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Purchase-and-Sale Contract: Your Right to Modify Them

Real estate purchase-and-sale contracts govern the buyer’s and seller’s rights in the transaction.  Although standard form contracts are utilized, this does not mean modifications cannot be made.  In numerous cases, modifications should be made to clarify the intent of the parties to the transaction.   In a recent case, Inlet Colony, LLC v. Martindale, 47 Fla.L.Weekly D1175a (Fla. 4th DCA 2022), the purchase-and-sale contract had a drop dead closing date. There was an addendum to the contract with specific closing terms that stated:

Seller and Buyer make the following terms and conditions part of the Contract; Closing will occur [the] later of tenants vacating the property or May 1st, 2020. In the event closing does not take place by June 1st, Buyer can cancel contract and received (sic) the full refundable escrow deposit of monies paid by the Buyer.

The seller had an existing tenant and evicted the tenant.  The tenant did not like the eviction and recorded a counterclaim with a lis pendens against the seller.  The lis pendens created a title defect (cloud on the title).  The purchase-and-sale contract gave the seller 30 days to cure title defects, which turned out to be June 8, 2020.  The lis pendens, however, prevented closing from occurring on May 1, 2020 because the seller could not convey marketable title with a cloud on the title.  The seller, in its dispute with its tenant, moved to have the lis pendens discharged.  A hearing was held on June 1, 2020 where the trial court ruled that if the tenant does not post a bond by June 6, 2020, the lis pendens will be discharged with prejudice.  The tenant did not post the bond.  The buyer was still unsatisfied and demanded a return of the deposit.  The buyer claimed closing did not occur by June 1, 2020, as required, and even if that date could be extended until June 8, 2020, the title defect still was not cured by this date.  The appellate court, affirming the trial court, agreed with the buyer on both fronts.  Here is why.

First, the June 1, 2020 closing date in the addendum was interpreted to be a drop dead date.  This date was not extended by the provision that gave the seller 30 days to cure title defects.  The addendum was not written this way.  The seller tried to argue that the buyer had waived or should otherwise be estopped from arguing that the June 1, 2020 closing date was a drop dead date.  However, these arguments were dismissed largely due to the statute of frauds and the contract itself.  The contract provides that there shall be no modification to the contract unless in writing and signed by the parties.  Also, the statute of frauds requires contracts for real property or interests concerning real property to be in writing and signed by the party to be charged. There was no modification to the contract that extended the June 1, 2020 closing date.

Second, even assuming in argument that the 30-day time period applied to cure the title defect, the title defect created by the lis pendens was still not cured by June 8, 2020.  Even though the trial court found that it would be discharged if a bond was not posted by June 6, 2020, and the bond was not posted, the tenant was still within its appellate time period to appeal the trial court’s June 1, 2020 ruling.  The lis pendens continued to remain a cloud on title during the tenant’s appeal window (which extended beyond June 8, 2020).

Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.


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