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It's The Law: Sometimes Buyers Can Cancel Condo Purchase

Question: I have a contract to buy a new condominium from a developer. The developer made some changes and I do not like them. Can I cancel the contract?

Answer: Chapter 718 of Florida Statutes is the Florida Condominium Act. The Act has extensive protections for buyers of condominiums, most of which rely on disclosure by the developer.

Under Section 503 of the Act, buyers have fifteen (15) days after receipt of a long list of documents and disclosures from the developer within which to cancel the contract. If the developer amends the project in a manner that is both material and adverse to the buyer, the developer is required to give the buyer reasonable notice. The buyer gets a new fifteen (15) day period to cancel the contract after receipt of the amendment.

Key words in the Statute are “material” and “adverse” change. Material change to the physical condominium has been defined as palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan as to appreciably affect or influence its function, use or appearance. Material change to documents, such as budget or contract, is generally change to those provisions which are essential, significant and important.

There has been a substantial amount of litigation on whether changes to condominium developments were material and adverse so as to trigger a buyer’s new fifteen (15) day right of rescission. In 1979, the Fourth District Court of Appeal issued a decision that has pretty much governed trial courts on this issue. That court concluded that buyers of new condominiums may rescind when any substantial changes are made in the condominium documents effecting their rights and not merely effecting value of the unit. Determination of adverse is based on a reasonable standard. All of these determinations are based upon the changes as they existed at the time the buyer sought rescission and not after any subsequent remedial effort by the developer.

Specific examples of material and adverse changes, as determined by the courts, have included:

  1. Amendment of the Condominium Documents so that units would be separately metered for utilities, resulting in approximately $12,000.00 per year additional cost to the buyer;
  2. Failure to build within 12 months along with failure to deliver recreational facilities;
  3. Addition of 9 cabanas to a pool area;
  4. Unilaterally increasing the costs of extra by $7,000.00. On the other hand, a $90.00 monthly increase in assessments was not a material change.

The courts have agreed determination of whether a change is material must be viewed from an objective standard, not the subjective viewpoint of an individual purchaser.

In these cases, beauty or lack thereof is governed by more than the eye of the beholder. A change which most would consider minor and of no consequence, can be a real problem for a particular buyer. Because emotions often affect decisions in these circumstances, it is important that the buyer with objections about changes retain an experienced attorney immediately.

An experienced attorney can provide advice without the emotional issues brought by the buyer and with knowledge of both case law and statutes. The 15 day right of rescission can go by quickly and that makes prompt action important. You should retain an attorney immediately.

By: William G. Morris, Esquire

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