Risk of Loss During the Executory Period

The executory period is the period of time in a real estate transaction between the signing of the contract for sale and the closing of the property.  A key consideration during the executory period of any real estate transaction is which party bears the physical risk of loss of the property.  It is important to determine who bears the risk of loss, as that risk establishes liability for losses from floods, fires, and similar occurrences. The parties, and particularly the buyer, should determine who will bear the risk of loss prior to executing the contract for sale.  Otherwise, the courts will make that determination for them.

In Florida, the risk of loss of the property is on the buyer, in the absence of an agreement to the contrary.  See O’Neal v. Commercial Assur. Co. of America, 263 So. 2d 246, 247 (Fla. 3d DCA 1972); Munshower v. Martin, 641 So. 2d 909, 910 (Fla. 3d DCA 1994).  The impact of Florida’s rule is that the courts will determine the risk of loss to the detriment of the buyer.  Florida provides an insurance remedy for the buyer’s risk.  If the property is insured, the buyer is entitled to insurance proceeds resulting from any loss.  See Munshower, 641 So. 2d at 910.  The insurance remedy places the buyer in the unenviable position of relying on the seller to purchase insurance and to provide the proceeds to the buyer.  The entitlement to insurance proceeds has been the source of much litigation. 

The parties do not need to rely on the insurance remedy.  Prior to executing a contract for sale, the parties should contemplate their expectations regarding the risk of loss.  Florida’s presumption is that the risk of loss falls to the buyer.  However, the parties may agree by contract that the seller will assume all or part of the risk.  It may be in at least one of the parties’ best interest to shift the risk to the seller.

If you are about to enter into a contract for the sale of real property, call one of our South Florida real estate attorneys today at (954) 779-7009.

Eminent Domain in Florida

Fundamentally, eminent domain describes the power of the state to seize private property without the owner’s consent.  The property must be taken for some "public use" (utilities, highways, schools, or parks, for example), and under the 5th Amendment, “just compensation” is required to be paid to the property owner.  The power of eminent domain is exercised by the government as an action for condemnation; the use of the term “condemnation” here is distinct from the use of the term to mean unfit for habitation. If the court grants the condemnation, just compensation is then determined and paid to the property owner.

As stated above, the 5th amendment operates to limit the government’s use of the eminent domain power. The relevant section of the 5th Amendment reads, “nor shall private property be taken for public use without just compensation;” not surprisingly, courts have had to clarify exactly what constitutes a “taking,” “public use,” or “just compensation.”


There are several ways the state can effect a taking on a piece of private property. A partial taking occurs when the government partially occupies another’s property. An example of this would be if the state decided to expand a public road in a way that encroached on a citizen’s property. A temporary taking occurs when the government appropriates property for a limited period of time, and the property is returned to the owner upon the end of the use. Another limited type of taking occurs when the government determines that an easement is required for access of some sort, for example, a utility. A complete taking occurs when title of the land passes to another party entirely (in fee simple).

Public Use

The “public use” requirement has been the most controversial of the requirements in recent years. The Supreme Court’s 2005 decision in Kelo v. City of New London upheld the transfer of property from one private owner to another in order to further economic development, reasoning that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a “public use.” As a result of this decision, several states changed their laws to limit the use of the eminent domain power. In 2006, the Florida legislature enacted a law (Florida Statutes 73.013) limiting the claims made by a “natural person or private entity” for eminent domain. Furthermore, eliminating blighted properties or slums is no longer a permissible “public use” in Florida (Florida Statues section 73.014). The legislature also created a new cause of action for property owners when a new law, rule, regulation, or ordinance unfairly affects property; actions that “inordinately burden” an existing use or vested right of or in the property qualify as “unfair.” Finally, the Florida Constitution was amended in response to the Kelo decision, prohibiting the use of eminent domain to transfer property from one private person or entity to another.

Just Compensation

Just Compensation is defined as fair market value. Fair market value, in turn, is determined by looking to the highest price one would pay for the property, assuming there is a willing seller. Furthermore, if there are business disruptions or other losses suffered due the condemnation, those losses will be relevant in determining fair market value.

If you are currently facing a condemnation action, please do not hesitate to call one of our experienced South Florida real estate litigation attorneys today at (954)-779-7009. As hopefully this article made clear, there are a myriad of issues that arise in a condemnation action and, as a result, a myriad of ways for an experienced attorney to fight to keep your property or to ensure that you receive the highest amount of compensation possible.