There is no doubt that the recent Marina Grande opinion from the Fourth District Court of Appeal in Florida is a key decision and, as I’ve written about here, it is an important object of analysis on the issue of what constitutes a “material and adverse” change sufficient to enable a condo buyer to recover his or her preconstruction deposits. What surprises me, however, is that newspapers reporting on the decision have suggested that it foreshadows an imminent slow-down in lawsuits brought by real estate purchasers. For examples of this story line, see the June 13th South Florida Business Journal (“Buyer suits show signs of slowing”) and yesterday’s Palm Beach Post (“Is this the death knell for people trying to undo their purchase deals and avoid the closing table?”).
In reality, nothing could be further from the truth. The number of calls to my office in recent weeks and months from people all over the world who bought Florida real estate and who are now seeking legal advice on what to do about their purchase contracts can fairly be described as a flood, and there is no sign of the floodwaters abating any time soon. We are only now beginning to realize how overheated the market in Florida real estate (along with the broader U.S. housing market) was in recent years, and that cold realization is carrying with it the discovery of some of the more intricate schemes and scams that were perpetrated during the days when everyone believed that investing in real estate was a golden ticket. Just by way of example gleaned from news reports in the past several days, consider the recent wave of criminal mortgage fraud indictments in South Florida, along with this report from yesterday’s Naples Daily News concerning an elaborate “lease-to-own” scheme allegedly perpetrated by a developer on Florida’s west coast.
Based on my experience and legal practice, the core and narrow issues in the Marina Grande case — that is, whether rising assessments due to increased insurance premiums and electricity costs were sufficiently material and adverse to enable a buyer to cancel its purchase contract — represent just a tiny sliver of the universe of grounds for buyers’ claims in the ongoing litigation war between buyers and developers. As I have written on this blog, those grounds include the federal Interstate Land Sales Full Disclosure Act (ILSA), securities law, as well as the multiplicity of state statutory and common law claims. And as the situation for real estate purchasers continues to worsen in the midst of the ongoing subprime crisis and resultant credit crunch, we can expect to see ever more lawsuits filed by buyers on the basis of new and novel legal theories.
This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the author.
Mr. Beck has a law degree from Harvard Law School, and practices law in the courts of South Florida. His law firm, Beck & Lee Business Trial Lawyers in Miami, is dedicated to the practice of business and real estate litigation. A significant portion of Mr. Beck’s practice is devoted to issues arising under condominium and other real estate purchase agreements. He can be reached at 305-789-0072 or firstname.lastname@example.org