Articles Posted in Case & Legislative Updates

DanPascale-214x300By: Daniel T. Pascale, Esq.

Within the State of Florida especially, it is common to encounter real properties encumbered to more than one party– be it by inheritance, speculative investment, marriage, or some other such instance of shared ownership or tenancy in real estate. When these relationships are legally severed, such assets must be fairly and equitably divided between all invested parties, and in the State of Florida this is referred to as Partition of Real Estate or, more colloquially, Partition Law. Codified under Chapter 64 of the State Statutes, partition matters are a unique area of real estate law and subject to defining rules and regulations that set them apart from other, more familiar forms of litigation. The following is a brief synopsis to help illustrate the process of partitioning real estate in Florida.

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Daniel PascaleBy: Daniel T. Pascale, Esq.

Office Locations: Delray Beach and Coral Gables, FL

On April 20, 2016, the District Court of Appeal for the Fourth District of Florida held that a copy of an electronic promissory note (e-note) was sufficient to prove the identity of the e-note’s owner and to provide authorization to the loan servicer to pursue a foreclosure action (Rivera v. Wells Fargo Bank, N.A., 2016 WL 1579076 (Fla. 4th DCA Apr. 20, 2016)).

Daniel Pascale
By: Daniel T. Pascale, Esq. Office Locations in Delray Beach, FL and Coral Gables, FL

Florida bills effective July 1 revise some rules in Fla.’s building code, regulate private-residence elevators and authorize officials to create fumigation rules.

SB 1602 creates rules for new elevators in private residences, saying they must:

Daniel Pascale

By: Daniel T. Pascale, Esq.

Offices Located in Delray Beach, FL and Coral Gables, FL

10 SE 1st Avenue, Suite A, Second Floor, Delray Beach, FL 33444

255 Aragon Avenue, Second Floor, Coral Gables, FL 33134

Liquidated Damages Clause Enforced in Real Estate Contract

San Francisco Distribution Center, LLC v. Stonemason Partners, LP,

39 Fla. L. Weekly D790 (Fla. 3d DCA 2014)

Synopsis

Vendor of commercial property brought breach of contract action against failed purchaser, seeking to recover deposit which closing agent had returned to vendor. The Circuit Court, Miami–Dade County, Ronald C. Dresnick, J., entered summary judgment for vendor, and purchaser appealed.

Holdings: The District Court of Appeal, Emas, J., held that:

  1. Liquidated damages provision was not unenforceable on grounds vendor could choose between damages and specific performance;
  2. Amount to be forfeited was not grossly disproportionate to sale price; and
  3. Provision was not rendered unconscionable by subsequent sale for higher price.

Foreclosure and Mortgagor’s Bankruptcy Discharge

Deutsche Bank Trust Co. Americas v. Nash,

39 Fla. L. Weekly D829 (Fla. 2d DCA 2014)

Synopsis

Mortgagee brought foreclosure action against mortgagors, and mortgagors stipulated to entry of foreclosure judgment. After mortgagors were discharged in bankruptcy, they moved for relief from the foreclosure judgment and sale. The Circuit Court, Hillsborough County, Perry A. Little, Senior Judge, granted the motion. Mortgagee appealed.

Holding: The District Court of Appeal, Silberman, J., held that:

Mortgagors were not entitled to relief from the foreclosure judgment and sale as a result of their discharge in bankruptcy.

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Daniel PascaleBy: Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables

10 SE 1st Avenue, Suite A, Second Floor, Delray Beach, FL 33444

255 Aragon Avenue, Second Floor, Coral Gables, FL 33134

Hayes v. Norman Harris Services, Inc., 41 Fla. L. Weekly D293

Trial Court Must Hear Homestead Arguments to Stay Execution of Judgment

Background: Mortgagors filed motion to vacate consent judgment and motion to stay writ of execution and vacate sheriff’s levy as to their personal residence. The Circuit Court, Polk County, Keith P. Spoto, J., denied motions. After their motion for rehearing or clarification was summarily denied, mortgagors appealed.

Holdings: The District Court of Appeal held that:

  1. Challenge to trial court’s refusal to consider homestead objection was preserved for appellate review, and
  2. It was a denial of due process for trial court to refuse to hear argument that the property was protected from forced sale by the homestead exemption.

Affirmed in part, reversed in part, and remanded.

Hendricks v. Department of Business and Professional Regulation, 183 So.3d 1172

Florida Real Estate Recovery Fund

Background: Prospective purchasers who had obtained default judgments against real estate licensees in underlying action for fraud appealed final orders of Florida Real Estate Commission (FREC) denying their claims against the Florida Real Estate Recovery Fund.

Holdings: The District Court of Appeal held that:

  1. Licensees acted solely in their capacities as real estate brokers in the mishandled sale of newly constructed homes such that purchasers could pursue claims against Florida Real Estate Recovery Fund, and
  2. Misconduct for which prospective purchasers obtained default judgments against licensees in underlying civil action was within scope of activity prohibited by professional rules and regulations governing real estate brokers such that purchasers could pursue claims against Florida Real Estate Recovery Fund

Reversed and remanded.

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Daniel PascaleBy: Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

Lenders Standing at Foreclosure

Creadon v. U.S. Bank N.A. 166 So.3d 952 (Fla. 2nd DCA 2015)

The circuit court entered final judgment in favor of U.S. Bank N.A., foreclosing a mortgage encumbering property. The owners assert that U.S. Bank did not prove its standing to foreclose the note and that the court erred in substituting it as the plaintiff.

