Florida Court Recently Affirmed as Unenforceable Fixed-Price Purchase Options with Unlimited Duration of Time to Exercise
Jul 25, 2022 - Florida Real Estate Law by Moorhead Law Group
In this blog, Matt Couch, Attorney with Moorhead Law Group of Pensacola and Santa Rosa Beach, Florida, writes about a recent Third District Court of Appeals of Florida ruling that affirmed as unenforceable fixed-price purchase options with unlimited duration of time to exercise. Couch’s practice areas include real estate and construction disputes, business litigation, and employment law. To learn more about him, his areas of practice, and his contact information, click here.
The Florida Third District Court of Appeal (Third DCA) recently affirmed the well-settled rule that fixed-price purchase options with an unlimited duration of time to exercise such option are unenforceable.
The ruling issued on June 29, 2022, in the case of 814 Property Holdings, LLC v. New Birth Baptist Church Cathedral of Faith International, Inc. involved two condominium units situated in a two-unit condo building located near Miami. 814 Property owned Unit 1 and New Birth owned Unit 2 and operated a radio station from the unit serviced by an antenna located on the condominium common property. The declaration of condominium governing certain aspects of the two units granted the owner of Unit 1 a first purchase option on Unit 2 for a fixed price of $200,000. Upon exercise of the option by the Unit 1 owner, the Unit 2 owner was required to use its best efforts to obtain approval from the FCC to relocate and transfer the radio antenna. There was no time limitation on when the Unit 2 owner was required to obtain such approval, except that said owner would use its best efforts. Once FCC approval was obtained and notice of same provided, the Unit 1 owner had only 10 days to exercise the purchase option.
In August 2017, 814 Property purported to exercise the option by demanding in writing that New Birth use its best efforts to obtain FCC approval for transfer of the antenna. New Birth refused and litigation ensued. Summary judgment was ultimately granted in favor of New Birth.
The Third DCA affirmed the trial court ruling, finding that the option constituted an unreasonable restraint on the alienation of property. The court cited the long-standing rule set forth by the Florida Supreme Court in Iglehart v. Phillips, 383 So. 2d 610, 614 (Fla. 1980) (noting “[i]t is generally agreed that an option restraint is reasonable if the option price is at market or appraised value, irrespective of the duration of the option”). Notwithstanding the 10-day period for the Unit 1 owner to exercise the option upon notice of Unit 2’s receipt of FCC approval, the option overall was unlimited in duration, as the Unit 1 owner could opt to demand to purchase Unit 2 at any time. Based on that finding, the appellate court found no error in the summary judgment in favor of New Birth.