Welcome to the website of the law office of Steven D. Rubin.  Mr. Rubin has been licensed to practice law in the State of Florida since 1981. His office  is located at 980 N. Federal Highway, Suite 440, Boca Raton, Florida 33432. He is admitted to practice before all of the State Courts in Florida and is Board Certified by the Florida Bar in Real Estate Law and Condominium and Planned Development Law.

Case Law Update

A CHINK IN THE JOHNSON v. DAVIS ARMOR? No Duty of Seller of Residential Property (in an option to purchase contract)To Disclose Facts Not Readily Observable and Unknown to Buyer Even Though the Hidden Defects May Materially Affect the Value of the Property.

Since 1985, when the Florida Supreme Court decided the seminal case of Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), it has been the law in Florida that when the seller of residential real property knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This is true even when the contract for sale and purchase contains “as is”, waiver, and disclaimer clauses. The standard Florida Bar/Florida Association of Realtors approved residential form of contract for sale and purchase actually contains a clause which closely mirrors the seller’s Johnson v. Davis disclosure duty.

Does the seller of residential property have the Johnson v. Davis duty of disclosure when the seller and buyer only enter into an option to purchase the home, instead of a purchase and sale contract? No, the seller does not, according to the Florida Second District Court of Appeal. In Rost Investments, LLC v. Cameron, 45 Fla.L.Weekly D1716 (Fla. 2 DCA 07/17/20), the buyer and seller entered into a lease of the home and a second contract for an option to purchase the home. The buyer moved into the home under the lease and had not yet exercised the option to purchase when the buyer alleged that the seller had failed to disclose hidden defects materially affecting its value which the seller had known about before the buyer signed the option contract. The buyer sued the seller, in part, for rescission of the lease and option contract based upon the seller’s breach of its duty to disclose the hidden defects.

The District Court of Appeal reversed the trial court’s judgment in favor of the buyer and held that because the buyer had not yet exercised his option to purchase, the Johnson v. Davis duty to disclose was not applicable. In essence, the relationship between buyer and seller was only one of tenant and landlord or optionee and optionor, not buyer and seller. Would the result have been different if the buyer had exercised the option before filing suit against the seller? Perhaps, but the timing of the exercise would have been crucial. If the buyer had exercised the option after he learned about the alleged hidden defects, then arguably the defects would have been “known” to the buyer before the “sale” thereby relieving the seller of liability. In addition, because the buyer took possession of the home under the lease, the “hidden” defects might have become “readily observable” to the buyer before the buyer had exercised the option, again relieving the seller of liability.

Is a lease/option to purchase transaction now a legitimate way for a seller of residential property to circumvent the Johnson v. Davis duty of disclosure? If so, it would seem to eviscerate the strong public policy reasons the Florida Supreme Court considered and relied upon when it decided Johnson v. Davis 35 years ago. The Court then stated in pertinent part:
“These unappetizing  [caveat emptor] cases are not in tune with the times and do not conform with current notions of justice, equity and fair dealing. One should not be able to stand behind the impervious shield of caveat emptor and take advantage of another’s ignorance. Our courts have taken great strides since the days when the judicial emphasis was on rigid rules and ancient precedents. Modern concepts of justice and fair dealing have given our courts the opportunity and latitude to change legal precepts in order to conform to society’s needs. Thus, the tendency of the more recent cases has been to restrict rather than extend the doctrine of caveat emptor. The law appears to be working toward the ultimate conclusion that full disclosure of all material facts must be made whenever elementary fair conduct demands it.”

As of February 4, 2021, the Second District Court of Appeal had denied rehearing and the case is  pending before the Florida Supreme Court. The Supreme Court has not yet decided whether it has  direct conflict jurisdiction to hear the case.


The United States Supreme Court recently went back to first year law school class for Real Property 101. The Court was tasked with deciding whether a “right of way easement” is “land”. The case arose when the U.S. government was asked by Coast Pipeline, LLC for permission to install a natural gas pipeline in the George Washington National Forest (“Forest”) in West Virginia, including 0.1 mile of pipe 600 feet under a portion of the Appalachian National Scenic Trail (“Trail”) which is located, in part, in the Forest.

