Florida Real Estate Case Law Update

Mortgages

Mortgage Dragnet Clauses. A dragnet clause in a mortgage will cover future debts only if the subsequent note specifically refers back to the mortgage's dragnet clause or when the obligations relate to the same transaction or are of the same kind or class. Guarantees of business loans subsequent to a mortgage on a homestead containing a dragnet clause are not of a similar character to the residential mortgage. Garrote v. Ocean Bank 713 So.2d 1095 (Fla. 3d DCA 1998).

Subsequent Note Tied to Prior Future Advance Mortgage. A judgment lien took priority over a subsequent promissory note that was not tied to a future advance clause of a prior open-ended mortgage. Gardner v. Guldi 724 So.2d 186 (Fla. 5th DCA 1999).

Mortgage Foreclosures. Foreclosure show cause statute was held unconstitutional. Section 702.10(2), F.S., which permits a mortgagee in a foreclosure action not involving residential real estate to request that a court enter an order directing the mortgagor to show cause why the mortgagor should not be ordered to make payments during the pendency of the foreclosure proceeding or to vacate the premises was held unconstitutional in the case of Tuttle's Design-Build, Inc. v. Caple, 712 So.2d 1213 (Fla. 3d DCA 1998).

Mortgagee's Unilateral Mistake at Foreclosure Sale. Due to a mistake in the location of the sale, the mortgagee's agent did not arrive on time. The foreclosure judgment was bid by and sold to a third party. The Appellate Court stated that even a unilateral mistake that results in a grossly inadequate price is legally sufficient to invoke the trial court's discretion to consider setting aside a mortgage sale. United Companies Lending Corp. v. Abercrombie, 713 So.2d 1017 (Fla. 2d DCA 1998).

Mortgage Foreclosure/Attorneys' Fees. Where a court enters a foreclosure judgment, reserving jurisdiction to award attorneys’ fees and the mortgagor pays that amount, the mortgagor is not required to pay an undetermined amount of attorney's fees before receiving the satisfaction in the absence from the mortgage and note of any provision for attorney's fees. Edrisi v. Sarnoff, 715 So.2d 1124 (Fla. 3d DCA 1998).

Lessee Has No Right of Mortgage Redemption. A lessee has no independent right of mortgage redemption and can only redeem property under or through the mortgagor's rights. Burns v. Bankamerica Nat. Trust Co., 719 So.2d 999 (Fla. 5th DCA 1998).


Restrictions

Assessment Liens Interpreted as Not Inferior to Mortgage. A mortgage with a payment schedule amortized for 30 years but with a final balloon payment due at the end of 5 years was inferior to an assessment lien that was only subordinated to mortgages amortized over a period of not less than 10 years. Galloway Glen Homes Ass'n. v. USMLIC-SIX 717 So.2d 592 (Fla. 3d DCA 1998).

Assessment Provisions are Affirmative, Not Restrictive Covenants. Subdivision documents giving the developer authority to amend the restrictive covenants, but requiring a two-thirds vote of the property owners to make other changes, did not give the developer the authority to amend provisions relating to monetary assessments. Assessments clauses are affirmative covenants rather than restrictive covenants. Hill v. Palm Beach Polo, Inc., 717 So.2d 1080 (Fla. 4th DCA 1998).

Fines for Violation of Restrictions. Restrictive covenants may be enforced against a property owner even though he purchased the property before the covenants were amended restricting the particular use of the property. Zerquera v. Centennial Homeowners Ass'n., 712 So.2d 751 (Fla. 3d DCA 1998).

Assessment Lien Priority. A homeowner’s claim of lien had priority over a prior recorded purchase money mortgage. The restrictions authorizing the lien to be assessed contained specific language indicating that the lien took priority over intervening mortgage. The court concluded that the lien dated from the date the restrictions were first placed of record. Ass'n. Poinciana v. Abatar Properties 714 So.2d 585 (Fla. 5th DCA 1998).

Developers Mandatory Repurchase Requirement Upheld. Deed restrictions whereby a purchaser of a residence in a subdivision agreed, upon desiring to transfer title to his residence, to sell the residence to a purchaser designated by the developer or to the developer at a specified price and the developer agreed to repurchase at that price, was not an unlawful restraint against alienation of property. Indian River Colony Club, Inc. v. Bagg 24 FLW D757 (Fla. 5th DCA 1999).


Taxation - Doc Stamps on Deed

The Family Corporation. Only a nominal documentary stamp tax is due on transfers from owners to family corporations because the corporation is not a purchaser within the meaning of Sec. 201.02(l), F. S. which provides that a purchaser of real estate is required to pay documentary stamp tax. Kuro, Inc. v. State Department of Revenue, 713 So.2d 1021 (Fla. 2d DCA 1998).

