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Do arbitration agreements in FL connect to the land?

On Behalf of | Jul 26, 2019 | Real Estate Disputes |

Real estate contracts are complex. Each provision can have a huge effect on future issues and a failure to properly review and negotiate provisions during a sale can result in unforeseen consequences. The property owner who finds themselves with a defective piece of real estate may experience the full impact of these provisions after the purchase is complete.

A recent case provides an example.

In this case, a Florida appellate court was asked to determine whether an arbitration clause between a developer or home builder remained binding for future property owners when included in the deed to the original home buyer.

The case involves a property sold to a homeowner in 2007 and the following timeline:

  • Event #1: 2007. During this sale, the original owner, a builder, included an arbitration provision within the deed along with language stating “all covenants, conditions and restrictions” within the deed should run with the land.
  • Event #2: 2010. The property owner sold to another family.
  • Event #3: 2017. Family discovers a defect in the property and files suit against the builder. The builder contends the lawsuit could not move forward in court, but instead must be resolved through arbitration as stated within the original 2007 contract. The new family disagreed, stating the provisions of the 2010 contract should apply.

Florida’s Second District Court of Appeal, held the arbitration clause within a deed can attach to the property and impact future property owners. The case is now under review by the Florida Supreme Court.

The state’s supreme court could agree with the appellate’s finding and allow the arbitration agreement to run with the land or it could disagree and send the case back to lower courts with additional instruction. Since the court’s decision will impact future Florida real estate disputes, we will follow this case’s progression and provide updates as they become available.