No one seriously disputed that the borrower was in default on the mortgage encumbering the property. The original complaint asserted, and Plaintiff’s testimony confirmed, that the borrower had not payments since 2008.

The issue here is the plaintiff presented sufficient evidence to warrant its substitution as plaintiff and to prove that it had standing to enforce the note and mortgage. It did not introduce the assignment of mortgage, or any other assignment, into evidence. It proceeded solely on the theory that it was the holder of the note and thus had the right to foreclose the loan.

The borrowers appealed and prevailed as the Court determined that the Bank had not established that it was holder of the note because the note had been filed with the registry of the Court years earlier than the plaintiff’s appearance in the case.

Disclosure of defects to property being sold with an “as-is” contract

Bowman v. Barker 40 Fla. L. Weekly D2091b; 2015 WL 5239079

The purchaser of a home claimed the sellers knew of material defects to the property but did not disclose them to the purchaser. The trial court granted summary judgment for the sellers.

The 1st DCA cited to the Florida Supreme Court’s holding in Johnson v. Davis, 480 So.2d 625 (Fla. 1985), which established that where a vendor knows of facts materially affecting the value of property not readily observable and not known to a purchaser, the vendor must disclose those facts to a purchaser. A contract being “as is” does not change this duty.

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Daniel PascaleBy: Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

Foreclosure Sale Notice

Skelton v. Lyons, 157 So. 3d 471(Fla. 2d DCA 2015)

Background: Debtor filed objection to foreclosure sale of property. The Circuit Court sustained the objection and set aside the foreclosure sale. Third-party purchaser appealed.

Holding: The District Court of Appeal held that the failure to serve third-party purchaser with notice of either debtor’s objection to foreclosure sale or the hearing held on the objection violated purchaser’s due process rights, and the debtor’s objection to foreclosure sale was insufficient as a matter of law.

Common Law Claims Precluded by Construction Lien Statute

Jax Utilities Management, Inc. v. Hancock Bank, 40 Fla. L. Weekly D948 (Fla. 1st DCA 2015)

Background: Contractor brought an action against construction loan lender asserting equitable lien and unjust enrichment claims. The Circuit Court granted summary judgment for the lender and the contractor appealed.

Holding: The District Court of Appeal held that the one-year statute of limitations began to run from last furnishing of labor, services, or material for the improvement of real property, barring contractor’s equitable lien claim, and, as a matter of first impression, statute governing responsibilities of construction loan lenders precluded contractor’s common law claims.

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Dan Pascale By Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

CORRECTING A FORECLOSURE JUDGMENT

The Court considered whether Florida’s Rule of Civil Procedure allowing for corrections of “clerical mistakes,” encompasses authorization to supplement a final deficiency judgment by clarifying the party defendants’ status in the litigation almost three years after the entry of the initial judgment. See Fla. R. Civ. P. 1.540(a). The District Court of Appeal held that rule governing relief from a judgment, decree, or order on the basis of a clerical mistake did not extend to allow the Circuit Court to supplement its initial deficiency judgment in order to more definitively address the litigation status of the three party defendants.

OBJECTION TO FORECLOSURE SALE NOTICES

Debtor filed objection to foreclosure sale of property. The Court held that the Debtor’s perfunctory objection to the judicial sale did not make any claims of deficiency regarding the sale’s unfairness or irregularity. As such, Lyons’s objection was legally insufficient as a matter of law and the trial court necessarily abused its discretion by setting aside the judicial sale on this basis. And while there was a hearing held on the objection, the trial court did not make any findings in its order or state its reasoning for setting aside the sale. Similarly, there is nothing contained in the record to indicate that the sale suffered any deficiency or irregularity requiring it to be set aside. Without such a basis, the trial court abused its discretion when it set aside the sale.

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img_2262By: Alejandro E. Jordan, Esq.

The Jumpstart Our Business Startups Act, known as the Jobs Act, has changed the way to raise money from groups of investors to purchase commercial and investment real estate properties.  Many forget that raising money from multiple investors is often viewed as selling “securities” and are regulated and restricted under the federal securities laws.

What Changed?

In its July 10, 2013, meeting, the Securities and Exchange Commission adopted the new Regulation D, Rule 506(c) as authorized by the Jobs Act (Title II), which became effective September 23, 2013.  Under the new rule, persons such as issuers, sponsors, syndicators, or promoters selling “securities” to private investors to fund their companies or real estate transactions will be able to advertise their private-investment opportunities under certain conditions.

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Daniel PascaleBy Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

What is FIRPTA?

The Foreign Investment in U.S. Real Property Tax Act of 1980 (“FIRPTA”) was enacted to ensure that foreign investors are taxed on the gains from the disposition of their U.S. real property investments.  Pursuant to FIRPTA, a buyer (whether domestic or foreign) purchasing U.S. real property interests from a foreign person must withhold 10 percent of the amount realized from the sale (i.e., the entire purchase price, not just the gain).  FIRPTA applies to both residential and commercial real estate transactions.

In a FIRPTA transaction, the buyer (i.e. the transferee) is considered the withholding agent and has the responsibility to determine whether the seller (i.e. the transferor) is a foreign person; otherwise, if the seller is a foreign person and the appropriate amount is not withheld, the buyer will be held liable for the tax, and any and all penalties.

The IRS defines a foreign person as a nonresident alien individual, a foreign corporation that has not made an election under section 897(i) of the Internal Revenue Code to be treated as a domestic corporation, a foreign partnership, a foreign trust, or a foreign estate.

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