The government granted permission, but a local environmental organization filed suit to stop the issuance of the permit. Under the federal Mineral Leasing Act, pipeline easements are prohibited in National Park System land but are permitted in National Forest land. The parties agreed that if the Trail is “land”, then because it is within the National Park System, the pipeline  permit should not have been issued, but if the Trail is not “land”, then the pipeline is located in Forest land and the issuance of the permit was proper.

The Florida Supreme Court has stated that: “ . . . . an easement is more than a mere personal privilege; it is an interest in land.” See H & F Land v. Panama City-Bay Co Airport, 760 So.2d 1167 (Fla. 1999), citing to Winthrop v. Wadsworth, 42 So.2d 541 (Fla.1949). While an easement is not the fee simple interest in land (the whole bundle of sticks), it is one of the sticks in the bundle. However, Justice Thomas, who wrote the majority opinion, relied on non-Florida case and treatise authorities to conclude that “easements are not land, they merely burden the land that continue to be owned by another.” In so ruling, the Court held that the issuance of the pipeline permit was proper because “a trail is a trail, and land is land.” See United States Forest Service v. Cowpasture River Preservation Association, Inc., 28 Fla.L.Weekly Fed. S285 (U.S. June 15, 2020).

The dissent pointed out that the National Park Service has always considered the Trail to be land, and if the Trail is not land, exactly what is the National Park Service maintaining (an imaginary space above the land)? The dissent also stated that private property rights in land are not relevant to the grant of interests in public land owned by the United States, and the Statutory scheme of the National Park System grants jurisdiction to maintain buildings, roads, houses, recreation areas, and monuments located on land not owned by the Park Service. Justice Kagan noted that the Trail is a foot trail worn into the earth, not a trail of water or something other than land.

Has the Supreme Court Opinion changed the law of easements in Florida? The majority could have avoided the issue altogether by ruling that the scope of the National Park Service right of way easement in the Forest land did not extend 600 feet underground and thus the United States Forest Service retained the right to grant another interest in the land (underground easement) to the pipeline company. Can Coast Pipeline now apply for and receive a permit to construct a 15 foot high pipe on top of the Trail, thereby blocking the Trail for hiking? Regardless, in my opinion, this case is a great example of how the personal perspective and judicial philosophy of each Justice make a huge difference in the ultimate outcome of a case.


If a building or improvement which is  located on one lot is partially built on an adjoining lot (i.e., an encroachment onto the adjoining lot and an excroachment of the building on  the lot itself),  the same  would usually be  considered a title defect, with respect to what the survey would show, thereby rendering title of both lots  unmarketable. That makes sense; only the owner of a lot should be permitted to build an improvement on it, unless the lot owner has granted another person permission to do so (e.g., by easement, covenant, or license).
What if a lot owner  installs a boundary wall on the  lot owner’s lot, but the subterranean footers of the wall extend 6 inches into and underneath the adjoining lot? Would the adjoining lot owner have a cause of action against the lot owner who installed the footers to compel the  lot owner to remove the encroaching subterranean footers and for damages? Apparently not, at least according to the Florida Fifth District Court of Appeal. In Williams v. River Bend of Cocoa Beach, 44 Fla. Weekly D2377 (Fla. 5th DCA 09/20/19), the Court upheld the trial court’s ruling that the 6 inch subterranean footer encroachment was “de minimus and did not seriously interfere with the use and enjoyment of the land [adjoining lot],” nor did it render title of the adjoining lot unmarketable.
This ruling seems contrary to established law which states that  ownership of land is unique and any unpermitted interference with the owner’s rights to or interest in the land is presumed to cause irreparable damage. Why should a lot owner be able to use the adjoining lot without  the adjoining lot owner’s permission? What if the adjoining  lot owner wanted to construct a boundary wall on her side of the boundary line and she  wanted her subterranean wall footers to extend into and under the other lot? That would not be possible if the other lot owner’s boundary wall footers extended  6 inches into the adjoining  lot; she would be prevented from installing her wall any closer than within 6 inches of her boundary line because the other lot owner’s footers would already be there. If a lot owner is permitted to encroach  onto the adjoining lot, purportedly as authorized by this court ruling, will the  lot owner eventually acquire title to the 6 inch strips of land on the adjoining lot  by adverse possession or prescriptive easement?
The Fifth District cited to a 1953 Florida Supreme Court case to support its ruling. However, in Loeffler v. Roe, 69 So.2d 331(Fla. 1953), the encroachment involved a roof overhang of a building which was located on private land but which hung over public land (the roof overhang encroached into the air rights over a public street and publicly owned sidewalk). The municipality had no objection to the air encroachment, which I would argue, is a material distinguishing fact from the facts in the Williams case. In Williams, the encroachment was underneath another privately owned lot, not public land, and the owner of the privately owned lot objected to the encroachment.
Interestingly, the Fifth District also affirmed the trial court’s ruling that if the  lot owner’s wall “fell into a state of disrepair in the future that it must be removed”,  then the encroaching footer must be removed from the adjoining lot, and any new wall could not encroach on or under the adjoining lot.Rhetorical question: Why can’t the  lot  owner reinstall the encroaching  subterranean wall footer 6 inches under the adjoining lot again if, as the trial court ruled and the Fifth District affirmed, the encroachment is de minimus and does not seriously interfere with the adjoining lot owner’s property rights, or render the adjoining lot  owner’s title unmarketable? Furthermore, what must or should the lot owner who caused the encroachment disclose to a prospective purchaser  or mortgagee of the lot about the excroachment of the footers under the adjoining lot?

