Closing on New Construction in Palm Beach County: CO, Walkthroughs and Builder Warranties

Closing on new construction works differently from buying a resale home. With a resale, the house already exists and the closing date is set in the contract. With a new build, the date often moves, the house must pass final inspections, and the builder controls much of the paperwork. This guide covers the steps from the certificate of occupancy to move-in day, along with the warranty deadlines that follow. It is written for buyers in Palm Beach County, Port St. Lucie and the newer communities around them.

Key takeaways

• Your home needs a certificate of occupancy from the local building department before you can move in, and most lenders want it before they fund.
• Florida lets buyers of one- and two-family homes from larger builders require that deposits of up to 10% of the price go into escrow.
• A home that is not substantially complete on Jan. 1 gets no value placed on the building that year, so your second tax bill can be much higher than your first.
• Many builder warranties follow a 1, 2 and 10 year pattern for workmanship, systems and structure. Read your own warranty, because terms vary.
• Florida's statute of repose for most construction defect claims runs 7 years from the certificate of occupancy.

How closing on new construction differs from a resale

A resale closing follows a fixed calendar. By contrast, a new build closes when the house is done, inspected and approved. Builder contracts often give an estimated completion window rather than a firm date. As a result, you may get a few weeks of notice, or the date may slip more than once.

The builder also shapes more of the process. Many builders have an affiliated mortgage lender and title company, and some offer incentives if you use them. You can still compare offers. Federal law bars a seller from requiring you to buy title insurance from a particular company as a condition of the sale, under 12 U.S.C. 2608. So weigh the incentive against the full cost of the loan and the title fees.

For the steps before you sign, see our guide to the new construction home buying process.

Protecting your deposit before closing on new construction

New construction buyers often put down a larger deposit, and the builder may hold it for months. Florida law gives you a choice here. Under section 501.1375, a buyer of a one- or two-family home from a builder who sells 10 or more units a year statewide can require that deposits of up to 10% of the price go into an escrow account.

The contract must tell you about that right in capital letters. However, the builder may use the money for construction in some cases, such as when it posts a surety bond. So read the deposit section closely, and ask where your money sits right now.

The certificate of occupancy

A certificate of occupancy, or CO, is the local building department's sign-off that the home passed its final inspections. Without it, you cannot legally move in. In addition, most lenders will not fund the loan until it is issued.

Delays at this stage are common. A failed inspection, a missing utility connection or a backlog at the building department can push the CO back. Therefore, keep in touch with the builder during the last few weeks, and ask for a copy of the CO once it is issued.

Keep that copy in your records. The CO date also starts important legal clocks, as the warranty section below explains.

Rate locks and moving dates

Because the closing date can move, plan for it. Ask your lender how long your rate lock lasts and what an extension would cost. If you are selling another home or ending a lease, build in some cushion. A short rent-back or a month-to-month lease can save you from moving twice.

The blue-tape walkthrough

Before closing, the builder will schedule a walkthrough, often called a blue-tape walk or new home orientation. You and the builder's rep go room by room and mark flaws with blue painter's tape. Typical items include paint touch-ups, scratched counters, gaps in trim, sticky doors and missing fixtures.

Take this walk seriously, since it sets the list of what the builder agrees to fix. Bring a phone for photos, a notepad and a small level. Run every faucet, flush every toilet and open every window and door. Test the appliances, the AC and the garage door, too.

Also ask that every item be written on the builder's punch list, with a promised completion date. Cosmetic items are much easier to get fixed before you move in than after. A private inspector can help here, too. Our new construction inspection checklist covers the pre-drywall, final and 11-month inspections in detail.

Closing day for new construction homes

On closing day, you will sign the loan documents, the deed and the closing statement. Review the final numbers a few days early. Check that any builder credits, upgrades and incentives match your contract. Also confirm the deposit you already paid shows as a credit.

Many new communities have an HOA or community development district. So ask for the first year's dues, any capital contribution and any special district charges in writing. Some of these show up on the property tax bill instead of a monthly statement.

In most cases you get the keys once the deed is recorded or the closing agent releases them. If punch list work is still open, get the builder's written promise and timeline before you sign.

