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1982). Because of this dilemma, a third party is required to convey title to the successful buyer only when the third party is not a bona fide purchaser without notice of the claim. Hence, the statement of a cause of action in a suit for specific performance calls for two kinds of allegations: those that establish the right to recover for breach of contract, as well as those that are … Section 16(c) of the Specific Relief Act, 1963 mandates "readiness and willingness" on the part of the Plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. Section 10 of the Specific Relief Act, 1963 , states “ Cases in which specific performance of contract enforceable. What is Specific Performance? Sparks v. Charles Wayne Group, 568 So. 5 R.P.M. 2d 918 (Fla. 4th D.C.A. Such claims are common. All rights reserved. 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. The buyer obtained two extensions and paid the $25,000 extension fee. To explore t… 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 latter remedy is specific performance. Specific performance is allowed in real estate contracts because each parcel of land is unique and monetary damages are not adequate. 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. 2d 479 (Fla. 5th D.C.A. 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. In order to maintain a lis pendens, the party seeking the lis pendens must post a bond unless the lis pendens is based on a duly recorded instrument. Almost all states have now adopted the UCC, or Uniform Commercial Code. The law as it exists today affords an unable buyer the power to force the unwary seller to settle a frivolous claim. Just as no two problems are exactly the same, there is no silver bullet, no one best way of fixing them. 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. Suit for Specific Performance: Specific performance means the actual carrying out of the contract as agreed. 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. 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. To prove a claim for specific performance, a plaintiff must prove the existence of the contract by clear, definite, and certain evidence.4 The plaintiff then must prove that it complied with the conditions of the contract,5 and that it was ready, willing, and able to perform its obligations under the contract.6 The typical specific performance case filed in Florida courts can take from one to three years to reach trial, given the court’s caseload and the amount of discovery typically required by these suits. We propose that the legislature enact law to protect sellers, which also balances the buyer’s right to access to courts. ~ From the Rules Regulating The Florida Bar. 1990). 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. Specific per… 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. 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. §48.23(3) provides that “[w]hen 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 dissolveinjunctions.” This provision was intended to have persons who place a lis pendens on property provide the same protections as a person obtaining an injunction. Mark A. 2d 1347 (Fla. 3d D.C.A. 1991). (1) No action for specific performance of a real estate contract may be maintained against an owner of real property unless: As one might expect, the buyer was a shell corporation with a substantial amount of debts and little in the way of assets. 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. 782 (1975). 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. 2d 5 (Fla. 1965); and McNeal v. Marco Bay Assoc., 492 So. 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. (4) This section applies to all actions now or hereafter pending in any state or federal courts in this state, but the period of time above-mentioned does not include the period of pendency of any action in an appellate court.” 8 See, e.g., Beefy King Intern., Inc. v. Veigle, 464 F.2d 1102 (5th Cir. Two recent unreported trial court decisions illustrate the point that a specific performance lawsuit can result in legal blackmail. 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. Suit For Specific Performance of Contract- Practical Problems Specific performance is a remedy developed by principle of equity. 1991). 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. In yet another recent unreported trial court decision, the unsophisticated owner of an attractive residence on Palm Island on Miami Beach entered into what effectively was a lease/option to purchase contract with a tenant, but had 48 hours to have the contract reviewed by an attorney. 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. 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. (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. These two cases are not extraordinary situations. Courts will enforce specific performance only if the underlying contract was fair and equitable. 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. Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. 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. Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. from St. Thomas University School of Law in 1994. This is not an atypical situation. Specific performance is another possible remedy in this situation. 2d 778 (Fla. 2d D.C.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. The Many Ways to Be Relieved of Your Timeshare Obligations, Straight Up with Jocelyn Predovich: The Truth about FHA 203k Loans. denied, 96 S.Ct. 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 reason is simple. Within the allotted time period, the owner elected not to proceed in what was an ambiguous contract coupled with a bad bargain. A suit for specific performance is like an court injunction, ordering one party to complete the performance promised in a contract. An alternative contract solution would be for the seller to specifically exclude the remedy of specific performance. Hence you won't get a judge to … 44 Fla. Jur. You can use a similar approach to fix problems that fall into a specific category. The term specific performance refers to literal performance of ones obligations under a contract. In today’s day and age, the marketability of any parcel of property depends on the buyer’s ability to obtain title insurance. Because a specific performance action can cause serious damage to the seller that often may not be remedied through either a slander of title or malicious prosecution suit, particularly when the plaintiff/buyer is insolvent and, thus, has even greater leverage, legislative action is necessary to protect sellers. Conclusion s; the solution is relatively simple. Under certain circumstances an aggrieved party may file a suit for specific performance, i.e., for a decree by the court directing the defendant to actually