As of March 10, 2020,  a motion for rehearing had been denied and an appeal is pending with the Florida Supreme Court.


Not infrequently in the context of a purchase and sale transaction, the title search may reveal a defect in title. Most real estate contracts define a defect in title as a matter which renders title “unmarketable”. Subject to specific  exceptions and qualifications in a real estate contract, generally, a marketable title is one that must be such “as to make it reasonably certain that [title] will not be called into question in the future so as to subject the purchaser to the hazard of litigation.” See e.g., Henley v. MacDonald, 971 So. 2d 998 (Fla. 4DCA 2008). Examples of defects in title are the failure of a predecessor in title to sign a deed or the failure to obtain condominium association approval, when approval is required.

If the buyer’s examination of title discloses a defect in title, the buyer is usually obligated to notify the seller of the title defect within a certain time period to give the seller an opportunity to cure the defect (cure provisions are strictly contract requirements and vary from contract to contract). In a typical real estate contract, after the buyer gives timely written notice of the title defect to seller, there are certain obligations imposed upon the seller to cure the defect and to do so within a stated time period.
In D&E Real Estate, LLC v. Vitto, 43 Fla. L. Weekly D2654 (Fla. 3DCA 11/29/18), the Contract contained an initial period of 30 days for seller to cure the title defect (“Cure Period”). It further provided:

“If Seller is unable to cure defects within Cure Period, then Buyer may, within 5 days after expiration of Cure Period, deliver written notice to Seller: (a) extending Cure Period for a specified period not to exceed 120 days within which Seller shall continue to use reasonable diligent effort to remove or cure the defects (“Extended Cure Period”); or (b) electing to accept title with existing defects and close this Contract on Closing Date….; or (c) electing to terminate this Contract and receive a full refund of the Deposit, thereby releasing Buyer and Seller from all further obligations under this Contract. If after reasonable diligent effort, Seller is unable to timely cure defects, and Buyer does not waive the defects, this Contract shall terminate, and Buyer shall receive a refund of the Deposit, thereby releasing Buyer and Seller from all further obligations under this Contract.”

 In this Case, the Court had the opportunity to rule upon two issues which commonly arise when there is a defect in title. The first is if the buyer fails to timely notify seller in the manner required by the Contract that buyer has elected to extend the Cure Period, is the Cure Period extended?; and second, if the Cure Period is extended, how does the seller satisfy its “reasonable diligent effort” contract obligation to cure or remove the defects in title?

