“One Sided Construction Contracts May Not Be Enforced By The Courts.”

Luxury Homes and Estates in Florida

In the current construction climate builders often dictate the terms of a construction contract. For some large builders form contracts are the norm. However, smaller contractors often negotiate the terms and don’t rely on form contracts.

However, all builders attempt to exact complete freedom and flexibility in the performance of the contract. Builders insert language in default clauses which are designed to make the builder immune from litigation or recovery.

One such device is a default clause that provides that if the builder cannot perform or will not perform, the buyer’s sole recourse is the recovery of the initial deposit.

Such default clauses are problematic because they are one sided and essentially allow the builder to build the home if it wants to and to sell the home to the buyer if it wants to.

The courts will not enforce such one-sided agreements.

In the case of Ocean Dunes of Hutchison Island Development v. Colangelo, 462 So.2d 437 (4th DCA 1985) the court ruled for the buyer and against the builder finding that this type of clause created a disparity in the obligations of the parties which is appalling. The court found that the builder’s obligations were illusory and struck the clause because there was no mutual obligation for performance between the parties.*

Thus, a buyer faced with the prospect of a builder who will not perform should consult an attorney. The builder’s self-serving and over reaching contract terms may not be enforceable.

*Other cases with similar holdings against the builder’s position are Hackett v. J.R.L. Development, Inc., 566 So.2d 601 (Fla. 2nd DCA 1990): and Blue Lakes Apartments, Ltd. v. George Gowing, 464 So.2d 705 (Fla. 4th DCA 1985).

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Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.

“If Your Contract is Improperly Written, the Deposit May Not Be Retained in the Event of a Default.”

Luxury Homes and Estates in Florida

In the ordinary real estate transaction, the buyer expresses his interest in a property by executing a contract. One routine provision is to require the seller to put up a good faith deposit. The deposit serves several purposes. One purpose is to ensure that the buyer is serious by putting money at risk. The second purpose is to afford the seller a pot of money for potential recovery in the event of a default.

Real estate contracts afford remedies upon the event of default including retaining a deposit as a liquidated damage. Liquidated damage clauses are inserted in order to limit the remedies available and to avoid litigation. However, a realtor must be aware of real estate contracts that afford the seller an election of remedies. If the contract affords the seller a choice of whether to retain the deposit as liquidated damages or sue for actual damages, the clause is void.*

The Florida Supreme Court held that a liquidated damages clause is invalid if the seller may either retain the deposit or bring an action for damages. Although the case was decided over ten (10) years ago, Appellate Courts routinely invalidate liquidated damages clauses which have not been changed.

Accordingly, it would behoove each agent, seller or buyer to review the contract language to make sure that the liquidated damages clause is enforceable.

*The Supreme Court case of Lefemine v. Baron, 573 So.2d 326 (Fla. 1991) discusses this issue. The liquidated damages clause at issue in Lefemine is as follows: Default by buyer: if buyer fails to perform the contract within the time specified, the deposits(s) made or agreed to be made by buyer may be retained or recovered by or for the account of seller as liquidated damages, consideration for the execution of the contract and in full settlement of all claims; whereupon all parties shall be relieved of all obligations under the contract; or seller, at his option, may proceed at law or in equity to enforce his rights under the contract.

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Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.

The Business of Winning, an Interview with Houston Short

When Houston E. Short takes on a case, he goes to war.

He marshals his resources with the sole purpose of annihilating his adversary in the courtroom or at the mediation table.

“If you really have a successful case, it will never go to trial,” said Short, co-founder of Pohl & Short, a boutique law firm specializing in corporate law, commercial litigation, real estate law and personal finance.

While many clients know the basics of the legal world, some need brief tutorials to dispel preconceptions drawn from watching “The Practice” or reruns of “Perry Mason.” The firm’s 14 attorneys try to give those clients “a road map of what a lawsuit is,” said Short. “We destroy the myth that a case will go to trial in three months.”

Actually, only a small percentage of civil or criminal cases end in jury trials. The rest are resolved through mediation, arbitration, guilty pleas, or die for a lack of evidence.

Short, who earned his law degree from the University of Florida, opened the Winter Park firm in September 1993 with fellow attorney Frank L. Pohl. Within a few years, the firm received accolades and awards from the Greater Seminole Chamber of Commerce and the federal government for its innovation and vision.

Part of the success stems from the emotional as well as professional investment given each case, said Short. “We actually care about our clients and we maintain long relationships,” he said. “My clients are my best friends and I carry their concerns on my sleeve.”

On Occasion, that passion translates into cases where Pohl & Short becomes a white knight defending the vulnerable. In one instance the firm did free legal work for an elderly woman left destitute through the sale of her home, and in another charged a nominal fee to help a client get fair compensation on a land deal, said Short.

“We’ve done that on many occasions in the past and we will do that again when our hearts are so led,” he said.

The opportunity to make a positive difference in someone’s life is one of the attractions that drew Short to the legal profession after he graduated from Florida State University.

“Coming out I knew that I wanted to make differences, palpable differences with the people I came upon,” he said. “I could never understand people who just take a job or do something that they don’t care for.”

He has found that the law can be a rough business where no quarter is given.

“If you don’t think that, go to trial and be a nice guy and don’t be prepared and see what happens,” said Short, 43. “You’re going to use all your assets on the battlefield of the courtroom, and the lawyer is your general.”

When he is not waging legal warfare, Short enjoys spending time with his sons, Houston Jr., 12, and Noah, 6. In Addition to the usual baseball, basketball and soccer games, there are afternoons at area skateboard parks where Short, wearing the appropriate pads and helmets, does his best to be the Baby Boom’s answer to Tony Hawk.

He said there is a lesson in this he hopes his boys will carry with them as they move through life.

“They learn they can go out and it’s okay to fail,” he said. “The only failure is not to try.”

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“A Bank Account Owned by Husband and Wife is Immune from Collection by a Creditor of Only One Spouse”

Luxury Homes and Estates in Florida

Once a husband and wife are married in the State of Florida the law recognizes a separate and distinct entity for property owned by husband and wife. Real and personal property owned by both husband and wife is recognized as owned by tenancy by entireties. This distinction is important in Florida because a creditor of only one spouse cannot pierce and obtain payment from assets owned by both husband and wife.

Most often, a husband and wife will open a checking account and savings account with a local bank. The signature card often allows either the husband or wife to withdraw funds from the account. You should designate any checking account owned by husband and wife as tenancy by entireties. However, failure to so designate the account does not defeat the immunity from creditors.

Collection attorneys often argue that an account designated not as tenancy by entireties but as a joint checking account is subject to collection.

Florida courts hold that even a joint account is afforded protections. The courts look at the intent of the husband and wife at the time of opening the account to determine whether or not the account is protected as an estate by entireties. The Gibson v. Marr, 395 So.2d 1278 (Fla. 4th DCA 1981); Roger Dean Chevrolet, Inc. v. Fischer, 217 So.2d 855 (Fla. 4th DCA 1969). The courts look at extrinsic facts including whether or not both the husband and wife “owned” the account, and whether the money to create the account came from assets or earnings from the couple after they were married, and whether or not the monies in the account are used to pay the expenses of the household.

These arguments should be marshaled if a creditor of one spouse garnishes the bank account of the husband and wife. You should contact an attorney familiar with collections and exemptions afforded the husband and wife to protect your rights.

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Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.