South Florida Commercial Property Leasing Update

The South Florida Business Journal reported that over 3.6 million square feet of leases in South Florida commercial properties are set to expire over the next 12 months. Included in the 3.6 million square feet is 1.91 million for retail, 1.15 million for office, and 484,225 for industrial. South Florida is home to approximately 40% of Florida’s expiring leases. The lease expirations could cause trouble for properties that are unable to obtain new leases on terms that are as favorable as deals in place now.

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When a “time is of the essence” clause is contained in a real estate contract, the parties are required to perform certain obligations within a specified time. If a party’s obligation is not performed within the essential time, the non-performing party has defaulted. By defaulting, the other party is provided the opportunity to cancel the agreement. “Time is of the essence” is not a standard provision.

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Marcus v. Florida Bagels, LLC, 4D12-2971 (Fla. 4th DCA 2013):

This is a case where a non-party to an arbitration agreement, also known as a non-signatory, seeks to compel a party to an agreement to arbitrate. An obligation to arbitrate is based on consent, and for this reason a non-signatory to a contract containing an arbitration agreement ordinarily cannot compel a signatory to submit to arbitration. Roman v. Atl. Coast Constr. & Dev., Inc., 44 So. 3d 222, 224 (Fla. 4th DCA 2010). However, courts have been willing to estop a signatory from avoiding arbitration with a non-signatory when the issues the non-signatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed. Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F. 3d 773, 779 (2d Cir. 1995). (more…)

Heller v. Blue Aerospace, LLC, 4D12-992 (Fla. 4th DCA 2013):

Zell Global (“Zell”) and Blue Aerospace (“Team Blue”) entered into a contract where Zell would render financial consulting services in connection with the potential sale of Team Blue’s assets or equity. Team Blue sold the majority of its assets but refused to pay Zell fees under the contract. The contract contained a narrow arbitration provision where the parties agreed to submit all disputes, controversies and claims arising under the agreement to binding arbitration.

Zell commenced an arbitration seeking damages against Team Blue. Team Blue defended arbitration by alleging that Heller wrongfully induced Team Blue to enter into the contract by misrepresenting, inter alia, himself and his company as licensed business brokers. Team Blue also counterclaimed against Zell in arbitration for fraud in the inducement, negligent misrepresentation, unjust enrichment, and declaratory relief based on allegations that Zell misrepresented itself as a business broker. Subsequently, Team Blue filed an action in the circuit court against Heller individually. (more…)

The general rule in Florida is clear – No party to a written contract in this State can defend against it’s enforcement on the sole ground that he signed it without reading it.

This rule was acknowledged and applied in Merrill, Lynch, Pierce, Fenner & Smith, Inc. v. Benton, 467 So. 2d 311 (Fla. 5th DCA 1985) (“Benton”), where the Fifth District Court of Appeal stated that “[p]ersons not capable of reading English, as well as those who are, are free to elect to bind themselves to contract terms they sign without reading.   

The rule, however, is not absolute. 

In a recent Florida case, an exception to this rule was noted.  In Begualg Inv. Mgmt., Inc. v. Four Seasons Hotel Ltd., 10-22153-CIV, 2012 WL 5941971 (S.D. Fla. 2012), plaintiff, Begualg Investment Management, Inc. (“Begualg”) was established by a husband and wife who were residents of Mexico.  Begualg sued various defendants claiming fraud and breach of contract in connection with its purchase of several rental properties in Miami, Florida and its enrollment into rental agreements for those properties.  The condominium hotel units that were the subject of the transactions were located within the Four Seasons Hotel in Miami.  The plaintiff alleges that the various defendants, Millennium Partners, LLC, Four Seasons Hotels Limited, and Terremark Brickell II, Ltd. (“Four Seasons defendants”) acted in concert with defendant, Interinvestments Realty, Inc. (“Interinvestments”) who the plaintiff believed to be its agent. 