With respect to the first issue, the Buyer had timely notified the Seller in writing that there was a title defect.   However, the Seller was not able to cure the title defect within the initial 30 day Cure Period. Thereafter, the Buyer did not timely notify the Seller that it had elected to extend the Cure Period in the manner required by the contract,  leading the  Seller to argue that it was under no obligation to cure title after the Cure Period expired, and that in fact it was entitled to terminate the Contract.  The Court found that the Buyer did not timely notify the Seller, in writing, to extend the Cure Period, however, it concluded that the Seller was estopped to declare the Contract was terminated because of the Seller’s inconsistent post-Cure Period conduct upon which the Buyer relied.  The testimony at trial was that after the Cure Period had expired, the Seller, instead of declaring the Contract had terminated, continued to make some effort to cure or remedy the title defect. The Seller also received numerous post-Cure Period email communications from the Buyer’s attorney requesting the Seller to render title marketable and inquiring about the status of the results of Seller’s efforts. Despite the Buyer’s failure to extend the Cure period in the manner required by the Contract, at no time after the initial  Cure Period expired did the Seller notify the Buyer that the Contract had been terminated. The trial court found the Seller’s failure to communicate termination of  the Contract to Buyer  misled the Buyer into believing that the Seller was in fact attempting to render title marketable.

Having determined that the Seller was under the obligation to use reasonable diligent efforts to render title marketable after the initial Cure Period had expired, the Court next had to decide whether the Seller met its diligent efforts obligation. The Court stated that whether a seller exercises reasonable diligent efforts in rending title marketable is nearly always a mixed question of law and fact. The trial court concluded the Seller did not exercise reasonable diligent efforts to clear title because the Seller did nothing more during the “Extended” Cure Period except to file a motion to dismiss the pending bankruptcy case (the pending bankruptcy case was the reason title was unmarketable). In addition to filing the motion to dismiss, the Court stated that the Seller should have asked the bankruptcy court for relief from the automatic stay, which the bankruptcy court invited the Seller to seek, and have sought an expedited hearing on its motion to dismiss. The Third District Court of Appeal affirmed the trial court’s findings of fact and law that Seller’s efforts to cure title were unreasonable, and it was not entitled to cancel the Contract, and moreover, that  Seller had breached the Contract because of its failure to exercise reasonable diligent efforts. The Buyer had the right to obtain, and the Appellate Court affirmed the trial court’s order granting, specific performance of the Contract.

Notably, there was no discussion in the opinion about whether the Contract contained an integration, anti-waiver, or no oral modification clause, and if it did, whether Seller argued to the trial court that the doctrine of  estoppel  is an  insufficient claim or defense as a matter of law.  As posted in the Case Law Update Article  below entitled: “Lessons Re-learned; Get It In writing!”, in 2013, the  Florida Supreme Court  held that the doctrine of promissory estoppel is not a valid exception to the statute of frauds and held that the seller’s oral promise to extend the contract due diligence period is not enforceable when the contract contains a clause which prohibits an oral modification. The D & E Real Estate decision was not appealed to the Florida Supreme Court ending review of the decision for now.

From a practice pointer standpoint, when a real estate  contract requires notice be given  to  the other party,  notice  should be sent  within the time period and in the precise manner stated in the contract.  And even if the contract contains anti-waiver, integration, or no oral modification clauses,  a party to the contract should promptly assert its rights, respond to emails, and communicate clearly, and obtain a written modification of the contract if necessary, to avoid a later argument that the party’s conduct misled the other party about the status of and rights under the contract. What we’ve got here in this case is a  failure to communicate.



If you see something, say something, and if you say something do something. In the world of real estate, if you gratuitously say you will do something, you may be required to do it in a careful and prudent manner. In Muchnick v. Goihman, 43 Fla.L.Weekly D986 (Fla. 3 DCA May 2, 2018), the real estate agent (Agent”) for the landlord repeatedly told the renters (“Renters”) that he (the Agent) would take care of correcting the mold, water damage, and cosmetic problems in the leased apartment. The Agent was not paid by the Renters for his services to correct the problems and no binding contract existed between the Agent and the Renters for the performance of any services or work. When the Agent failed to take care of the problems, the Renters sued the Agent for damages, in part, alleging the negligent conduct of the Agent.

In reversing the summary judgment in favor of the Agent, the Court held that the evidence supported the claim that the Agent had a duty to exercise reasonable care and could be liable to the Renters for damages if the Agent’s negligence resulted in increased harm to the Renters, or the Renters relied upon the Agent’s gratuitous offer to make the repairs and the Renters were damaged. The Court based its decision on the “undertaker’s doctrine” which provides: “Whenever one who undertakes to provide a service to others, whether one does so gratuitously or by contract, the individual who undertakes to provide the service – i.e., the ‘undertaker’ – thereby assumes a duty to act carefully and to not put others at an undue risk of harm.”

