What Sophisticated Buyers Should Know About the FARBAR Contract in Florida Real Estate
If you’re buying luxury real estate in Florida, especially through a trust, entity, or cross-border structure, the FARBAR contract is the document that controls every part of your transaction. It sets the tone for how the deal closes, who’s responsible for what, and what protections are (or aren’t) built in. And yet, most high-net-worth buyers sign it with little more than a quick glance.
The FARBAR contract isn’t just another form; it’s a legal agreement with potentially significant tax and financial implications. If you’re structuring a purchase through an LLC, funding through a foreign account, or managing the acquisition through an estate or asset protection plan, this contract must be reviewed with those factors in mind.
As of 2024, several key changes were made to the FARBAR contract. If you’re not working with an attorney who understands those updates and how they intersect with tax strategy, you’re leaving risk on the table.
The 2024 FARBAR Updates That Matter
The 2024 revision of the FARBAR contract included several key changes that directly affected high-net-worth buyers and sellers.
First, the contract now clearly states that the seller is not required to pay any commission unless it is explicitly agreed to and written into the terms. That means if your agent or broker is expecting a fee from the seller and it’s not in writing, you may be responsible for the full commission. For buyers relying on co-brokerage agreements, this clause should be reviewed closely to avoid unexpected liability.
Second, the updated FIRPTA (Foreign Investment in Real Property Tax Act) language includes critical details. If the wrong box is checked, the buyer could become responsible for up to 15% of the purchase price in IRS withholding. FIRPTA requires tax withholding on certain transactions involving foreign sellers. A misstep in this section not only results in a withholding obligation, but it can trigger IRS penalties and make closing far more complicated. Most buyers aren’t even aware that the burden of FIRPTA compliance falls on them, not the seller.
Why a High-Net-Worth Buyer Should Never Use the Standard “As-Is” Form
Most luxury real estate deals in Florida use the FARBAR “As-Is” contract. But without legal revision, this document does very little to protect a sophisticated buyer. For example, the standard “as-is” language allows the seller to walk away with minimal obligations. Unless customized, it doesn’t require them to resolve open permits, municipal liens, or code violations. These issues could interfere with your ability to renovate, claim homestead exemptions, or even resell the property later.
An attorney who also understands tax law can modify these terms to ensure a clear title, proper lien clearance, and protection against post-closing surprises. This is especially important for buyers purchasing through multi-member LLCs, revocable trusts, or international investment vehicles.
Florida’s Legal and Tax Advantages, But Only If Structured Properly
Florida remains one of the most attractive states for high-value property purchases because it lacks a state income tax, provides generous homestead protections, and offers favorable treatment of LLC and trust-owned properties. However, the contract and ownership structure must be aligned to benefit from those advantages.
For example, buyers using an LLC must ensure the entity is treated as a partnership, not a disregarded entity, to retain certain liability protections. Buyers seeking homestead status must avoid taking title in an LLC altogether and consider trust ownership instead. A mistake here could cost you thousands in lost tax savings or expose the asset to creditors.
The FARBAR contract doesn’t cover any of this. Most real estate lawyers don’t advise on it. However, a former CPA who understands both legal drafting and federal tax strategy can help you structure the transaction correctly from day one.
A Real Estate Attorney Who Also Understands the Tax Code
Most real estate attorneys review contracts. Fewer revise them to reflect your tax planning goals. Even fewer can explain the implications of FIRPTA, entity selection, homestead eligibility, or capital gains deferral.
That’s what sets Jacqueline A. Salcines apart. As a real estate attorney and former CPA, she doesn’t just ensure your FARBAR contract is legally sound, she ensures it works with your larger financial strategy.
Never Close Alone. Contact the Law Offices of Jacqueline A. Salcines, PA, to structure your next luxury real estate purchase with precision.