According to the allegations, Begualg believed that Interinvestments was its agent throughout the negotiations and transactions. Neither of the two principals of Begualg (Riojas nor Simental) were fluent in English. Begualg allegedly relied on Interinvestments to review the contracts and to interpret them. Interinvestments advised Begualg that the contracts were completely consistent with all of the Defendants’ pre-contractual promises. As it turned out, the contracts were inconsistent in many ways, containing material terms that stated the exact opposite of what the Defendants had promised Begualg in the negotiations. In addition to these allegations of fraud, Begualg alleged that the Four Seasons defendants were in breach of the rental program agreement, having failed to properly market Begualg’s condominium hotel units.

The defendants relied on the case of Benton, contending that the contract signed by Begualg was enforceable regardless of whether Riojas or Simental read it.  The court, however, distinguished Benton, noting that unlike the case before it, in Benton, there was no allegation or testimony that the defendants prevented the plaintiff from reading the contract or induced her to refrain from reading it or in any way prevented her from reading it or having it read to her by a reliable person of her choice.  In this case, Begualg had provided record citations to support its allegations that the Four Seasons defendants and Interinvestments conspired to prevent Begualg from reading the contract or induced it to refrain from reading it.

Ultimately, the appellate court noted that under the facts presented, no contract existed between the parties; while the rule is generally that a party cannot recover in fraud for alleged oral misrepresentations that are adequately covered or expressly contradicted in a later written contract, where a misrepresentation of the character or essential terms of a proposed written contract occurs, assent to the contract is impossible.  Due to Interinvestments’ conduct, and the reliance of Begualg upon Interinvestments, there was essentially an “ineffective assent to the contract.”

A party to a contract is generally charged with the knowledge of what is contained in the contract regardless of whether he read it.  While there may exceptions to this rule, the exceptions are narrow and often present difficulty of proof.  Accordingly, it is imperative for you to read and understand the contract you are signing, or retain the services of any attorney to otherwise protect your interests.  At Schecter Law, our attorneys’ attention to detail and their litigation background mean that Schecter Law approaches each agreement it prepares and reviews with a keen eye as to what will be required for an agreement to withstand judicial scrutiny.

The language used in a contract is what governs the relationship between the contracting parties. In a lawsuit, the court looks within the four corners of the contract to determine the rights and obligations of each party. Outside evidence can be used in limited circumstances, such as to explain particular terms of the contract. The following case highlights the importance of contract language.

In Breazeale v. GDC View, LLC, 79 So. 3d 96 (Fla. 1st DCA 2012), Sommai Breazeale (the “Buyer”) entered into a contract to purchase a condominium from GDC View, LLC (“GDC”), the developer and seller of the condominium. The condominium was not constructed when the purchase contract was executed. The purchase contract provided that the unit would be completed within two years of the date of the contract and in no event later than May 1, 2007. The purchase contract also provided that the period for completion of the unit could be extended beyond two years if certain delays occurred. The condominium was not completed within two years of the contract. In April 2007, GDC gave the Buyer notice that it was ready to close between the dates of May 1 and May 21, 2007, but the Buyer never appeared for a closing. On May 4, the Buyer advised GDC in writing of her decision to rescind the contract. The Buyer sought a refund of the deposit and return of the letter of credit. GDC refused to grant a refund and, instead, filed suit for breach of the purchase contract. The Buyer filed a counterclaim also for breach of the purchase contract. The case was decided in GDC’s favor, and the Buyer appealed.

The Court looked to Florida Statute section 718.104(4)(e), which set forth two requirements before a completed condominium in a substantially completed building can be conveyed, and the language of the recorded Declaration of Condominium, which outlines the rights and obligations of the developer and the condominium owner, and agreed with the Buyer. The Court found that the condominium could not have been conveyed by May 1, 2007 because it could not have been deemed complete. Despite this finding, the result was affirmed because the purchase contract allowed for the extension of the period for completing the condominium if certain delays occurred. These delays extended the completion deadline to June 28, 2007, a date beyond the June 11, 2007 issuance of certificate of occupancy.

If you are a buyer or seller of commercial or residential property and seek assistance with your real estate contracts, contact the real estate attorneys at Schecter Law today at (954) 779-7009 to address your real estate contract concerns.