So, even though the Agent was not paid a penny for his time by the Renters for attempting to correct the problems and there was no contract for any services, the Agent may be liable to the Renters as an “undertaker” for his negligence. No doubt the Agent earned a real estate commission for procuring the Renters, and this fact probably explains why the Agent was so willing to “gratuitously” offer to correct the problems – no tenants, no rent, no commission.


It is not uncommon for the owner of real property to grant to one person the  right  to purchase the property if the owner accepts a bona fide offer to purchase the property from another person (right of first refusal). For example, a tenant might want to have the opportunity to own the leased premises if the landlord decides to sell it during the term of the lease. To protect the tenant’s opportunity to purchase the leased premises during the lease term, a clause would be included in the lease which obligates the landlord to notify the tenant that the landlord has accepted an offer to purchase the leased premises from a third party purchaser, giving the tenant the right to purchase the leased premises from the landlord on the same terms and conditions that are contained in the purchase contract between the landlord and the third-party purchaser.

What happens if after the landlord and third-party purchaser enter into the contract, the third-party purchaser learns about the tenant’s right of first refusal, and in an attempt to defeat the right, the third-party purchaser cancels the contract, and then enters into a second contract with the landlord at a much higher purchase price? When the first contract is terminated, does the tenant lose its right of first refusal? No. When the landlord entered into the first contract with the third-party purchaser, the tenant’s right of first refusal was converted into an irrevocable option to purchase the property. See The Allegro at Boynton Beach, LLC v. Pearson, 42 Fla.L.Weekly D2277 (Fla. 4th DCA 10/25/17). The tenant can enforce its right by filing an action against the landlord for specific performance to compel the landlord to sell the property to the tenant upon the same terms and conditions that are contained in the first contract. Nice try by the third-party purchaser, but the Court recognized the landlord’s and third party purchaser’s  gamesmanship and ruled in tenant’s favor based upon the applicable law.


A written contract for the conveyance of real property must contain all of the essential mutually agreed upon terms. One essential element is the agreed upon description of the real property to be conveyed. If the description of the land described in the contract cannot be determined by a surveyor reading the contract, with or without the use of extrinsic evidence (e.g., looking at a plat is extrinsic evidence), then the description is patently ambiguous (i.e.,  the surveyor cannot identify the property in the contract to the exclusion of all other property). Oral testimony of the parties at trial (parol evidence) is not permitted to resolve a patent ambiguity of the description of the land in the contract. The consequence of a patently ambiguous description of the land in the contract is the likelihood that the buyer will not be able to compel the seller, by court action, to convey the property to the buyer (i.e., by an action for “specific performance”), even if the seller has unjustifiably breached the contract by refusing to close.

Which of the following descriptions of land in a contract have been determined by the courts to be patently ambiguous?
1. “Approximately 20,000 square feet in the 31 story building.”
2. “A survey to establish the exact legal description of the property to be conveyed…per the sketch of the general area which is attached to the contract.”
3. “Property adjacent to the Mardi Gras, a Daytona Beach business, having a minimum of 50 frontage feet on the Boardwalk, and sufficient land to build a 7500 square foot building.”
4. Only (1) and (3) above.
5. All of the above.

See Boardwalk at Daytona Beach Development, LLC v. Paspalakis, 41 Fla.L.Weekly D2605 (Fla. 5th DCA, November 18, 2016). The correct answer is (5).


A natural person must be mentally competent to legally convey real property by deed. That is not a novel or surprising proposition. Suppose a woman in her nineties is selling her home and she attends the closing to sign the deed and other closing documents. She is not represented by an attorney, and she arrives in a wheelchair with her aide. The settlement agent, having met the seller for the first time, starts a conversation with her and pleasantries are exchanged. The seller responds appropriately and signs all of the closing documents, including the deed. The transaction closes in the ordinary course. However, three months later, the seller’s son files a petition to determine the seller’s incapacity, the court finds that the seller is incompetent, and the son is appointed as the guardian of the person and property of the seller. The son now alleges that the deed his mother signed three months prior is invalid because she was incompetent and he asks the court to set aside the deed (because the home was supposed to remain in his mother’s estate for distribution to the son upon her death). Should and will the deed be set aside?

