The seller again faced the prospect of a drastic downturn in the market, had lost a year and a half of rent, and had to absorb the real estate taxes and utility bills. Under current law, courts grant specific performance when they perceive that damages will be inadequate compensation. Alternatively, the law could provide that the seller be entitled to an immediate hearing, at which time the plaintiff/buyer would be required, under the standards for injunctive relief, to establish the likelihood that the buyer would prevail on the merits. In effect, this can be a form of “legal blackmail.”. The Many Ways to Be Relieved of Your Timeshare Obligations, Straight Up with Jocelyn Predovich: The Truth about FHA 203k Loans. 2d 778 (Fla. 2d D.C.A. “Legal blackmail” was a practical reality. Alternatively, the buyer could be required to post a bond or letter of credit payable to the seller in the event the seller prevails, in a sum equivalent to the purchase price of the property plus a reasonable amount for attorneys’ fees and costs. In a suit for specific performance, when there are conflicting rights of parties namely, that of the agreement holder and the subsequent purchaser, what relief, the agreement holder should seek, apart from the relief of specific performance of sale agreement? In one case, the buyer and seller entered into a purchase and sale contract for an unimproved parcel of property to be purchased in four phases for $12,000,000. In so doing, the seller must provide an alternative remedy for the buyer in the event of a default, such as a mechanism to determine the amount of damages if a court determines that seller breached the contract. The legislature could remedy this situation by enacting a statute that protects unsophisticated/unrepresented sellers and provides that as a condition to the remedy of specific performance in real estate transactions, the plaintiff/buyer must post a bond equivalent to a percentage such as 30 percent of the purchase price, plus a reasonable amount for costs and attorneys’ fees, accompanied by evidence that there was a binding financing commitment in effect at the time of the default. While a lis pendens is simply a notice of pending litigation, the effect thereof on the owner of property is to constrain its right to convey title.) One could argue that the seller, facing a spurious lawsuit for specific performance, could simply invoke the doctrine of caveat emptor and remain silent regarding the specific performance suit. Such a model statute could be the following: The buyer, as was established at trial, had not been able to obtain financing and could not possibly have closed. One solution lies in the freedom to contract, where the seller could insert a clause in the sale contract that as a condition precedent to filing a suit for specific performance, the buyer would be required to deposit in an interest-bearing escrow account the full amount of the purchase price, plus a reasonable sum to reimburse the seller for attorneys’ fees and costs in the event the seller prevails. Specific Performance asks the court to force the opposing party … §48.23(3). 2d 918 (Fla. 4th D.C.A. In response to the seller’s motion for summary judgment, the buyer claimed that the seller’s patterns of accepting late payments, albeit as an accommodation to the buyer, created a waiver of the “time is of the essence” clause.2 The court ruled that factual issues existed and denied seller’s motion for summary judgment.3 During a 12-day bench trial that was concluded more than a year and a half later, the seller established that a representative of the buyer had threatened to “tie the property up for three years” if the seller would not withdraw its default. He is president of Richman Greer Weil Brumbaugh Mirabito & Christensen, P.A., with offices in West Palm Beach and Miami, where his practice is complex commercial litigation, such as contracts, securities, antitrust, real estate, class actions, civil fraud, RICO, and other business torts. Mr. Richman is a graduate of the University of Florida with bachelor of building construction and J.D. The claim is thus merely based on an unrecorded contract, and a bond is required to protect the landowner from damages resulting from the new cloud on title. In the event said notice of lis pendens is discharged by order of the court, the same shall not in any way affect the validity of any unrecorded interest or lien. Thus, the law allows an aggrieved party to file a claim for specific performance, which requests the court to order the party breaching the contract to perform its obligations under that contract. 1989). 1972)(purpose of lis pendens is to notify prospective purchasers and encumbrancers that any interest acquired by them in property in litigation is subject to decision of court. This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Bruce M. Stone, chair, and Brian Sparks and William Sklar, editors. At first blush, it would seem that a seller who has had a lis pendens dissolved while a specific performance suit is pending should simply be able to seek out an uninformed buyer and close the transaction without revealing to the buyer or the buyer’s attorney the pendency of the lawsuit for specific performance. (b) Except for the interest of persons in possession or easements of use, the filing for record of such notice of lis pendens shall constitute a bar to the enforcement against the property described in said notice of lis pendens of all interests and liens including but not limited to federal tax liens and levies, unrecorded at the time of filing for record such notice of lis pendens unless the holder of any such unrecorded interest or lien shall intervene in such proceedings within 20 days after the filing and recording of said notice of lis pendens. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. Even where a contract to purchase specifically provides that a good and marketable title of record is not required, the seller’s failure to disclose the pendency of a known claim to title may subject the seller to liability in tort. 2 To support its waiver argument, the buyer relied on Mark v. Hahn, 177 So. Section 10 of the Specific Relief Act, 1963 , states “ Cases in which specific performance of contract enforceable. the time the stay was lifted, the tenant was evicted, and the specific performance claim tried and determined adversely to the tenant, the tenant had occupied the property for a year and a half rent free and tax free. 2d 237 (Fla. 1st D.C.A. After waiting three days for the check that never arrived, the seller relied on the time is of the essence clause, defaulted the buyer, and terminated the contract. Remedy of specific performance which is affected in case of breach of contracts is provided by the equity courts. Because most contract issues … On a motion to dissolve the lis pendens, the court ruled that the initial pleading did not show that the action was “founded on a duly recorded instrument” as required by statute to maintain the lis pendens, and that a bond would be required.1 The court dissolved the lis pendens after the buyer advised the court that it had no intention of posting a bond. 10 Mohican Valley, Inc. v. MacDonald, 443 So. Regardless of the appraisal of the merits of such claim, The Fund does not feel justified in buying possible litigation.”) 