perform the promise that he has made. The court may impose such terms for the extension of time as justice requires. The theory is that there're many buyers for a given property, but there may be only one "dream home" for a buyer. SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT-PRACTICAL PROBLEMS INTRODUCTORY (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 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 … It is also possible that by the seller and seller’s attorney even having notice of a threatened specific performance action marketability of the property is at risk.13 In any event, Florida courts have held that the pendency of a lawsuit seeking specific performance of property makes the title to the property unmarketable14 and the threat of legal blackmail exists. From Key Media, the world’s #1 global mortgage business publisher. Notably, the remedy is granted to both Buyers and Sellers, so either party may bring a suit for specific performance if … While the trial court thus ultimately ruled in favor of the seller, the property was, in fact, tied up for almost two years, and, had the appellate process run its full course, could have been tied up for as long as two to three years or longer. The practical reality is that once the lawsuit is filed, the property cannot then be sold to another buyer. Other commodities that courts have found to support specific performance include works of art, custom-made products, and goods in short supply. 1980). While it is true that a timeshare contract is a binding legal document, it is often mistakenly thought that such a contract cannot only be cancelled. The appeals process can add an additional year or more to resolve a claim. 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. These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. Aside from being unethical, such conduct may also expose the attorney to liability to the buyer in tort for fraud or misrepresentation. 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. On the other hand, I have found that most performance problems fall into one of 11 categories. 2d 732 (Fla.), cert. In fact, it is more likely than not that a lis pendens is not maintained on a property throughout the course of a specific performance lawsuit. 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. 14 Chafetz v. Price, 385 So. 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. Other items courts agree that support specific performance is custom-made products, works of art, and goods that are in short supply. 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. Instead of compensation in lieu of the losses accrued, the aggrieved party may approach the Court in order to enforce a specific part of the contract. In fact, most timeshare companies maintain that their contracts are non – cancellable. 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. The tenant responded with a counterclaim for specific performance that tied up the property for over a year even after a settlement agreement was reached requiring the tenant to leave the premises. 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. Specific performance is a remedy for breach of contract which is most often used in transactions involving land and construction work. The buyer, as was established at trial, had not been able to obtain financing and could not possibly have closed. A common misconception is that title to property is not clouded by the filing of a lawsuit unless it is accompanied by a lis pendens.7 The fiction is that a lis pendens is necessary to give notice to the world of the existence of a suit.8 Many serious legal battles involve trying to dissolve a lis pendens or to force the party filing the lis pendens to post a substantial bond.9 The lis pendens statute requires a claimant to post a bond when the lis pendens places a cloud on title that did not previously exist.10 It would seem to follow that once having succeeded in dissolving a lis pendens, the property owner then should be free to convey title. On the date of the scheduled closing, with no extension having been granted, the buyer informed the seller that it did not have the money and stated that it was “all over.” Later that day the buyer surprisingly informed the seller by fax that the “check is in the mail.” The buyer never sent the extension fee. 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. Gerald F. Richman is board certified in both civil trial and business litigation. 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. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. (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. Because most contract issues … The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings. The Current Law Regarding Specific Performance Under current law, courts grant specific performance when they perceive that damages will be inadequate compensation. In the typical case in which a lis pendens is based on a claim for specific performance of a real estate contract, there is no duly recorded instrument already clouding title because the contract is rarely recorded. 1 See Fla. Stat. 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. Although a title insurance company theoretically could issue a policy with an exception for an unrecorded interest in property of which it is aware, such as the existence of a specific performance lawsuit involving the property, such a practice is prohibited by most title insurance companies because they might then become involved in the practice of “buying a lawsuit.”15. 2d 512 (Fla. 5th D.C.A. Orders for specific performance come about after two parties have contracted with one another but one party has failed or refuses to perform as agreed in the contract. In effect, this can be a form of “legal blackmail.”. Under contract, the buyer had the right to extend the closing date for three 30-day periods by paying a $25,000 “extension fee” by a specified date for each extension. 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. “Legal blackmail” was a practical reality. 17 Terex Trailer Corp. v. McIlwain, 579 So. 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. Understanding Specific Performance In the vast majority of civil suits, the plaintiff is seeking cash, known as monetary damages. Such a model statute could be the following: However, as set forth below, such an occurrence is highly unlikely. Specific Performance asks the court to force the opposing party … 13 An agreement to sell and convey real property is an agreement to sell title to land. from George Washington University in 1990 and his J.D. 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. §48.23 provides the procedures to be followed in obtaining a lis pendens. © 2020 The Florida Bar. 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. 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