Opinion ID: 1790113
Heading Depth: 1
Heading Rank: 2

Heading: ILSFDA Exemptions

Text: N & C pleaded exemptions under § 1702(a)(2), (b)(1), and (b)(5). On appeal, however, neither party argued the applicability, or nonapplicability, of § 1702(b)(5). Therefore, because there was no evidence presented to support such an exemption, we will not discuss that subsection. N & C further asserted an exemption under § 1702(a)(2). N & C argued that, because two of the sales contracts provided a completion date within two years, it is exempt from the registration and disclosure provisions of the Act. The Windhams, however, argue that the language in those sales contracts does not create an unconditional commitment to complete the units within two years and, therefore, does not place the units within the exemption. We agree. The contracts state that in the event the units are not completed by the date established, each party shall be relieved of all obligations to the other and the Windhams' deposit will be refunded. This language serves to limit any action that could be taken by the Windhams in the event the units were not completed within the two-year period. As was stated in Dorchester Development, Inc. v. Burk, 439 So.2d 1032, 1034 (Fla.Dist.Ct. App.1983): A construction contract obligating the seller to complete the called-for building by a time certain is not the equivalent of a contract ... which limits the purchaser to the right to the return of his deposit in the event the building is not constructed by a certain time. Where the seller is obligated to complete by a time certain, the purchaser is not limited ... to the remedy of rescission, but he may affirm the contract and seek damages. See, also, Schatz v. Jockey Club Phase III, Ltd., 604 F.Supp. 537 (S.D.Fla.1985). Clearly, the language in the contracts between N & C and the Windhams merely limits the remedies available to the Windhams. Because there is no unconditional commitment to complete the units within the two-year period, the units do not fall within the exemption provided under § 1702(a)(2). The third exemption asserted by N & C is based on § 1702(b)(1) of the Act. Section 1702(b)(1) provides an exemption to the disclosure and registration requirements of the Act when the lots in a subdivision containing fewer than 100 lots, which are not exempt under subsection (a) of this section, are offered for sale or lease. N & C argues that it is exempted under (b)(1) because: (1) phase I has 55 units and should not be combined with phase II, which has 46 units, for purposes of determining whether there were more than 100 lots for exemption purposes under § 1702(b)(1); or (2) if the two phases are counted together, the two units sold to the Windhams that had completion dates within two years are not to be included in the 100 lots because they would be exempt units under subsection (a) for purposes of determining whether there were more than 100 unexempt units. An offer is defined as including  any inducement, solicitation, or attempt to encourage a person to acquire a lot in a subdivision. 15 U.S.C. § 1701(11) (Emphasis added.) A subdivision is defined as any land which is ... divided or is proposed to be divided into lots ... for the purpose of sale or lease as part of a common promotional plan. § 1701(3). A common promotional plan under the Act is a plan, undertaken by a ... developer..., to offer lots for sale ... where such land is offered for sale by such a developer..., and such land is contiguous or is known, designated, or advertised as a common unit or by a common name, such land shall be presumed, without regard to the number of lots covered by each individual offering, as being offered for sale or lease as part of a common promotional plan. § 1701(4). Under the terms of the Act, which are to be applied liberally in favor of broad coverage, De Luz Ranchos Inv., Ltd. v. Coldwell Banker & Co., 608 F.2d 1297 (9th Cir.1979), phase II of East Pass Towers is part of the common promotional plan. N & C admits that it had retained the option to build the second phase and had reserved the land. The promotional materials depicted twin towers joined by a common lobby. The Declaration of Condominium contained a provision stating that the developer had this option. This Court in Pritchard relied on a Florida decision, Grove Towers, Inc. v. Lopez, 467 So.2d 358 (Fla.Dist.Ct.App.), cert. denied, 480 So.2d 1294 (Fla.1985). Grove Towers held that [a]s long as appellant wanted that option to build [over 100 units], it was obligated to comply with [the ILSFDA]. Grove Towers, 467 So.2d at 361. N & C, by its own statements, admits that it wanted the option to build phase II. Its argument that these units were not formally offered for sale and that they were not advertised is insufficient in this case to overcome the presumption of coverage under ILSFDA. The evidence before the trial judge on the motion for summary judgment showed, as a matter of law, following this Court's decision in Pritchard, that the two phases were to be treated as part of a common promotional plan. N & C alternatively argues that the two units claimed to be exempt under § 1702(a)(2) are to be deducted from the total units in determining whether the number of units is over 100. The registration and disclosure requirements of ILSFDA do not apply to the sale or lease of lots in a subdivision containing fewer than one hundred lots which are not exempt under subsection (a). Because we find that N & C is not entitled to the exemption under § 1702(a), we hold that these two units cannot be subtracted from the total units in determining the total units for § 1702(b) purposes. For the reasons stated herein, we affirm the judgment of the trial court. ORIGINAL OPINION WITHDRAWN; OPINION SUBSTITUTED; APPLICATION GRANTED; AFFIRMED. HORNSBY, C.J., and MADDOX, ALMON, SHORES, HOUSTON, STEAGALL and INGRAM, JJ., concur.