Specific Performance and a Florida Real Estate Deal: Why is it Expensive Litigation in More Than One Way?

Posted By on November 26, 2013

Last Update: 02/24/16

Most people think of money damages when they think of lawsuits dealing with real estate contracts or land. It’s true, that most claims that cannot be negotiated or settled end up in courtrooms where dollars and cents are awarded by a judge or jury; however, there are times when money just won’t get the injured party justice. In some situations, the harmed party asks for — and receives — a court order that forces the other side to go through with the deal, or to “specifically perform” under the terms of the real estate agreement.

Specific performance is a form of remedy recognized in every state, as well as under federal law; however there are nuances in how specific performance must be asked for and proven, as well as when it will be legally awarded, which depends on specific state statutes and case law.

real estate, for sale sign

Once a lawsuit requesting specific performance of a real estate sales contract is filed in Florida, that land cannot be sold until the litigation is resolved – no matter how long that might take.

 

Florida Specific Performance in Real Estate Agreements

In Florida, not every contract can be granted specific performance, no matter how much the injured party wants to force the other side to go through and comply with the terms of the contract.

However, Florida law does allow a seller of real estate to file a lawsuit against a buyer, who refuses to close, seeking specific performance.  In these lawsuits, the seller simply asks the court to force the buyer to fulfill their obligations under the contract and to purchase or complete the real estate transaction; however, certain conditions must be present in order for the seller to win this remedy.

For instance, the contract for the sale of that condo, home, tract, or other piece of real estate cannot be confusing in its terms: it has to be clear in its terms. Additionally, that seller better be ready, willing, and able to do his part of the agreement if he or she is asking the court to make the buyer specifically perform their end of the bargain. One other thing: if there’s another remedy that will be sufficient for that seller, then the judge may not grant specific performance.

Why? Under Florida law, forcing that buyer to perform can only be done by a court if there is no other “adequate remedy at law.” If the judge tries to order specific performance and the buyer can demonstrate that other remedies were available (say, a cash payment), then that trial court judge will be reversed on appeal (unless, of course, the contact states the parties may seek specific performance).

Why Sue for Specific Performance of a Florida Real Estate Contract? To Force the Sale or To Cloud the Title.

When a real estate deal blows up in Florida, it’s usually because one side or the other has made a business decision that the agreement is no longer in their best interests to perform, and they would rather not sell the land or buy the property. Instead, they may try to negotiate damages to get out of the contract they’ve signed and move forward.

For sellers, maybe they have discovered that the land is more valuable to them than they first assumed. For buyers, maybe market prices changed and what was once a great bargain is now a bad deal.

It’s business, just business, in many of these scenarios.

However, the party that wants to do the deal isn’t pleased with the change of position, of course. And for buyers, suing the seller over the real estate contract and demanding specific performance means that the real estate title is clouded until the controversy is resolved. It will stop the seller from selling that land to someone else. For sellers, suing for specific performance can mean tying up the buyer’s funds — which can be pressure on a business to rethink its earlier position.

Can specific performance litigation be considered “blackmail” by some? Sure. There’s a long Florida Bar Association article discussing this very thing online, if you’re interested in knowing more.

The Case of Our Savior Lutheran Church v. Tom Jones Enterprises, Inc.

Here’s an example of specific performance litigation in action here in Florida.  In May 1978, a Lutheran church here in Florida decided to sell some land to a corporation named Tom Jones Enterprises. Representatives of Our Savior Lutheran Church signed an official contract with representatives of Tom Jones Enterprises for the sale, and the document included the following language:

  • “This offer is subject to the buyer obtaining rezoning within 6 months from current zoning to R2 Multifamily. If rezoning not granted the buyer has the option to purchase as is.”
  • Seller would furnish to buyer within 30 days “from date of contract” a title insurance commitment
  • Closing would take place “within 30 days of rezoning if approved.”

Months passed. In late October, the church learned that there would be a delay in getting the needed zoning changes: zoning hearings would drag on for another 6 months. So, the church notified the buyer that the deal would be open until November 13, 1978 because of the zoning problem and then on November 27, 1978, the representatives of Our Savior Lutheran Church returned the earnest money to Tom Jones Enterprises and considered the deal to be over.

Bye-bye, Tom Jones Enterprises.

Except that Tom Jones Enterprises wanted that land. Tom Jones Enterprises sent a letter to the church the day after it got the earnest money returned to it, stating:

“If, however, your congregation does not vote to grant me the extension in January in order to proceed with the city for the zoning change, then I wish to inform you and your congregation that I reserve my rights under the contract to take title, as is, at that time.”

You know what happened. The deal didn’t close. Tom Jones sued for specific performance. The trial court entered a final judgment ordering specific performance of the contract; the church appealed that decision.

The church won.

From the appellate court opinion:

The trial court held that the option to take “as is” was timely exercised. We disagree. In fact, we think the option was never exercised.

The contract clearly provided that the buyer had six months to obtain rezoning or to exercise the option to take the property “as is.” The buyer did not obtain rezoning during that period nor was there any attempt to exercise the option….

The rule in Florida is well established that in a suit for specific performance of a contract for the sale of realty the plaintiff must do more than prove his case by a preponderance of the evidence; he must prove his case by competent and satisfactory proof which must be clear, definite, and certain. The buyer, appellee here, did not meet that burden in attempting to show an option term longer than six months.

Even assuming that the evidence established a period longer than six months, the option was never effectively exercised. …. Summarizing, the buyer-appellee has not shown by clear, definite and certain proof that the term of the option was longer than six months….The purported exercise of the option on November 28, 1978, was not only too late, Pattison v. Reid, 303 So.2d 40 (Fla. 3d DCA 1974), but was also ineffective.

We therefore reverse and remand with instructions to enter final judgment for appellant, voiding the purchase and sale agreement.

Larry Tolchinsky’s Tip:

Specific performance litigation involving real property normally occurs because of the unique characteristic of real estate; no two parcels of real property are the same. However, litigating a demand for specific performance is not only expensive in terms of time and money for all parties, but it also carries with it all sorts of indirect costs as well: the land cannot be sold, the earnest money deposit is frozen, until the case is finally determined.

For example, in the above case of Tom Jones Enterprises and Our Savior Lutheran Church, the deposit was returned in November 1978 and the appellate court decision was issued in November 1982. That’s four years where the land was in dispute — and a good lesson and encouragement for alternative dispute resolution for many people today.

A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork isn’t as costly as most of us think it is. And, it’s always a lot cheaper than paying to fix a problem after a closing occurs.  Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

_______________

Picture of Larry Tolchinsky

Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 
 
 
 
If you found this information helpful, please share this article and bookmark it for your future reference.

Comments

Leave a Reply

Please note: Comment moderation is currently enabled so there will be a delay between when you post your comment and when it shows up. Patience is a virtue; there is no need to re-submit your comment.

css.php