Source: https://www.floridalegalblog.org/2009/06/second-district-on-interstate-land.html
Timestamp: 2020-01-25 05:02:40
Document Index: 714522244

Matched Legal Cases: ['§ 1711', '§ 1703', '§ 1709', '§ 1703', '§ 1703', '§ 1709']

The Florida Legal Blog: Second District on the Interstate Land Sales Full Disclosure Act
In Plaza Court, L.P. v. Baker-Chaput (5D08-899 & 5D08-1188), the Fifth District affirmed the trial court's conclusion relating to the Federal Interstate Land Sales Full Disclosure Act "ILSFDA."
On May 6, 2005, Baker entered into a purchase agreement with Plaza for the preconstruction purchase of a condominium unit for a purchase price of $447,900.00. The purchase agreement required a deposit of $22,395.00 upon execution of the agreement as well as a cash deposit of $22,395.00 within fifteen days of the effective date of the purchase agreement. In April 2007, Baker and Plaza agreed, through a special addendum to the purchase agreement, to add O'Brien as a purchaser of the condominium unit.
On July 31, 2007, Baker sent Plaza a letter demanding rescission of the purchase agreement pursuant to ILSFDA. Plaza responded by letter, rejecting Baker's demand for rescission. On October 17, 2007, Baker filed suit. Baker alleged that Plaza violated ILSFDA by (1) failing to provide him with a property report, (2) failing to provide an unconditional commitment in the purchase agreement to complete construction of the condominium unit within two years, and (3) failing to complete construction of the condominium unit within two years.
The issue before this Court is whether the trial court properly found that Baker and O'Brien were entitled to judgment as a matter of law. On appeal, Plaza argues that the trial court erred in holding that Baker's and O'Brien's claim for rescission was timely. Even though Baker filed suit within the three-year statute of limitations provided in 15 U.S.C. § 1711(b), Plaza contends that the trial court's decision disregarded the deadline contained in 15 U.S.C. § 1703(c), requiring exercise of the right to revoke within two years of executing the purchase agreement.
In essence, ILSFDA intends to provide an exemption where a developer provides a purchaser with an unconditional commitment to construct a condominium unit within two years. If the developer does not qualify for this exemption, the developer is required to: (1) provide a property report to a purchaser prior to the signing of a purchase agreement, and (2) clearly inform the purchaser, in the purchase agreement, of his right to revoke within two years if the required property report is not provided.
Because Plaza is not exempt from ILSFDA, we next must determine whether the time limits contained within ILSFDA were met. The trial court concluded that Baker and O'Brien were not time-barred because they filed suit within the three-year statute of limitations in § 1709. The trial court did not apply the two-year time limit under § 1703 for exercise of the right of rescission provided in the statute as the remedy for the developer's failure to provide a property report. It is undisputed that there was no rescission within the two years after execution of the purchase agreement. The failure to exercise the right of rescission within the two-year time limit is not curable by filing suit within the three-year statute of limitations. The right to rescind is expressly limited and, if the time limit is not met, the right of rescission expires. See Taylor v. Holiday Isle, LLC, 561 F. Supp. 2d 1269, 1273 (S.D. Ala. 2009).
Although there is much in Taylor with which to agree, we are bound to separate from its analysis on the last issue – the effect of the failure of the developer to include § 1703(c)'s required notice of the two-year limit on the right of rescission for the failure to provide a property report. The Taylor court reasoned that the failure of the developer to provide the statutorily required "clear" notice of the two-year right of rescission could not affect the developer's right to enforce the limitation because the statute did not include any remedy for violation other than, perhaps, the damages remedy in § 1709. The Taylor court also treated the two-year rescission right as a statute of limitations and concluded that the "extraordinarily limited" circumstances the law recognizes to avoid a statute of limitations could not apply, in part, because the two-year limitation is contained within the statute and everyone is expected to know the law. 561 F. Supp. 2d at 1274-75.
As to the statute of limitations analysis, we do not accept the premise that the provision at issue is a statute of limitations. A statute of limitations sets the outer limits for the commencement of litigation and this provision does not do that. This is a two year right of rescission and upon timely exercise, the statute of limitations for bringing suit to enforce the right is three years from the date of purchase. We see nothing in the statutory rescission right to which the "equitable tolling" analysis of Taylor should pertain. We also note that Judge Hurley in the Southern District of Florida has quite recently reached a similar conclusion in Jankus. 2009 WL 961154 at *5. The conclusion reached by the Jankus court was that the two-year right of rescission would not begin to run until proper notice of the right to rescind was given, up to expiration of the three-year statute of limitations. For the reasons well described in the Jankus opinion, this analysis is superior to the view taken by the Taylor court, which effectively holds the developer harmless for the failure to give the required notice. The result in Jankus is consistent with Florida law. See Engle Homes v. Krasna, 766 So. 2d 311 (Fla. 4th DCA 2000). Because there is no suggestion that Plaza gave the statutorily required notice to Baker and O'Brien prior to their filing suit within the three-year statute of limitations, we affirm.
Posted by Jeffrey Kuntz at 5:33 PM
Labels: Fifth DCA, Real Property/Real Estate