In the ensuing litigation, the son will have the burden of proof to overcome “the strong presumption in favor of the validity of deeds “by clear, strong and convincing evidence,” as reaffirmed in the recent case of Marcinkewicz v. Quattrocci, 41 Fla. L. Weekly D2094a (Fla. 3d DCA 09/06/16).  The mother’s “mental capacity as grantor is presumed and must be overcome by a preponderance of the evidence”. Saks v. Smith, 145 So. 2d 895, 896 (Fla. 3d DCA 1962). The Court stated that the focus in any challenge to a grantor’s mental capacity is on the grantor’s capacity at the time the deed is executed:

“The burden rests on those seeking to set aside a deed on the ground of incapacity of the grantor at the time the instrument was executed. For it is the capacity of the grantor at the time the deed is executed and delivered that is controlling and his subsequent incapacity will not affect the deed. Parks v. Harden, 130 So. 2d 626, 628 (Fla. 2d DCA 1961).”

In Marcinkewicz, the Third District Court of Appeal reversed the trial court’s judgment which set aside the deed because the burden of proof was not met to establish that the grantor lacked the mental capacity when she signed the deed in July, 2013, despite evidence that:

1. In 2010, 3 years before she had signed the deed, the grantor was adjudged incompetent and her daughter was appointed the guardian of her person and property;
2. In January, 2012, 16 months before she had signed the deed, the guardianship was dissolved, but a limited guardianship remained over her person (see Florida Statutes Section 744.331(6) which gives the guardianship court the authority to specify which rights a person is mentally incapable of exercising, and apparently, the right to contract was not one of those rights the grantor could not exercise in the Marcinkewicz case); and
3. The grantor’s testimony at the trial convinced the trial judge that she lacked the mental capacity to sign a deed as of the trial date ( November, 2014; 18 months after she had signed the deed).

The only evidence that was presented at trial which was relevant to the grantor’s mental capacity when she had signed the deed was the testimony of the grantor’s attorney who had prepared the deed and witnessed her signing it in July, 2013. The attorney stated under oath that the grantor “knew what she was doing. . . .She had her faculties. . . I have known [her] for ten, 15 years…. [and] she wasn’t under any mental weakness of any kind.”

At a closing, who has the capacity to determine whether the grantor has the mental capacity to sign the deed, and how is that determined? A name search of the grantor would show a recorded order of incompetency but not a pending proceeding. A court records search might disclose any pending incompetency litigation. A discussion of substance with the grantor could be undertaken to evaluate her understanding of the pending transaction. The grantor’s physical condition might also give some clues about her mental capacity. Should or must a settlement agent hire a psychiatrist to attend all closings and require the parties to submit to a mental examination before the closing papers are signed!?

These are not easy questions to answer, and the law recognizes this practical difficulty by imposing the presumption of validity of deeds and requiring the party challenging the grantor’s mental capacity to prove the grantor’s mental incapacity at the time the deed is signed. The challenger should not solely rely upon a prior or subsequent adjudication of the grantor’s incapacity, even though that might appear to be very strong circumstantial evidence of incapacity at the time the deed was signed.


The Florida Constitution exempts every Florida resident’s homestead from “forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon”, except for “the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field, or other labor performed on the realty.” See Art. X, Section 4, Florida Constitution. In general, a “homestead” is the Florida resident’s permanent home, and land surrounding the home, provided the total area is not more than a half acre if the home is located within a municipality, and not more than 160 acres if the home is located in an unincorporated area. There is no monetary limit for the value of the homestead exemption. For example, pursuant to this Constitutional homestead protection, if a homeowner negligently injures another person and that person obtains a $5,000 judgment  against the homeowner, the injured person cannot collect the $5,000 personal injury judgment against the homeowner by forcing the sale of the homeowner’s homestead real property, even if the homestead has a value in excess of $5,000,000.

What if the homeowner sells the homestead residence after the injured person obtains the judgment against the homeowner? Can the injured person collect the judgment from the sale proceeds of the homestead because under those circumstances, the homestead is not sold “forcibly” by the Sheriff, but instead voluntarily by the homeowner? In 1962, the Florida Supreme Court answered this question and ruled that the sale proceeds from the homeowner’s voluntary sale of the homestead are still protected from the creditor’s attempt to collect its judgment, provided:
“1. There must be a good faith intention, prior to and at the same time of the sale, to reinvest the proceeds in another homestead within a reasonable time;
2. The funds must not be commingled with other monies; and
3. The proceeds must be kept separate and apart and held for the sole purpose of acquiring another home [homestead].” See Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201 (Fla. 1962).

