Spent Money on a Real Estate Deal That Didn’t Close? Here’s What Florida Law Allows You To Recover
Real estate deals don’t always make it to the closing table. Sometimes, a buyer may fail to secure financing, a property may be rezoned, or negotiations may fall apart. But what happens when you’ve already spent money trying to make the deal work? Can you recover the money? It’s a frustrating position, especially when those costs add up quickly. Fortunately, Florida law provides several paths to recovery, but as recent cases show, those paths aren’t always as straightforward as they seem.
Understanding Unjust Enrichment
When there is no binding contract, many parties turn to a legal doctrine called unjust enrichment. This doctrine applies when one party benefits at another’s expense in a way that feels unfair. To succeed, you must show three key things:
- You provided a benefit to the other party
- They knew about and accepted the benefit
- It would be unfair for them to keep it without paying you.
At first, this may seem like a great resolution path for failed real estate deals, especially if you’ve invested time and money improving or preparing the property.
The Officious Intermeddler doctrine
However, Florida Courts also apply the officious intermeddler doctrine. This can actually block recovery completely.
In a recent court decision, City National Bank of Florida v. Signature Land, Inc., the court addressed a situation in which the developer spent significant funds rezoning a property, hoping to secure investors and finalize a purchase. The issue here was that he did this without a binding contract. While the rezoning ultimately benefited the property owner, the court ruled that the developer could not recover the money he spent. This is because the work was done voluntarily, during negotiations, and primarily for his business advantage. The court made it clear that if you choose to spend money before securing a deal, you may be acting at your own risk, and therefore, you may not be entitled to reimbursement.
This case demonstrates that if you provide an unrequested benefit, made before an agreement was finalized, or driven by your own expectation of future gain, the court may find the other party allowed to keep the benefit without paying for it.
For instance, if you undertake actions such as rezoning or conducting inspections without a binding contract, you may not be able to claim unjust enrichment.
When Can You Recover Costs?
That said, all is not lost. Recovery may be possible if:
- A Valid Contract Exists– If you have a binding agreement, even if the deal didn’t close, you may recover expenses related to performance of the contract, such as inspections or due diligence.
- Promissory Estoppel Applies– If you relied on a clear promise of counter-performance and suffered a loss because of it, you may have a claim.
- There’s Breach of Contract– If the other party failed to honor a valid agreement, you may recover damages or even seek to enforce the deal.
Legal Help Is Available
If you are involved in a real estate contract dispute, contact our Davie real estate litigation lawyers at Valero Law today by calling 305-607-7011 to evaluate your options and protect your rights. We serve clients in Davie, Broward County, Coconut Grove, and Miami-Dade County.
Source:
flcourts-media.flcourts.gov/content/download/2442478/opinion/Opinion_2023-0308.pdf
