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. Enter., Inc. v. Murphy, 575 So. In effect, this can be a form of “legal blackmail.”. The action is usually one that has been previously detailed in a contract. The term specific performance refers to literal performance of ones obligations under a contract. The Many Ways to Be Relieved of Your Timeshare Obligations, Straight Up with Jocelyn Predovich: The Truth about FHA 203k Loans. SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT-PRACTICAL PROBLEMS INTRODUCTORY Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. In fact, most timeshare companies maintain that their contracts are non â cancellable. 2d 512 (Fla. 5th D.C.A. 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. Other items courts agree that support specific performance is custom-made products, works of art, and goods that are in short supply. 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. ~ From the Rules Regulating The Florida Bar. (2) Where an action for specific performance that does not comply with section (1) is filed, the court upon motion of defendant shall hold an immediate hearing where the claimant shall be required to both show cause why the requirements of section (1) have not been complied with and establish the likelihood of success on the merits of its claim. As one might expect, the buyer was a shell corporation with a substantial amount of debts and little in the way of assets. 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. 1989). Courts will enforce specific performance only if the underlying contract was fair and equitable. degrees and past president of The Florida Bar. 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. 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. In fact, the Florida Supreme Court stated that the bond requirement contained in the lis pendens statute exists merely to permit property holders to protect themselves from irreparable harm. Hence you won't get a judge to … 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. 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. (3) When the initial pleading does not show that the action is founded on a duly recorded instrument or on a lien claimed under part I of chapter 713, the court may control and discharge the notice of lis pendens as the court may grant and dissolve injunctions. The buyer subsequently filed a suit for specific performance and placed a lis pendens on the property. 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. “Legal blackmail” was a practical reality. Understanding Specific Performance In the vast majority of civil suits, the plaintiff is seeking cash, known as monetary damages. Where an agreement for the purchase of real property does not specify the character of title, the seller is required to furnish good and marketable title. 1984). What Does Specific Performance Mean? These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. All rights reserved. 2d 383 (Fla. 3d D.C.A. There's no one fix to all performance problems. 2 To support its waiver argument, the buyer relied on Mark v. Hahn, 177 So. 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. However, in some circumstances you can sue for “specific performance,” which means the judge orders the seller to actually go through with the contract and transfer the property to you. denied, 96 S.Ct. 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. 2d 918 (Fla. 4th D.C.A. 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. 3 In its order denying the seller’s motion for summary judgment, the court found that a factual issue existed, holding “whether [seller’s] acceptance of prior late payments constitutes a waiver clearly impacts upon the ultimate issue of whether [seller] breached the Contract by refusing to close.” 4 Muhtar v. Goldman, 419 So. He received his B.A. It's sometimes called an "equitable" remedy, because it involves a court using its discretion to order the nonperforming buyer or seller to perform and to complete the contract as if it had … A party to a contract who is damaged because the contract is breached by another party has the option to file a suit for specific performance compelling to perform his … 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.) The absence of a lis pendens was thus irrelevant. Suit for Specific Performance: Specific performance means the actual carrying out of the contract as agreed. 10 Mohican Valley, Inc. v. MacDonald, 443 So. Aside from being unethical, such conduct may also expose the attorney to liability to the buyer in tort for fraud or misrepresentation. (1) No action for specific performance of a real estate contract may be maintained against an owner of real property unless: On the eve of the agreed-upon scheduled departure the tenant filed for bankruptcy, which deprived the state court of jurisdiction to enforce the settlement and evict the tenant. Decree of specific performance is discretionary relief. (b) the claimant alleges (in a sworn complaint) that it had the financial ability to perform under the contract and attaches to the initial pleading evidence of its financial ability at the time of the alleged default. 2d Real Property and Exchanges §47. Conclusion s; the solution is relatively simple. The buyer, as was established at trial, had not been able to obtain financing and could not possibly have closed. 