Anatomy of a Case: Kluger Kaplan Sets New Standard for Upholding Residential Real Estate Contract

Case: Diaz v. Kosch, Third District Court of Appeal of The State of Florida

Thanks to the arguments of Kluger Kaplan attorneys, Alan Kluger and Ashley Frankel, along with Scott Kravetz of Duane Morris, the Third District Court of Appeal of The State of Florida recently set a new standard for strictly upholding the provisions of the Florida Bar’s standard contract for real estate home purchases.

AJK High ResolutionBackground:

The case began in 2012 with a real estate transaction gone bad.  Coral Gables homeowners, David and Tiffany Kosch, entered an agreement with Miami attorney, Richard Diaz, to sell their home “as-is” for nearly $2.8 million.  The purchase agreement followed the standard form for a real estate contract established by the Florida Bar.

As part of the purchase agreement the sellers completed a disclosure statement affirming, among other things, that they had no knowledge of improvements constructed in violation of applicable building codes, without necessary permits, or with any open permits not closed with a final inspection to the property or the presence of toxic substances. The prospective buyer deposited $50,000 in escrow for the purchase with a further deposit of $235,000 due when the 10-day right of inspection and right to cancel period expired.

AFrankel232During the 10-day inspection/termination period, the buyer raised concerns regarding unpermitted renovations; however, they did not negotiate an extension of the inspection period or terminate the transaction. On the final day of the right to terminate period, the buyers deposited the additional $235,000 in escrow, per the agreement, but also threatened legal action against the sellers.

Shortly before the closing date on the purchase, the buyers terminated the transaction demanding return of the money deposited in escrow. The buyers also filed a lawsuit against the sellers and brokers asserting claims for breach of contract, conversion, fraud in inducement, fraud in concealment, negligent misrepresentation, and conspiratorial fraud, with a claim for punitive damages asserted as well. The buyers also alleged the property contained radon contamination requiring extensive remediation.

The Ruling:

The litigation over the failed sale was extensive, lasting more than four-and-a-half years during which the buyer filed multiple motions for punitive damages. Ultimately, Judge Eric Hendon of the Circuit Court for Miami-Dade County issued a summary judgement in favor of the sellers, ruling the buyers did not properly exercise their right to terminate in the period allowed by the contract, and so were not entitled to a return of the money held in escrow. Additionally, the judge awarded the sellers attorneys fees in the case. In June 2018, the Third District Court of Appeal affirmed Judge Hendon’s decision.

The court ruled that the allegations in the plaintiffs’ complaint were contradicted by the language in the “As Is” Residential Contract for Sale and Purchase, which included non-reliance provisions. The court further ruled that the buyers could not attempt to get around these provisions by effectively creating a “conditional tender” of the second deposit, which would make the sellers liable for repairs, permitting issues and other circumstances.

Impact:

This was a landmark decision that reinforces the strict, but enforceable provisions in contracts governing residential real estate transactions. It affirms that purchasers and sellers must carefully review and comply with the letter of each provision in the Florida Bar’s standard form.

Parties in a home purchase must adhere to the wording of the “As Is” contract, which states that once a deposit is in escrow, the purchaser cannot change the terms of the agreement, and must either move forward or walk away. Purchasers are not allowed to create a “conditional tender” with a second deposit to reserve their right to purchase but hold the sellers liable for repairs.

Florida Bar Advisory Opinion: You Must Be Board Certified to List an “Expertise” on LinkedIn

By Marko Cerenko

A recent advisory opinion issued by the Florida Bar should serve as a cautionary tale to lawyers who list certain practice areas as “expertise.”  A lawyer can only list an expertise if the lawyer is certified by the Florida Bar, the ABA or another state bar association with certification standards comparable to those of the Florida Bar.  While a gray area remains – what about non-board certified areas such as e-discovery? – those of us who use LinkedIn should update our profiles in light of this recent opinion.

Associates’ Corner: Using Appellate Review to Stall the Litigation Process: Can You Fight Back?

By Jamie L. Zuckerman

Recently I have been involved in a couple of cases where the appellate process has been utilized to stall civil court proceedings. This usually involves the appeal of an interlocutory order or the appeal of a final judgment when post-judgment enforcement issues remain. Once your opponent moves to stay the trial court proceeding, the appeal can serve as a delay tactic.

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Amendments to Attorney Advertising Rules – What Next?

By Todd A. Levine

On Friday, the Florida Supreme Court approved amendments to the Rules Regulating the Florida Bar that relate to attorney advertising.  The new rules require that all statements made in attorney advertisements be “objectively verifiable.”  This rule extends to attorney websites.

The term “objectively verifiable” raises many questions in the context of firms that handle sophisticated business disputes.  The purpose of the rules are to protect consumers from misleading advertising such as “we will get you money for your injury” or “we will get your DUI dismissed.” But what about law firms that practice complex commercial litigation?

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Florida Supreme Court Adds Civility Pledge to Bar Admission Oath

Florida Supreme Court Adds Civility Pledge to Bar Admission Oath

By American Board of Trial Advocates
Published Wednesday, Sep. 14, 2011

TAMPA, Fla., Sept. 14, 2011 — /PRNewswire-USNewswire/ — Citing the efforts of the American Board of Trial Advocates (ABOTA), the Florida Supreme Court has revised the Oath of Admission to The Florida Bar to include a pledge of “fairness, integrity, and civility” to opponents, not only in court, but also “in all written and oral communications.”

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