Real Property Case Summaries

Verbal promise to lend funds not enforceable. Puff 'N Stuff of Winter Park, Inc. v. Bell, 683 So.2d 1176 (Fla. 5th DCA 1996) (en banc).

Lender instituted a foreclosure action when Borrower defaulted on a loan for acquisition and renovation of a building. Borrower counterclaimed, alleging that Lender breached a verbal agreement to provide additional funding to Borrower. As a defense to the counterclaim, Lender raised F.S. §687.0304(2), which requires credit agreements to be in writing. The trial court agreed with Lender, and the Fifth DCA affirmed in a 6-4 en banc decision. The court rejected Borrower’s argument that Lender’s verbal promise to lend money could be characterized as “fraud” in the inducement in order to avoid application of the statute. The court stated such a holding would effectively repeal the statute.

12 U.S.C. §1821 preempts five-year statute of limitations for mortgage foreclosure. WRH Mortgage, Inc. v. Butler, 684 So.2d 325 (Fla. 5th DCA 1996).

A mortgage stated that the note it secured matured on February 25, 1990. After that date, the assets of the original Lender were obtained by the RTC. More than five years after the maturity date, the RTC's successor sought to foreclose the mortgage. Borrower argued that F.S. §95.281 terminated the mortgage holder's right to foreclose five years after the maturity date, and, therefore, the foreclosure action was untimely. The trial court agreed and granted summary judgment in favor of Borrower. On appeal, the Fifth DCA reversed, holding that the extended six-year statute of limitations provided by 12 U.S.C. &1821 preempts F.S. &95.281 for mortgages obtained through the RTC.

Bylaws of homeowners' association amendment preclude revision of age restriction. West-wood Community Two Association, Inc v. Lewis, 687 So.2d 296 (Fla. 4th DCA 1997).

A homeowners’ association’s Declaration of Restrictions limited the use of lots in the association to permanent residents at least 16 years of age. It also provided that the restrictions were binding on all owners of lots until March 2022. When the Florida Legislature amended the Fair Housing Act to prohibit such restrictions, the association attempted to amend its bylaws to fit within an exception for "housing for older persons." When the bylaw amendment was challenged, the trial court ruled and the 4th DCA affirmed, that the bylaw amendment was invalid because the bylaws specifically prohibited any amendment in conflict with the Fair Housing Act amendment, and permanent residents under 16 years old could not be prohibited.

Condominium association owes mortgagee duty of care as to insurance proceeds. National Title Insurance Company v. Lakeshore 1 Condominium Association, Inc., 691 So.2d 1104, 22 F.L.W. D703 (Fla. 3d DCA March 19, 1997).

A Declaration of Condominium gave the condominium association control over insurance matters. It provided: (a) the association was required to buy insurance for its own benefit and the benefit of unit owners and mortgagees; (b) the insurance must cover all improvements, including the units; (c) the association was the agent for unit owners and mortgagees as to the adjustment of any claim; and (d) mortgagees have no right to determine whether to reconstruct the property. After the condominium was severely damaged by Hurricane Andrew, the association collected insurance proceeds and entered into a contract to reconstruct. However, the construction was never completed and the proceeds were depleted. When a mortgagee acquired several uninhabitable units by foreclosure, it sued the association for negligence in the handling of the insurance proceeds. The trial court granted summary judgment in favor of the association, ruling that it owed the mortgagee no duty of care with respect to the insurance proceeds. The Third DCA reversed, holding that, once the association undertook to manage the insurance proceeds on behalf of the unit owners and mortgagee, it owed them a duty to use reasonable care in such management.

Right of first refusal invalidated by rule against perpetuities. Fallschase Development Corporation v. Blakey, 696 So.2d 833 , 22 F.L.W. D754 (Fla.1st DCA March 20,1997).

In 1975, a property owner granted a right of first refusal to a developer in connection with the sale of an adjacent parcel. The agreement provided that it was binding on the parties, their heirs, successors, and assigns. In 1995, the owner's heir sought to have the right of first refusal invalidated and the trial court ruled in favor of the heir. On appeal, the First DCA affirmed, holding that, although the grant of the right of first refusal is not invalid per se, the successors and assigns language, as an attempt to make the right run with the land, violated the rule against perpetuities. Had this language not existed, the right would have been extinguished upon the death of the granting owner. In its decision, the court rejected the developer's argument that F.S. §689.22, which was amended in 1979 and in 1988, did not apply to save the right of first refusal, but certified the question of the statute’s application to the Florida Supreme Court.

Construction of power lines within scope of highway right of way grant. Nerbonne, N.V v. Florida Power Corporation, 692 So.2d 928, 22 F.L.W. D812 (Fla 5th DCA March 27, 1997).

A property owner granted a county a "right-of-way for public road purposes” in order to "construct and operate a road." When the county later granted a permit to an electric utility to construct a power line along the right-of-way, the owner's successor in interest brought an action for inverse condemnation, arguing that the construction of a power line was not within the scope of the original right-of-way easement. The trial court disagreed and the Fifth DCA affirmed. The court held that although the owner's argument had "the force of common sense and plain meaning,” the construction of a power line that does not interfere with highway travel is a proper use of a highway easement and does not impose an additional burden on the servient parcel. The court relied on several out-of-state cases that characterized public highways as “avenues of communication” that necessarily encompass improvements such as telephone and power lines.

Evidentiary hearing required to condition lis pendens on posting of bond. Licea v. Anllo, 691 So.2d 29, 22 F.L.W. D826 (Fla. 3d DCA April 2, 1997).

Buyer of real estate under a contract for sale sued Seller for specific performance of the contract. In connection with the suit, Buyer recorded a notice of lis pendens. Seller moved to discharge the lis pendens or to require Buyer to post a bond. The trial court set the hearing on its motion calendar, and, without an evidentiary hearing, set bond for $350,000. Buyer posted the bond and appealed. The Third DCA reversed, holding that an evidentiary hearing is necessary and that Seller would be required to show both potential damage and the amount of such damage in the event the lis pendens was unjustified.

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