As a practical matter, how does the homeowner keep the sale proceeds “separate and apart” and for the “sole purpose” of acquiring another homestead? Typically, when the sale of a home occurs, the seller is paid at the closing either by attorney’s trust account check or wire transfer. How does the homeowner have to “keep” the proceeds – put the check in a folder labeled “for new homestead only”; wire or deposit the funds into a separate non-interest bearing bank account; or cash the check and put the money in a jar under the bed until it is used to purchase the new homestead (an example used by the Florida Supreme Court)? Prior case law established that placing the proceeds into a separate interest bearing bank account was sufficient. That sounds reasonable, even though the proceeds are technically “invested” in the bank, as opposed to a new homestead, and the homeowner receives a return on his bank investment (the interest). It has also been held that the homeowner/seller can take back a note and mortgage instead of cash when the homestead is sold, and the note and mortgage will qualify for the homestead exemption, provided they are eventually used to reinvest in the new homestead.

What if the sale proceeds are placed into a separate brokerage account labeled “homestead account”, and the funds are used in the interim to purchase mutual funds and unit investment trusts? Are those “investments” for the “sole purpose” of buying a new homestead? Yes they are, says the Florida Supreme Court. In JBK Associates, Inc. v. Sill Bros., Inc. (41 Fla.L.Weekly S189 (Fla.04/28/16), the Court held that such investments were “safe”and an alternative to today’s bank accounts which do not “garner any significant amount of interest earnings”, and they do not “demonstrate an intent so different from reinvestment in a new homestead within a reasonable time.” In JBK Associates, the debtor did in fact reinvest the proceeds into a new homestead within a reasonable time after the sale which prevented the judgment creditor from collecting its judgment.

Unanswered questions remain for future resolution, and they will be decided on a case by case basis. For example, how long is a “reasonable time” from the date of sale of the homestead to reinvesting the sale proceeds into a new homestead? One court has stated ten years is too long, and although the opinion in JBK Associates does not state the precise amount of time that had elapsed, it was at least four months. Are the profits generated by the homeowner from the interim stock and mutual fund investments also protected from forced sale? What constitutes a “safe” investment, and does a “safe” investment vary depending upon the interest that can be generated by depositing the sale proceeds into a federally insured bank account? One question was definitely answered unequivocally: Florida Courts will continue to construe the homestead exemption very liberally in favor of homeowners, which makes Florida a very friendly and welcoming destination for the Nation’s debtors.


In a typical real estate transaction, an attorney may owe duties to the client, the lender, the title insurer, and the other party to the purchase and sale. For example, in Palm Beach County, an attorney could simultaneously be the escrow agent who holds the deposit, the title agent who examines evidence of title and issues the title policies to the buyer and lender, the closing agent who prepares the settlement statement and disburses the funds, and the attorney for the seller. The law imposes a variety of duties on the person who acts in these various capacities, and each representative capacity forms the basis for a potential conflict of interest. If an actual conflict of interest arises,  withdrawal from the representative capacity is required.

The various duties owed to the parties in a real estate transaction are created by both  law and  contract. An attorney has a fiduciary duty to her client and must provide legal representation in a non-negligent manner, with honesty and in good faith (see e.g. Mallard v. Dowell, 528 So.2d 512 (Fla. 3DCA 1988), rev, denied 539 So.2d 475 (Fla. 1988). A title agent has the duty to comply with the title insurance Statute and Regulations, and the contractual duties imposed by the title underwriter. The lender in a transaction will require the title or settlement agent to indemnify and hold the lender harmless if the agent breaches the lender’s closing instructions or commits a fraud.  The escrow agent holding the funds has a fiduciary and contractual duty to the buyer and seller to disburse the funds as directed by the parties’ contract (see e.g., United American Bank of Central Florida v. Seligman, 599 So.2d 1014 (Fla. 5DCA 1992). The closing agent has a fiduciary duty (with some exceptions) to the buyer and the seller to conduct and supervise the closing in a non-negligent manner, and with honesty and in good faith (see e.g., Askew v. Allstate Title & Abstract Co., Inc., 603 So.2d 29 (Fla. 2DCA 1992) and Gerson v. Broward County Title Co., 116 So.2d 455 (Fla. 2DCA 1959).