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. Section 10 of the Specific Relief Act, 1963 , states “ Cases in which specific performance of contract enforceable. It encompasses the idea that all parties to a contract are bound by the exact terms stated in that contract and that there are remedies that a wronged party can pursue when someone is in breach of those terms. Such a model statute could be the following: With regard to the final extension, the buyer informed the seller of its intent to seek an extension and make the required payment. See HTP, Ltd. v. Lineas Aereas Costariccenses, S.A., 685 So. 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. (2) No notice of lis pendens is effectual for any purpose beyond 1 year from the commencement of the action unless the relief sought is disclosed by the initial pleading to be founded on a duly recorded instrument or on a lien claimed under part I of chapter 713 against the property involved, except when the court extends the time on reasonable notice and for good cause. Knowing of the existence of a specific performance suit, which could affect title, the seller’s attorney is ethically obligated to inform both the buyer’s attorney and the title company of the pendency of the suit.12 Thus, as a practical matter, the buyer becomes informed of the existence of the lawsuit; the buyer is deprived of bona fide without notice purchaser status, and the title company will not provide title insurance. A contractual remedy, however, does not protect the unwary and unsophisticated seller. In this video lecture we'll learn how to file a suit for specific performance of a contract or an agreement and related legal issues. This conduct can be characterized as “legal blackmail.”. §48.23 provides the procedures to be followed in obtaining a lis pendens. Where a … 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 today’s day and age, the marketability of any parcel of property depends on the buyer’s ability to obtain title insurance. 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. 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. 2d 1238 (Fla. 1996) (where the Florida Supreme Court held that the economic loss rule does not bar a common law fraud in the inducement action.) Romance is an associate with Richman Greer Weil Brumbaugh Mirabito & Christensen, P.A., in Miami and West Palm Beach, where he concentrates in trial and appellate practice, specializing in commercial litigation including real estate litigation. 2d 5 (Fla. 1965); and McNeal v. Marco Bay Assoc., 492 So. Is what can sellers reasonably do to protect themselves, and what possible legislative remedies are there for what is clearly an inequitable situation that easily lends itself to egregious abuse. 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. Gerald F. Richman is board certified in both civil trial and business litigation. 2d 104, 106 (Fla. 3d D.C.A. The statute provides: “(1)(a) No action in any of the state or federal courts in this state operates as a lis pendens on any real or personal property involved therein or to be affected thereby until a notice of the commencement of the action is recorded in the office of the clerk of the circuit court of the county where the property is, which notice contains the names of the parties, the time of institution of the action, the name of the court in which it is pending, a description of the property involved or to be affected, and a statement of the relief sought as to the property. (a) the claimant at the time of filing posts a bond equivalent to 30% of the purchase price to be held by the court to provide seller with damages caused by the filing of the action; and The net effect is that the title to the property is effectively clouded by the mere filing and pendency of the suit and the seller can be effectively blackmailed into having to pay off even the most spurious specific performance lawsuit. Within the allotted time period, the owner elected not to proceed in what was an ambiguous contract coupled with a bad bargain. Remedy of specific performance which is affected in case of breach of contracts is provided by the equity courts. from George Washington University in 1990 and his J.D. The answer lies in creating a fair balance between the important right of a real estate buyer who has been the victim of a breach of contract to have access to the courts without that right of access being unreasonably chilled, and the right of a seller to be protected against a cloud for specific performance being placed upon the property by a buyer who merely alleges the elements of a specific performance suit but has few real facts to support it. 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. 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. Specific performance is an alternative to a courts decision to award damages and it is commonly used as injunctive relief in cases involving real property or the disclosure of confidential information. Buyer’s Suing for Specific Performance The buyer may pursue specific performance if the seller is unwilling to carry out his or her obligations under the contract. The buyer obtained two extensions and paid the $25,000 extension fee. from St. Thomas University School of Law in 1994. Aside from the possibility of a suit for fraudulent inducement by virtue of the alleged failure to disclose a material fact,11 and aside from issues as to whether caveat emptor applies, a more practical barrier exists: the duty of the seller’s attorney. © 2020 The Florida Bar. Specific performance is best described as the breaching party's court-ordered performance of duty under the contract. Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. Such claims are common. What is Specific Performance? The theory is that there're many buyers for a given property, but there may be only one "dream home" for a buyer. 1982). 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