Kabula v. Southern Homes of Homestead VIII, Inc., 2008 WL 2741154 (S.D. Fla. 2008).

Kabula concerns a contract to purchase a condominium unit to be built after execution of the contract. The purchase agreement provided that the developer defendant had 30 months in which to build the condominium. The contract also had a Savings Clause stating that any provisions conflicting with ILSFDA were void.

The defendant asserted that it was entitled to claim the exemption under ILSFDA for properties required to be built within two years, claiming that the Savings Clause invalidated the 30-month time period.

The U.S. District Court for the Southern District of Florida held that the Savings Clause did not bring the contract within the exemption from ILSFDA, and could not be relied on to cure violations of ILSFDA “in hypothetically limitless ways.”

Van Hook v. Residences at Coconut Point, LLC, 2008 WL 2740331 (M.D. Fla. 2008).

Van Hook concerns a contract to purchase a condominium unit to be built after execution of the contract. The purchase agreement contained the following provision:

Seller anticipates Units will be substantially completed by the estimated date of within two (2) years of the date of this Agreement, but Buyer understands and agrees that Seller cannot guarantee substantial completion by that date. Seller will not be liable for any delays and Seller will not have to make, provide or compensate Buyer for any accommodations or costs as a result of any delays, and any delays will not permit the Buyer to cancel, amend, or diminish any of Buyer’s obligations. Notwithstanding the foregoing, however, Seller agrees to substantially complete construction of the Unit in the name specified in this Agreement by a date no later than two (2) years from the date that Buyer signs this agreement, subject, however, only to delays caused by matters which are legally recognized as defenses to contract actions in the jurisdiction where the Unit is being constructed.

The Seller defendant contended that this clause qualified it for an exemption under ILSFDA for an obligation to complete construction within 2 years. The U.S. District Court for the Middle District of Florida held that any obligation to complete construction within 2 years contained in the above-quoted provision was illusory and therefore not a true obligation. The court found fault with the first sentence for allowing extension for any delay without limitation, as well as for stating only an anticipated, estimated date of completion. The court also found that the third sentence embodied an illusory obligation because it included any defense to contract. The court held that conditions including delays other than acts of God or impossibility would remove the agreement from the exemption from ILSFDA. The court further held that the severability clause could not operate to cure the faults in the completion date provision, because severing that provision would leave no completion date at all, and thus could not qualify as an obligation to complete within 2 years.