03/10/2010
Return of real estate deposits in Florida in excess of 15%
During the real estate boom in Florida, purchasers were giving -- and developers were more than happy taking -- deposits equal to twenty percent (20%) of the purchase price on many if not all of their real estate transactions. This was especially true regarding real estate transactions relating to pre construction condominium purchases. The problem is that, in most cases, the law only allows the developers to take a fifteen percent (15%) deposit.
The Interstate Land Sales Full Disclosure Act ("ILSA") is a federal law which was passed in the late 1960s to, among other things, protect buyers from the sometimes adhesive hand of developers. ILSA provides for a default provision in certain real estate contracts which requires that once a buyer defaults after having paid fifteen percent (15%) of the purchase price, the seller must refund any amount which remains from the payments made after subtracting fifteen percent (15%). In sum, the buyer gets back anything they paid to the developer over and above fifteen percent (15%) of the purchase price.
Notwithstanding, even when suit is filed, developers have steadfastly refused to return any deposit monies including this excess amount. Unfortunately, many courts are not impeding such efforts. However, below is a link to the Third District Court of Appeal's most recent decision on the subject, which offers a significant ray of hope.
http://www.3dca.flcourts.org/opinions/3D09-2266.pdf
Although the Third District partially reversed the lower court's return of the deposits in excess of fifteen percent (15%), the appellate court did so based on a procedural deficiency in the underlying motion. The Third District commented that "however inscrutable the full-court resistance exhibited by these developers to returning the deposit monies in excess of fifteen percent in this case, they are entitled to the due process of the law, meaning a properly supported motion for summary judgment." Therefore, the Third District appears to be sending a message that, at a minimum, the developers will not be allowed to keep the deposits in excess of fifteen percent (15%), just as long as the underlying motions are done properly.
So, in the final analysis, the Third District's decision illustrates an even more important point. That is, the need to obtain counsel which will not just understand the substantive implications of the law, i.e., that the buyers are always entitled to a return of a deposit in excess of fifteen percent (15%), but counsel which will understand the proper procedural way to use that law too. This way the client's immediate entitlement to their funds is not needlessly frustrated by procedural technicalities overlooked.
Everyone makes mistakes, sure. But when clients' substantial sums of money are held in limbo as a result of such mistakes, it behooves such clients to find the lawyers who will keep such mistakes to a minimum -- or at least keep their mistakes to matters less significant. Money is not everything, but it sure is something that is nice to have a little more of.
By: Josh Kon, Esq. ( jkon@stoklaw.com)
(Please note: This article does not constitute legal advice or the formation of an attorney-client relationship; however, please feel free to contact the offices of Stok Folk + Kon, P.A. with any of your questions or concerns).
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