably shares a lot of the same DNA as the as the verbal contracts. I would say the biggest misconception people have brought my office is is when they're going through the contract process. And they bring that something extra to the closing table, I'll sit down, I've got the whole contract, all the agenda, I built closing documents for them to review, email that to them, a coin toss, whether or not they look at it or not. They sit down and they say where's my extra five thousand dollars for the furniture and i'd say What they were walking through the property and they told me I was getting an extra 5k Great, Okay, cool. Did they write that down anywhere?

Jim: 26:17

Yeah, so

Reid: 26:18

oftentimes a lot of what my job is reconciling the expectations of the party who went through this whole contract process and then all these conversations with realtors, lenders, sellers, representatives, whatever and distilling that into the legal documents that say how much you're paying and what you're getting. And that's where, I rested the fulcrum of that transaction, trying to balance those competing interests.

Jim: 26:46

Fantastic. Reid, thank you so much for coming on here today. 30 minutes goes by quick without realizing it. There's so much to dig into. We'll go into my next set of questions because I think we only got through four, but worth it.

Reid: 27:00

Oh, God bless. Let me tell you, and to anyone else watching, It is really my pleasure to help people understand these complicated and, lengthy verbal agreements and these long written agreements, distilling them into plain language is really joyful for me. I grew up, I was working in a metal shop when I was a teenager. I thought I was going to be a carpenter when I was a young adult. So I'm going from that background to the practice of law has really left with me. A deep appreciation for people who don't do this every day for people who really just wanted to explain in plain English what they're signing up for and what they're getting. So I'm happy to help Jim. I look forward to our next meeting.

Jim: 27:44

Absolutely. Thank you.