Buyers Contracts Legal News Selling/Listing

Get it in writing, and don’t get ahead of yourself!

Sometimes a handshake and promise aren’t enough in real estate.

In the case of DK Arena, Inc. v. EB Acquisitions I, LLC, 112 So.3d 85 (2013), a buyer and seller were at the end of the inspection period; and according to the executed contract, if the buyer terminated during the inspection period, the buyer would be entitled to a return of the deposit.

There was an unresolved issue regarding local government approval of a project, and the seller verbally promised to extend the inspection period while both parties sought approval. After the approval didn’t materialize, the buyer attempted to cancel the contract and get the deposit back.

The seller, however, argued that the agreement to extend the inspection period was not enforceable due to Florida’s Statute of Frauds, which requires that specific types of contracts, including contracts for purchase and sale of real property, be in writing and have proper signature(s) to be enforceable. Eventually, the Florida Supreme Court agreed with seller’s argument and held that promissory estoppel does not act as an exception to the longstanding Statute of Frauds.

Takeaways for buyers, sellers and Realtors

1. When it comes to contracts for sale and purchase of real property, parties should always ensure their contracts and amendments are in writing and signed. If not, they run a high risk of discovering that conversations and verbal agreements aren’t enforceable in a court of law.

2. Parties shouldn’t get ahead of themselves while negotiating contracts or amendments.

We hear from Realtors each day who feel cheated when promising negotiations don’t lead to a signed contract or amendment. There is a lot of anger and disappointment in these calls, but there’s not much to say beyond pointing to the Statute of Frauds, which has very few exceptions. (As you can see in the case, the Florida Supreme Court was unwilling to have an exception for promissory estoppel.) Even if a buyer and seller verbally agree to every single point of negotiation and shake hands, if one of them won’t sign a written document, there’s not much the other side can do.

It’s important to note that the reason for refusing to sign is irrelevant. It doesn’t matter if there was an unexpected family emergency or if someone simply found a way to make more money.

3. Parties should always orient themselves on the signed contract they have until they have a fully executed amendment. If a party misses a deadline, as in the case above, the party could be penalized even though they were in the process of negotiating an amendment.

As a final note, please remember that the Statute of Frauds only applies to specific types of contracts, such as purchase and sale contracts. Many common contracts are enforceable despite their verbal nature. That said, parties would be well advised to get most agreements in writing to avoid confusion and fights over how each side remembered specific terms.

Original Source

I am one of the Managing Brokers for United Realty Group, Inc. I have been servicing the residential real estate market since January 2007 and have formed a real passion for the industry. With high standards and a strong moral compass, I am pleased to serve our industry and URG's REALTORS on a daily basis.

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