Recent Miami-Dade Circuit Court Case Suggests Growing Trend in Condo Buyer's Remorse
MIAMI – Recently, condo speculators wagering on flipping their investments in large real estate developments have been desperately trying to back out their contracts due to depressed property values. Their most recent maneuver involves leveraging a provision in the 1968 Interstate Land Sales Disclosure Act (ILSA) to rescind their contracts.
This month, a Miami-Dade Circuit Court ruled in favor of a developer represented by Akerman Senterfitt attorneys Scott Rostock and Dana Clayton, affirming an earlier Federal Court decision providing for a two-year statute of limitations for rescission actions under ILSA and rejecting the plaintiffs' contention that ILSA's general three-year limitations period applied.
"This was an important victory in condominium litigation, with interstate implications, since there is not much case law on condo contract disputes," said Michael McMahon, Chair of Akerman's Litigation Practice Group. "We expect the trend in speculative condo litigation matters to expand regionally throughout the U.S. as long as the housing market remains depressed."
This is not the first attempt by condo speculators to back out of contracts with developers. The struggling real estate market has left those looking to "flip" their investments scrambling to back out of contracts in order to avoid losses. These cases have included arguments that oral agreements promising favorable returns on investments should be considered binding, over a written and signed contract. One judge termed these types of cases as a classic example of buyer's, or multiple buyers', remorse.
"This favorable decision is the result of excellent collaborative work by our Miami and Fort Lauderdale offices and reflects the overall strength and experience of our Real Estate Practice Group, which is currently involved in no less than twelve similar cases," remarked Richard Bezold, Chair of Akerman's Real Estate Practice Group. "It's inevitable that closings will be impacted by the credit crunch, but after the most recent ruling in the Miami-Dade Circuit Court we expect that those buyers still qualified for financing will likely close rather than lose substantial deposits."
Akerman Senterfitt has been a sought after authority in real estate litigation and continues to be a thought leader in this area. Less than a year ago, Akerman attorneys Chris Carver, Rob Chaskes and Ryan Roman successfully handled a case for the non-developer defendants where seven condo purchasers in Key West, Florida sought to escape their contracts on fraud, negligent misrepresentation, and related grounds, demanding the return of approximately $1,500,000 in deposits and subsequent release from the obligation to pay an additional $6,000,000 more for the units.
Akerman Senterfitt has more than 140 lawyers who focus on the needs of clients in the real estate industry. We are able to provide comprehensive representation, through changing business cycles, at all levels of activity. We manage the legal aspects of large land deals and construction projects, assist developers in meeting environmental regulations and green building standards, and advise on all aspects of transactional work including leasing, acquisitions and sales, and workouts and restructurings.