November 15, 2016

Florida Appellate Court Upholds Trial Court Order Binding New Condo Owner to Former Owner's Contractual Agreements

condo from groundIn CRP II - Miramar, LLC v. The French Quarters Condominium Owner's Association, the First District Court of Appeal considered a case involving an appeal between condominium owners. The plaintiff, Miramar, was developing a new phase of a mixed-use development. The defendant, French Development, owned a property adjacent to the development site. The two companies signed an "Easement and Maintenance Agreement." As part of the agreement, Miramar agreed to construct a swimming pool and other amenities on its property that would be available to residents at both condominiums. In exchange for this promise, French agreed to share in the maintenance cost of these improvements. The parties also agreed to assign the rights and obligations of the agreement to their respective homeowners' associations.

Miramar did not construct the pool and additional improvements. It told French instead that market conditions, contractor issues, and financing matters rendered the project undoable. French's homeowners' association sued Miramar. During that lawsuit, Miramar forfeited its ownership of the property in a foreclosure proceeding. The homeowners' association joined the new owner as a defendant in the lawsuit.

In its complaint, the homeowners' association alleged two causes of action. First, it sought a declaratory judgment that the agreement between French and Miramar constituted a covenant running with the land, meaning the new owner that obtained title through foreclosure was bound by the agreement. The second count alleged that the new owner and Miramar breached the agreement by failing to construct the pool and additional improvements.

In response, the new defendant asserted multiple defenses, including an argument that the agreement was not a covenant running with the land and that it had no obligation to build the pool and improvements.

The trial court granted partial summary judgment on the homeowners' association's first cause of action, entering an order that the agreement constituted a covenant running with the land that bound any of the original parties' successors. This meant that the new owner that obtained title through foreclosure was bound by the agreement. The court did not rule on the summary judgment motion. The new owner appealed the lower court's holding to the First Circuit.

In reviewing the lower court's findings, the appellate court found no error with the trial court's conclusion that the agreement constituted a covenant running with the land that bound the defendant. The court also noted that, although the issue of whether the defendant breached the contract was not at issue on appeal, the defendant included numerous arguments in its briefs regarding the issue of breach. The court found these arguments irrelevant and misplaced when deciding the appeal before it.

If you are involved in a real estate dispute, the diligent and hard-working real estate lawyers at Lusk, Drasites & Tolisano are prepared to provide you with the legal counsel that you need. We have counseled clients in contract and real estate matters throughout Southwest Florida, including in Fort Myers, Cape Coral, and Naples. To schedule your free consultation and learn more about your legal rights and options, call us now at 1-800-283-7442 or contact us online.

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