Florida Supreme Court Rules that Verbal Promises Regarding a Real Estate Contract Are Not Enforceable Unless in Writing

contract signatureReal estate sale and lease contracts can be extremely complicated, depending on the circumstances of the transaction. When large amounts of money are exchanged, and all the details of a real estate deal are taken into account, it is no surprise that disputes often arise in these situations. It is paramount to have a capable attorney who can draft, review, or negotiate a real estate contact on your behalf.

Even with a written contract, parties will frequently make oral changes or modifications. There are special rules when it comes to real estate contracts, however. In one case, the Florida Supreme Court has ruled that modifications made to a real estate contract weren’t enforceable unless they were made in writing and signed by the parties. Even if there was a verbal promise to the contrary, the parties were only bound to their written agreement.

This issue arose in DK Arena, Inc. v. EB Acquisitions I, LLC, a case involving a contract for the sale of property located in Florida. The parties entered into a contract to buy the property for the amount of $23 million. The real estate contract required a $1 million deposit to be deposited in escrow, and allowed the buyer to have 60 days to inspect the property and conduct due diligence. The contract also contained a provision stating that modifications to the contract were not enforceable unless they were in writing, signed and delivered.

At one point, the parties drafted an addendum to the contract, extending the due diligence period by two weeks. During this time, the parties also discussed forming a joint partnership to promote certain types of development for the property. However, the parties never memorialized their joint venture in writing. On the day the due diligence period was set to expire, the parties to the contract met and discussed extending the due diligence period once again while they negotiated the terms of the proposed joint venture. At trial, the testimony regarding this final meeting was conflicted. The buyer alleged that the due diligence period was held in abeyance indefinitely. The seller contended that an extension of only one week was granted and at the end of the period, the deposit would be nonrefundable. Either way, the parties acknowledged that no written memorandum was made to the contract regarding the extension of time.

Ultimately, the one-week time frame passed and the seller asserted breach of contract. The seller filed suit against the buyer when it refused to release the $1 million deposit from escrow and transfer it to the seller.

The Florida Supreme Court reviewed the trial and appellate court proceedings and held that any change made to the parties’ contract was required to be in writing and signed by the parties. This holding reinforced long-established Florida law known as the Statute of Frauds, which provides that certain types of contracts, including real estate contracts, are not enforceable unless they are in writing and signed by the parties to the contract. The Supreme Court held in the DK Arena case that the Statute of Frauds required a written addendum, regardless of any reliance on promises that were made verbally. The court noted that some states enforce verbal promises if there is reliance on the promise to the detriment of the other party. However, the state of Florida does not make exceptions in these types of situations, and the Supreme Court’s ruling in DK Arena confirms that.

If you are involved in the real estate industry, it is important to protect yourself when negotiating, drafting, or signing contracts. The Southwest Florida real estate attorneys at Lusk, Drasites, & Tolisano are skilled in the areas of real estate and contract law. Let our legal team help you minimize the risks associated with real estate transactions. From Naples and surrounding Collier County, to Cape Coral, Fort Myers, and other communities in Lee County, our legal team is ready to help you with your real estate needs. Contact us or call toll-free at (800) 238-7442 to discuss your real estate and business contracts needs.