Bankruptcy Act Tolls Time Running on Tax Certificates. The seven-year life of an ad valorem tax certificate is tolled for the period of time during the seven-year period when the property subject to the tax certificate has been the subject of a bankruptcy stay. Northcutt v. Balkany, 727 So.2d 382 (Fla. 5th DCA 1999).

Disclosures

Economic Loss Rule Bars Third-Party Beneficiary Negligence Action. The economic loss rule bars a negligence action in the context of a third-party beneficiary of a professional consultants contract when the plaintiff is seeking to recover only economic losses. Ocean Ritz v. GGB Associates, Ltd. 710 So.2d 702 (Fla. 5th DCA 1998).

"As Is” Purchaser May Not Recover for Damage to Fence. Although a prior owner might have a cause of action for damage to a fence resulting from improperly placing fill against the fence, a plaintiff has no cause of action where he took property “as is” from a foreclosing bank and was not assigned a predecessor's cause of action. Durrance v. Horner, 711 So.2d 135 (Fla. 5th DCA 1998).

Evidence of Seller's Fraudulent Misrepresentation of Lot Size. A trial court erred in entering a judgment rescinding a sale of a residential lot on the ground that the seller fraudulently misrepresented the size of the lot, where there was no evidence to support a finding that the purchasers based their erroneous assumptions on any representations made by the seller or any agent on his behalf. Stroud v. Crosby, 712 So.2d 434 (Fla. 2d DCA 1998).

Economic Loss Rule and Commercial Property. The economic loss rule barred commercial tenant's claim against a landlord for negligent misrepresentation when the misrepresentation is directly related to the breaching party's performance under the contract. Fraudulent inducement was not proven as there was no indication that the breaching party would fail to perform. Straub Capital Corp. v. L. Frank Chopin, 724 So.2d 577 (Fla. 4th DCA 1998), corrected 24 FLW D299 (Fla. 4th DCA 1999).

Waiver of Fraudulent Representation must be Explicit. Fraudulent representations regarding previous incomes of property are waived only if the contract for sale so states in explicit fashion, even when the contract contains a clause for the sale "as is" and an interpretation clause. Deluxe Hotel, Inc. v. Patel, 727 So.2d 299 (Fla. 5th DCA 1999).

No Misrepresentations Found in "As Is" Sale. A pre-closing representation by the seller as to the approximate costs of repairing the improvements cannot be relied upon by the buyer. The case left no doubt that the home, under the “as is” contract, was the functional equivalent of the one-eyed horse. A seller is not liable for failure to disclose known defects where the defects are readily observable or within the buyer's ability to know or easily discover. Pressman v. Wolf, 24 FLW D276 (Fla. 3d DCA 1999).

Recission Action Available on Fraudulent Non-representation. There were serious corrosion and other problems in the condominium building which the developer failed to disclose. The buyer sued for recission, false representation and failure to disclose. The court stated that maintaining a related cause of action does not preclude a recission action. A recission is available for a fraudulent failure to disclose a material fact whether or not there is proof of an impact on the property value. Even with a deterioration of value and inability to restore one party to status quo, rescission will be granted if the devaluation of the property was caused by the wrongdoer's conduct. Ancor Bank v. Conrardy, 719 So.2d 297 (Fla. 4th DCA 1998).


Easements


Termination of Easement. The grantor reserved an easement for septic tank hook-up but gave the grantee the right to terminate it if it interfered with the grantee's use of the premises. The court concluded that when a provision for termination of an easement is unambiguous, the provision will be enforced even if it would effectively deprive the dominant estate of the use of the dominant tenement. Shiner v. Baita, 710 So.2d 711 (Fla. 1st DCA 1998).

Plat May Eliminate Prior Easement on Property. An easement reserved in a deed is extinguished when the owner of the dominant tenement joins with the owner of the serviant tenement to dedicate and record a plat encompassing both of their properties and does not disclose or show the easements. Estate of Johnston v. TP&E Hotels, Inc., 719 So.2d 22 (Fla. 5th DCA 1998), petition denied 727 So.2d 904 (Fla. 1999).

Road Maintained by County. A road privately constructed but governmentally maintained is not a public road under the requirements for statutory presumptive dedication, Section 95.361(2), F.S. Hancock v. Tipton, 24 FLW D486 (Fla. 2d DCA 1999).

Access Across Waterway. The owners of certain property, a portion of which is landlocked because of a small lake, are entitled to a common law way of necessity across a neighboring land for access to their landlocked portion. Access across a waterway is not reasonable access to the property. Keene v. Jackson, 24 FLW D694 (Fla. 1st DCA 1999).

Proof for Statutory Way of Necessity. The claimant of a statutory way of necessity or prescriptive easement over another's property has the burden to first prove that there is no common law way of necessity over the property owned by the common grantor. Suwannee River Water Management District v. Price, 24 FLW D834 (Fla. 1st DCA 1999).





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