Residential Real Estate Disclosures in South Florida Area

The doctrine of caveat emptor was the rule of law governing disputes from the sale of residential real property. Seller’s disclosures were not required. The seller of real property was not liable or responsible to the buyer for a defective condition in the real property that existed at the time the seller transferred possession to the buyer. A purchaser bought real property at his or her own risk. A seller had no duty to communicate the existence of latent defects unless the seller represented that such a defect did not exist.


A Florida Realtors news article discussed RealtyTrac’s Q3 2013 Home Flipping Report. The Report indicated that Florida was second in the nation in third quarter home flips with 4,706. Only California had more with 8,592. The Report considered a home “flipped” where it was purchased and subsequently sold again within six months.


Florida Statute §624.608 defines title insurance as “[i]nsurance of owners of real property or others having an interest in real property or contractual interest derived therefrom, or liens or encumbrances on real property, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.” Our Ft. Lauderdale real estate law firm provides title examination and insurance. It is important to eliminate risk and prevent losses that may be caused by defects in title for both luxury residential and commercial properties.


Brokerage commissions should be established by a written listing agreement between the seller and their listing broker. The commission split between listing broker and cooperating brokers in the event of a buyer’s default, or in the event of closing, should also be established by writings between the licensees involved. Additionally, whether commercial or luxury residential real estate, the buyer’s broker may agree to rebate part of the purchase price to their clients. (more…)

While there are some similarities between the buying and selling of residential real estate and the buying and selling of commercial real estate, the duty to disclose in residential real estate transactions does not similarly apply to commercial property sellers. When a residential seller makes a material misrepresentation and the buyer relies on that misrepresentation, the contract of sale may be rescinded. The same is not necessarily true for a commercial real estate transaction. The inclusion of an “as-is” clause may also relieve a property seller, of both commercial and residential property, from liability for defects with the property. These principals are demonstrated in the case of Thomas J. Duggan, LLC v. Peacock Point, LLC, 89 So. 3d 283 (Fla. 1st DCA 2012).

In Duggan, Thomas J. Duggan (the “Purchaser”) purchased a six-lot waterfront subdivision from Peacock Point, LLC (the “Seller”) through an auction conducted by John Roebuck & Associates of Florida, Inc. (the “Auctioneer”). The contract of sale included an “as-is” clause which disclaimed “any warranties or representations of any kind or character, expressed or implied, with respect to the property, including, without limitation … habitability, design, quality, merchantability, condition, environmental status, matters of survey or fitness for any particular purpose[.]” The contract of sale also stated that the “Buyer has conducted such investigations and inspections of the Property as it deemed necessary and/or appropriate and shall rely upon same.” The Auctioneer and the Seller represented to the Buyer that the lots were ready for immediate construction when, in fact, they were not because there was no certificate of completion.

The Buyer sued the Seller and the Auctioneer seeking rescission of the contract of sale based on the misrepresentation, the failure to make full disclosure, or mutual mistake of fact. The trial court found against the Buyer, and the Buyer appealed. The Court agreed with the trial court’s findings. First, the Buyer was a knowledgeable and sophisticated developer, and the issue concerned matters of public record, which were readily available to the Buyer. Secondly, there was no failure to disclose under these facts because commercial real estate transactions are not subject to the same duty to disclose in residential real estate transactions. Lastly, the “as is” clause placed the risk of mutual mistake squarely on the Buyer’s shoulders.

If you are seeking to enter into a contract of sale for the purchase or sale of commercial or residential real estate, call the real estate attorneys at Schecter Law today at (954) 779-7009 to best protect your interests.