MIAMI—Whether due to a still recovering real estate industry or the gubernatorial election that seemed to encompass everything else, Florida real estate law in 2014 was a fairly quiet year. Still, Manny Farach, an attorney with the West Palm Beach office of law firm Richman Greer and is board-certified in Real Estate Law and Business Litigation, is pointing to several significant cases highlight issues and trends the Florida real estate lawyer must know.

1. The Tiara Condo Decision

“No discussion of Florida real estate law can begin without discussing the continued impact of last year's landmark decision of Tiara Condo. Ass'n, Inc. v. Marsh & McLennan Co., 110 So. 3d 399 (Fla.2013),” Farach tells GlobeSt.com. “Until Tiara, contracts lawyers were comfortable in the knowledge that contractual and intentional tort risk were the primary things they needed to look out for.”

Tiara, Farach says, changed that and now the Fifth District has applied negligence principles to a contract and held that that a bank's alleged acts of negligence toward its customer are actionable despite there being a contract, such as a depositor agreement, between the parties. Just as frightening to the contracts lawyer, he says, is the further holding that the waiver of jury trial in the depositor agreement was not applicable to these independent torts. Farach says these cases demonstrate that parties and lawyers can expect contractual uncertainty going forward. (Marian Farms, Inc. v. SunTrust Banks, Inc., 135 So. 3d 363, Fla. 5th DCA 2014).

2. Violating Escrow Provisions

“On the positive side, the Florida Supreme Court lessened the impact of violating the escrow provisions of the Florida Condominium Act, Florida Statute § 718.101 et seq., by applying the Rule of Lenity,” Farach says. “This Rule holds that the least punitive statutory interpretation will be adopted in a civil case when the statute at issue contains a criminal component.”

As a result of the Rule's application, Farach says, the more lenient interpretation was given to the statutory escrow provision requirement and the court held that the separate pre-construction escrow deposits required by Fla. Stat. § 718.202 (1) and (2) could be maintained in one account instead of two separate escrow accounts. While seemingly technical, he calls this interpretation is highly important as most condominium developers maintained just one escrow account for preconstruction deposits, and the court's interpretation saved these contracts from being voided (cancelled) for statutory non-compliance. (North Carillon, LLC v. CRC 603, LLC, 135 So. 3d 274, Fla. 2014). 

3. Offering Community Associations Certainty

“On the community association front, the Fourth District Court of Appeal held that the statute of limitations for suits arising from amendments to restrictive covenants begins to run when the amendments are recorded, and the amendments bind all owners presently affected by the restrictive covenants and those who purchase in the future, such as the statute of limitations binds those who are not owners at time of amendment but purchase after the amendment,” Farach says. “This decision gives developers and community associations certainty as to the impact of changes to their restrictive covenants. Harris v. Aberdeen Prop. (Owners Ass'n, Inc., 135 So. 3d 365, Fla. 4th DCA 2014).

4. Amending Restrictive Covenants

Farach also notes the issue of community association amendments, which came up in the Third District and held that a community association may amend its restrictive covenants so long as doing so is reasonable and not arbitrary and capricious. This principle, he explains, likewise applies to “business community associations, and applies such that amending restrictive covenants of a business community association to prohibit residential uses is reasonable and not arbitrary and capricious.” (Luani Plaza, Inc. v. Burton, --- So. 3d ----, 2014 WL 5012990, Fla. 3d DCA 2014).

5. The Cyberstalking Issue

“What constitutes cyberstalking and how it can be punished has been the topic of a good deal of legal discussion recently,” Farach says. “That includes a pending appeal to the United States Supreme Court. 2014 saw the Third District Court of Appeal weigh on the issue in a dispute between a landlord and a tenant when it held that a temporary injunction against a former tenant posting defamatory statements on a website is not permissible unless the landlord can prove loss of potential tenants, the commission of a future tort by the former tenant, or cyberstalking.” (Chevaldina v. R.K./FL Management, Inc., 133 So. 3d 1086, Fla. 3d DCA 2014).

3. Offering Community Associations Certainty

“On the community association front, the Fourth District Court of Appeal held that the statute of limitations for suits arising from amendments to restrictive covenants begins to run when the amendments are recorded, and the amendments bind all owners presently affected by the restrictive covenants and those who purchase in the future, such as the statute of limitations binds those who are not owners at time of amendment but purchase after the amendment,” Farach says. “This decision gives developers and community associations certainty as to the impact of changes to their restrictive covenants. Harris v. Aberdeen Prop. (Owners Ass'n, Inc., 135 So. 3d 365, Fla. 4th DCA 2014).

4. Amending Restrictive Covenants

Farach also notes the issue of community association amendments, which came up in the Third District and held that a community association may amend its restrictive covenants so long as doing so is reasonable and not arbitrary and capricious. This principle, he explains, likewise applies to “business community associations, and applies such that amending restrictive covenants of a business community association to prohibit residential uses is reasonable and not arbitrary and capricious.” (Luani Plaza, Inc. v. Burton, --- So. 3d ----, 2014 WL 5012990, Fla. 3d DCA 2014).

5. The Cyberstalking Issue

“What constitutes cyberstalking and how it can be punished has been the topic of a good deal of legal discussion recently,” Farach says. “That includes a pending appeal to the United States Supreme Court. 2014 saw the Third District Court of Appeal weigh on the issue in a dispute between a landlord and a tenant when it held that a temporary injunction against a former tenant posting defamatory statements on a website is not permissible unless the landlord can prove loss of potential tenants, the commission of a future tort by the former tenant, or cyberstalking.” (Chevaldina v. R.K./FL Management, Inc., 133 So. 3d 1086, Fla. 3d DCA 2014).