Q. Can I break my contract? I signed a preconstruction agreement, to purchase a condo, townhouse, villa or single family home or house and now I’ve changed my mind.
Q. How can I get my deposit back?
Q. I want my money back! What can I do?
Q. Why does my real estate contract have a two year construction completion obligation?
Q. The developer didn’t finish construction in two years. Can I get my deposits back?
Q. My Seller breached the Purchase and Sale agreement. Can I get my down payments back?
Q. What is the federal Interstate Land Sales Full Disclosure Act (ILSA)? What is the Florida Land Sales Practices Law?
Q. Are there any Federal laws that apply to sales of residential preconstruction Florida real estate (houses, town homes, villas, condominiums, etc.)?
Q. Does HUD (the U.S. Dept of Housing and Urban Development) have any rules to help Buyers get deposits back?
These are some of the questions many Florida lawyers are asked everyday. There are a variety of circumstances in which a buyer can cancel his/her contract and receive a refund of their deposit. . This answer will discuss those under Interstate Land Sales Full Disclosure Act (ILSA or ‘ILSFDA") and Florida law.
THESE ARE GENERAL RULES OF THUMB, THEY MAY NOT APPLY TO YOUR SITUATION AND THE LAW IS SUBJECT TO CONSTANT CHANGE.
In order to RESCIND, you should have an argument that the contract is defective and therefore not entitled to exemption from ILSFDA (the Act). We look for failures to conform to the law. The most common are:
- improper conditions on the two year completion obligation
- limitation of buyer’s remedies
- Seller having the right to approve and reject the Buyer
Improper conditions may include:
Rescission must be in writing and must be done within two years from the date that the Buyer signed.
ENFORCEMENT OF THE CONTRACT, where the other party (i.e. the developer in our example) has breached or committed a Default under the terms of the contract , the other party is can SUE FOR BREACH OF CONTRACT and is entitled to remedies at law, which may include more remedies than what appears on the contract itself .
A common example is where the Developer failed to complete construction within 2 years from Buyer signing contract. The Buyer doesn’t need to rescind, just to sue for return of deposits based on the seller’s breach.
I emphasize the difference between RESCISSION and ENFORCEMENT because I’ve seen people get into trouble when they meant to do one but did the other and shot themselves in the foot. If you terminate a contract, you can’t enforce your rights under it!!
Florida courts have said a hundred times with regard to all kinds of state and federal disclosure laws that they will interpret them to favor the consumer/home buyer wherever possible.
You may have other arguments under federal and Florida law, such as default by reason of shoddy construction, fraud, unfair and deceptive business practices, etc.
Q. Can I rescind a purchase of Florida real estate AFTER closing?
ANSWER. Yes, in some limited circumstances. This will often require litigation and should not be regarded as easy. CLICK HERE FOR MORE INFORMATION.
Q. RESCISSION /DISCLOSURE ISSUES: When can I legally rescind (cancel or terminate) an agreement I signed to purchase Florida real property?
ANSWER. Florida statutes require disclosures specific to the type of property you are buying, and give different ‘right to cancel’ periods. CLICK HERE FOR MORE INFORMATION.
Q. RESCISSION /DISCLOSURE ISSUES: Can I legally rescind (cancel or terminate) an agreement or contract I signed to purchase Florida condominiums or other real property and get my deposit money back?
ANSWER. Florida statutes require disclosures specific to the type of property you are buying, and give different ‘right to cancel’ periods.
Example: Condominium purchase from a Developer.
Until such time as the developer has furnished certain documents to a person who has entered into a contract to purchase a residential unit, the contract may be voided by that person, entitling the person to a refund of any deposit together with interest thereon.
You, the buyer or purchaser, may rescind within 15 days from the date you receive ALL condominium documents AND AGAIN within 15 days from the date you receive any material modification of those documents which adversely or detrimentally affects you, (or prior to closing, whichever is first).
Example: Condominium purchase from individual.
You may rescind within 3 business days of receiving the condominium documents, or prior to closing, whichever is first.
.Example: Homeowner Associations.
If the property is subject to assessments which can result in liens, you must be given a Disclosure Summary pursuant to Florida Statute §720.401. You then have 3 days to rescind.
If the Seller has made deliberate material misrepresentations to you about the property and you relied on them and suffered damage, you can seek to rescind (BEFORE OR AFTER CLOSING) on the basis of fraud.
Example: Failure to disclose facts which materially affect the value of the property. (BEFORE OR AFTER CLOSING)
This is a different standard than fraud. Where the Seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the Buyer, the Seller is under a duty to disclose them to the Buyer. If Seller fails to do so, Buyer may rescind, even after closing.
If the Seller has made inadvertent misrepresentations or failed to disclose things which materially affect the value of the property, you may rescind. You don’t have to prove the statements or lack of disclosure was deliberate or malicious – it’s enough that something wasn’t disclosed, BUT, it must be something important.
Example: Federal Law
There are instances where a failure to comply with certain federal laws, such as the Interstate Land Sales Full Disclosure Act.[15 U.S. C. 1701 et seq or ILSA for short] , may provide a right to rescind and receive a FULL refund of purchase monies, even up to two (2) years after contract (BEFORE OR AFTER CLOSING).
Many Florida developers take steps to exempt their projects from these laws. However, if the developer has not properly qualified for the exemption and/or their sales contract doesn’t meet certain standards, a Court may find the exemption inapplicable and permit rescission. It is important to act BEFORE the expiration of two years from the date you signed the contract. DON’T WAIT.
There may be other situations in which you can rescind. This is not meant to be comprehensive and you should consult Florida counsel to evaluate your rights and weigh the likelihood of dispute or litigation about a rescission.
As indicated, there are limited circumstances in which a buyer can rescind a purchase of Florida real estate even AFTER closing. This will often require litigation and should not be regarded as easy.
Remember, you can generally withdraw your offer to purchase or sell real estate anytime before the other party accepts and delivers to you (or your agent) a copy of the contract signed by said party. You should do this in writing. This is also true if they made changes (a counter offer) on their signed acceptance.
AVOID COMMON ERROR: One mistake many home buyers make is to wait to consult counsel until after a developer has failed to meet a completion obligation, such as the common two year construction (build-out) completion commitment. DO NOT DELAY until after the two years runs, you may lose certain valuable rights by waiting.
Learn more about rescission as opposed to enforcement of your real estate purchase and sale agreement by contacting us online or calling 239-963-1791 or toll free 866-504-8981.
These are generalizations only! Consult a Florida attorney for specific advice. Our office [239 262-2874] serves Collier and Lee counties (includes Naples, Fort Myers, Bonita Springs, Marco Island, Cape Coral, Estero) and can sometimes assist in other geographic areas. March 2008
~ FLORIDA ONLY – January 2012~