Recent Case Highlights the Importance of Strict Compliance with Condominium Riders

A recent Florida case highlights the importance of strictly complying with every provision of a purchase and sales agreement, including the condominium rider. In the case of Bydalek v. Saenz (2023), the Buyer provided the Seller with his notice of his intent to cancel the purchase and sales agreement, nine days after the scheduled closing. The Buyer’s position was that the Seller failed to provide him with the condominium documents, citing the statutory language within a condominium rider, the Court confirmed that the Buyer’s right to void a purchase and sales agreement had not terminated. This is of particular interest because the agreed-upon date for closing had elapsed.

Case Background

Jeffrey Bydalek (Seller) entered into a purchase and sales agreement that included a condominium rider with Eduardo Saenz (Buyer). The parties agreed to close on May 4, 2021. It was undisputed that the sale never took place. Thereafter, on May 13, 2021, the Buyer informed the Seller that he was canceling the agreement because the Seller never provided him with the Association’s condominium documents. The Seller refused to return the deposit, which led to the Buyer filing a lawsuit for breach of contract to obtain the return of his deposit.

The Court considered two primary issues. The first was whether the Buyer’s right to cancel the purchase and sale agreement terminated after he failed to timely close. The second was whether the Seller’s failure to provide the Buyer with the Association’s condominium documents was enough to allow the Buyer to terminate the agreement after the scheduled closing. Both parties were seeking to recover the earnest deposit being held in escrow.

Legal Argument and Court’s Decision

1. Contract Terms: The condominium rider attached to the purchase and sales agreement included a clause that allowed the Buyer to void the agreement by delivering written notice of his intention to cancel within three days after receiving the condominium documents. The specific language in the condominium rider provided:

THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF THE BUYER’S INTENTION TO CANCEL WITHIN 3 DAYS, EXCLUDING SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS, AFTER THE DATE OF EXECUTION OF THIS AGREEMENT BY THE BUYER AND RECEIPT BY BUYER OF A CURRENT COPY OF THE DECLARATION OF CONDOMINIUM, ARTICLES OF INCORPORATION, BYLAWS AND RULES OF THE ASSOCIATION, AND A COPY OF THE MOST RECENT YEAR-END FINANCIAL INFORMATION AND FREQUENTLY ASKED QUESTIONS AND ANSWERS DOCUMENT, IF SO REQUESTED IN WRITING. ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE THAN 3 DAYS, EXCLUDING SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS, AFTER THE BUYER RECEIVES THE DECLARATION OF CONDOMINIUM, ARTICLES OF INCORPORATION, BYLAWS AND RULES OF THE ASSOCIATION, AND A COPY OF THE MOST RECENT YEAR-END FINANCIAL INFORMATION AND FREQUENTLY ASKED QUESTIONS AND ANSWERS DOCUMENT, IF REQUESTED IN WRITING. BUYER’S RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.

Although the closing was scheduled for May 4, 2021, it is undisputed that the closing never took place. A significant portion of this statutory language is in the last sentence, which states: “BUYERS RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING” “At Closing” means when the closing occurs. Therefore, under the plain language of the statute, and the corresponding condominium rider, the Court determined that the Buyer’s right to void the agreement had not terminated, because the closing had not occurred.

2. Voidability at Closing: The critical clause stated that the Buyer’s right to void the agreement would terminate “at closing”. This became the central point of contention, as the closing did not occur. Notably, the Court did not address the reason why the closing did not take place.
3. Interpretation of “At Closing”: The court emphasized the phrase “at closing”, interpreting it to mean that the right to void the agreement remained provided that the closing had not occurred. This interpretation followed the principle that courts should not add words to a statute or a contract that were not contemplated at drafting.
4. Similar Precedent: In support of its finding, the court referenced Princeton Homes, Inc. v. Morganas it concerned a similar voidability provision. In both cases, the buyer’s right to void the agreement was upheld, due to the absence of a closing.
5. Final Judgment: The court affirmed the trial court’s decision, supporting the Buyer’s right to void the agreement. Therefore, he was entitled to a refund of his deposit since he had neither received the required condominium documents nor had the closing occurred.

Conclusion

Bydalek v. Saenz underscores the importance of providing the Buyer with the condominium documents promptly, preferably at the time the agreement is executed. Seller’s failure to provide the Buyer with the condominium documents preserved the Buyer’s right to terminate the agreement.

Practical Points to take away from this case:

• If the property is located within an association, the Seller should provide the Buyer with the Association’s documents at the time of signing the agreement.
• Seller should ensure that the Buyer receives all of the documents highlighted in the condominium and homeowner riders.
• Seller should also ensure that the Buyer acknowledges receipt of these documents by marking the relevant portion on the rider or through written confirmation.
• Failing to provide a Buyer with the Association’s condominium documents at the beginning of a transaction may have an adverse effect on your closing and entitle you to retain the escrow deposit.
• If you are unsure about your rights, obligations, or how to comply with specific provisions in the purchase and sales agreement, you should consult with an experienced real estate attorney to help guide you through the process.