Setting up utilities and services

A new home often needs every account opened from scratch. Ask the builder which providers serve the address, then set up these before move-in:

• Electric service, so the AC runs on day one
• Water and sewer, which may come from a city, a county or a special district
• Trash and recycling, if not covered by the HOA
• Internet and TV, which can take a week or more to schedule in new areas
• Homeowners insurance, which your lender will require before closing

Also update your mailing address and check that your mailbox is installed. In newer areas such as Westlake and the growing parts of Port St. Lucie, service schedules can lag behind the pace of new homes.

Your first tax bills after closing on new construction

Property taxes on a new home can surprise buyers. Florida values property as of Jan. 1 each year. Under section 192.042, a building that is not substantially complete on Jan. 1 has no value placed on it for that year.

In practice, your first tax bill may cover only the land. The next year, the full home is assessed, so the bill can jump. If your lender sets your escrow based on the land-only bill, you may later face an escrow shortage and a higher monthly payment. Our post on mortgage escrow shortages explains how lenders handle that.

Also file for the homestead exemption. In Palm Beach County, you must own and live in the home as your permanent residence on Jan. 1 and apply by March 1, per the Property Appraiser.

Builder warranties and the 11-month inspection

Most builders provide a written warranty. A common pattern is 1 year for workmanship, 2 years for systems such as plumbing and electrical, and 10 years for major structural defects. 2-10 Home Buyers Warranty describes that structure for its builder plans. Still, your builder's terms control, so read the actual document.

Before the first year ends, schedule an 11-month inspection. A private inspector checks for settling cracks, roof and window leaks, drainage problems and items that wore out early. Then send the builder a written list while the workmanship coverage is still active.

How to document defects

Good records make claims easier. Keep a single folder with the contract, the warranty, the CO, the punch list and every service request. Date your photos, and follow up by email after each phone call. That way you have a paper trail if a problem returns.

Florida's defect notice process

For more serious problems, Florida has a pre-suit process. Under section 558.004, an owner must serve a written notice of claim at least 60 days before filing suit. The builder then has 30 days to inspect and 45 days to respond with an offer to repair, pay or dispute the claim. Also note the outer deadline. Under section 95.11, most construction defect actions must start within 7 years of the certificate of occupancy. Talk with a Florida attorney if a dispute gets that far.

A simple timeline for closing on new construction

1. Confirm where your deposit is held and whether you want it escrowed.
2. About 30 to 60 days out, check the rate lock and plan your moving dates with some cushion.
3. Set up utilities and insurance once the builder gives a firm date.
4. Do the blue-tape walkthrough and get the punch list in writing.
5. Get a copy of the certificate of occupancy.
6. Review the closing statement a few days early, then close.
7. File for homestead by March 1 and plan for a higher second tax bill.
8. Book the 11-month inspection before the first warranty year ends.

Frequently asked questions

Can I close on new construction before the CO is issued?

Usually not. You cannot legally occupy the home without it, and most lenders will not fund the loan until it is issued. Ask the builder for a copy before closing.

How long after the walkthrough is closing on new construction?

Builders often schedule the walkthrough a few days to a couple of weeks before closing. The exact gap depends on the builder and how many punch list items need work.

Do I need my own inspector for a brand-new home?

It is a good idea. New homes can still have defects, and an independent inspector works for you. Many buyers also book an 11-month inspection before the first warranty year ends.

Why did my property taxes go up a year after I bought my new home?

If the home was not substantially complete on Jan. 1 of the year you bought it, the first bill may have covered only the land. The next bill includes the full home, so it is often much higher.

Do I have to use the builder's lender or title company?

No. Builders may offer incentives to use their affiliates, but a seller cannot require you to buy title insurance from a particular company. Compare the full costs before you decide.

Sources

• Florida Statutes, s. 501.1375 builder deposits
• Florida Statutes, s. 192.042 assessment date
• Florida Statutes, s. 558.004 notice of claim
• Florida Statutes, s. 95.11 limitations
• 12 U.S.C. 2608, title companies
• Palm Beach County Property Appraiser, homestead exemption
• 2-10 Home Buyers Warranty, builder warranty FAQs

Selling your current home before your new build closes? Start with a free home valuation and a sale timeline that matches the builder's schedule. Still choosing? Get a new construction vs. resale comparison from a Pure Equity agent. Contact our team.