16 Wilson v. Sandstrom, 317 So. However, the buyer took the position that the seller had not properly terminated the contract, refused to leave the premises, and the owner was forced to sue for eviction. ~ From the Rules Regulating The Florida Bar. 1 See Fla. Stat. Specific per… 2d 479 (Fla. 5th D.C.A. © 2020 The Florida Bar. Were the seller to convey title to a new buyer, the court would be faced with the possibility of ordering the new buyer to convey to the seller, or to determine an amount of damages sufficient to compensate the successful buyer. 12 Failure to disclose a known material fact to an opposing attorney or party in connection with the sale of land would violate Rule 4-8.4(c) of the Rules Regulating The Florida Bar (Rules of Professional Conduct), which prohibits a lawyer from engaging “in conduct involving dishonesty, fraud, deceit, or misrepresentation,” and may thus subject the attorney to Bar discipline. Beware real property owners: The mere filing of a suit for specific performance (regardless of its ultimate success or the merits) can potentially tie up your property for several years, with or without the existence of a lis pendens. Alternatively, suits for specific performance compelling someone to SELL their property can be successful. The theory is that there're many buyers for a given property, but there may be only one "dream home" for a buyer. If the holder of any such unrecorded interest or lien does not intervene in the proceedings and if such proceedings are prosecuted to a judicial sale of the property described in said notice of lis pendens, the property shall be forever discharged from all such unrecorded interests and liens. The court can issue an order compelling a party to comply with their contractual obligations – a good example being to complete building works on time. This is not an atypical situation. That, however, is not likely to be the case because the buyer, to be secure in title (meaning superior to all others), must be a bona fide purchaser without notice of the pending action and the possibility that the seller may be obligated, through the loss of a specific performance suit, to convey title to another earlier contracting party. 1991). When you sue for breach of contract, you can generally sue for money compensation. Specific performance is deemed an extraordinary remedy, awarded at the court’s discretion Sections 9-25 deal with specific performance of contracts: Basic rules. No title defect would appear of record, so the seller should then be able to find a buyer without knowledge of the pending specific performance claim. As one might expect, the buyer was a shell corporation with a substantial amount of debts and little in the way of assets. Hence you won't get a judge to … 17 Terex Trailer Corp. v. McIlwain, 579 So. All rights reserved. Aside from being unethical, such conduct may also expose the attorney to liability to the buyer in tort for fraud or misrepresentation. Later, when a suit for specific performance was filed, the defendant objected to it, invoking Order 2 Rule 2, which states that the relief of specific performance … The term specific performance refers to literal performance of ones obligations under a contract. The period of limitation for a suit for specific performance of a contract is three years and the time of limitation starts to run from the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused. However, as set forth below, such an occurrence is highly unlikely. 782 (1975). 9 Fla. Stat. The issue in the suit for specific performance was whether the agreement to sell dated 15.05.1990 executed by defendant in favor of the plaintiff would be enforceable in … The buyer subsequently filed a suit for specific performance and placed a lis pendens on the property. The prescribed period of limitation for a suit of specific performance is three years from the date fixed for performance, or, if no such date is fixed, when the plaintiff has noticed that performance has been refused. Alternatively, greater responsibility must be placed upon the seller’s attorney to include provisions in the contract to protect the seller. 11 Arguably, a claim for fraudulent inducement lies just as where a broker fails to disclose a material fact as to the physi cal condition of the property. 2d 512 (Fla. 5th D.C.A. Where a … Thus, the fact that seller is on notice of a claim, through a “threat” of a specific performance claim, this may prevent the seller from conveying title. The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings. You can use a similar approach to fix problems that fall into a specific category. Another issue arose whether, in absence of permission granted by the trial court at the time of withdrawing the previous suit in which permanent injunction was claimed, the plaintiff can file a fresh suit where specific performance will be claimed. If the buyer is successful in its specific performance claim, the court typically orders the seller to convey title in accordance with the terms of the contract. This article discusses the legal and practical problems with representing a seller of property confronted with the possibility of being effectively “blackmailed” into settling frivolous claims for breach of a real estate sales contract. These two cases are not extraordinary situations. The trial court found in an extensive opinion that the buyer’s president had repeatedly lied to the seller and others; that there was no waiver; that the buyer was never ready, willing, and able to close; and that there was no equitable basis for the relief sought by the buyer. This conduct can be characterized as “legal blackmail.”. The doctrine of mutuality of obligation requires a contract to provide that at least some of the terms may be enforced by one party against the other.16 Under Florida law, mutuality of obligation is essential to constitute a valid contract.17. Upon such showing, the buyer then would be required to post a reasonable bond to be established by the court to protect the seller against costs and expenses of defending the lawsuit, as well as the reasonable damages expected from the carrying costs of the property and the seller’s inability to convey the property during the pendency of the lawsuit. He received his B.A. The practical reality is that once the lawsuit is filed, the property cannot then be sold to another buyer. 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