In the recent case of Moreno v. First International Title, Inc., 40 Fla.L.Weekly D1834 (Fla. 3DCA August 5, 2015), the purchaser, after the closing, sued the closing agent (who was not an attorney) alleging that it had breached its fiduciary duty because it did not clearly communicate to the purchaser that the County had imposed code enforcement liens against the property in the amount of $64,000 (presumably because the seller or the seller’s predecessor had constructed additions to the home without obtaining the necessary permits). The purchaser did not speak or read English. Before the closing, the closing agent required the purchaser to sign an acknowledgement of the existence of the code enforcement liens and a hold harmless agreement which attached a copy of each lien. The purchaser did not have an attorney, and even though she could not speak or read English, she signed the documents. Did the closing agent breach its fiduciary duty to the purchaser by closing the transaction, notwithstanding the existence of the code enforcement liens  and the purchaser’s inability to read or speak English?

The Court upheld the trial court’s summary judgment order in favor of the closing agent. The Court concluded that there was “no fraudulent inducement to sign, purposeful or negligent misinformation, or any other action on the closing agent’s part to prevent the buyer from reading the documents and inquiring about the contents.”  Fair enough – the closing agent advised the purchaser of the liens and code enforcement proceedings, and the purchaser was then able to decide, based on full knowledge of the facts, whether to close (query whether the title agent included the liens as exceptions in the title policy and whether the real estate contract disclosed the liens and required the purchaser to accept title subject to the liens).  In Moreno, the closing agent conducted the closing electronically, and presumably  the agent was not present at closing and did not know the purchaser could not speak or read English. Had the closing agent known those facts, would the result have been different? It is further noted that litigation continues against the real estate agent and the realty company.

To further complicate an attorney’s consideration of what duties she may owe to the  parties in a real estate transaction, if the attorney is representing one party to the transaction, then she must decide what she needs to explain  about  the transaction to the unrepresented opposing party to avoid an ethics complaint against her. As stated by the Florida Supreme Court, when there is  an elderly, unsophisticated opposing party and the terms of the transaction are very favorable to the attorney’s client,   “[f]irst, the attorney must explain to the unrepresented opposing party the fact that the attorney is representing an adverse interest. Second, the attorney must explain the material terms of the documents that the attorney has drafted for the client so that the opposing party fully understands their actual effect. When the transaction is as one-sided as that in the present case, counsel preparing the documents is under an ethical duty to make sure that an unrepresented party understands the possible detrimental effect of the transaction and the fact that the attorney’s  loyalty lies with the client alone. R. Regulating Fla.Bar 4-1.7.” Florida Bar v. Bellville, 591 So.2d 170 (Fla.1991).

However, compare what the Fourth District Court of Appeal has said about an attorney’s legal duty (as opposed to an ethical duty) to the unrepresented opposing party in a real estate transaction. In the following case, the attorney represented the seller and allegedly negligently prepared the closing statement which caused the unrepresented buyers to pay too much money at the closing. The Court affirmed the dismissal of  the buyers’ claim against the seller’s attorney and stated:

“The question is whether the attorney owed sufficient duty to the buyer so as to require him to account to the buyer for his negligence, if any. We think not. The attorney was hired by the seller to be his attorney, no representations were made that the attorney was representing both parties (which indeed he is not permitted to do, EC 5-14, Code of Professional Responsibility), and the buyer was quite free to hire his own lawyer if he was unfamiliar with preparing for real estate closings. The buyers cannot hold the sellers’ attorney liable for negligence in preparing a closing statement. The attorney’s allegiance was solely to the sellers and there is no allegation the attorney intentionally misled anyone in the matter.” Adams v. Chenowith, 349 So.2d 230 (Fla. 4DCA 1977)

These cases are  good examples of why a party to a contract for the sale and purchase of real estate should retain a Florida Bar Board Certified Real Estate Attorney to represent that party’s interests in the transaction. A Board Certified attorney is an expert in the area of law for which he has been certified, and has special skills, knowledge, and competence to handle the matter with the highest degree of professionalism and ethics.