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WARNING! FLORIDA COURT RULES SOME WARRANTY DEEDS CAN BIND SUBSEQUENT PURCHASERS

Jul 07, 2020

07 Jul
2020

WARNING! FLORIDA COURT RULES SOME WARRANTY DEEDS CAN BIND SUBSEQUENT PURCHASERS

by Harold Hudson

Let your buyers beware, if they buy a home in Florida the previous owner’s warranty deeds can bind subsequent purchasers to the terms laid out in those deeds. Take the time to explain this to your buyers and make sure they know what they are getting into!

The Case Hayslip v. U.S. Home Corp.,

In 2010, the Hayslips purchased a home from the Kensingtons. The 2010 deed – which the Kensingtons did not sign – stipulated that should any disputes arise between the grantor (the Kensingtons) and the grantee (U.S. Home Corp.) they would first try to settle through mediation and if that weren’t successful it should be submitted to binding arbitration.

Although unsigned by the Kensingtons, it further provides that the grantee, by accepting the deed, automatically agrees to its provisions on behalf of itself, its heirs, personal representatives, and successors.

In 2017, the Hayslips filed a lawsuit against U.S. Home Corp. alleging that they had inadequately and improperly installed the home’s stucco system contrary to Florida’s Building Code Act.

U.S. Home Corp. moved to stay the court proceedings and pursue arbitration in light of the preexisting arbitration clause in the original deed with the Kensingtons.

The Hayslips argued that they shouldn’t be held to the terms of the deed.

The Recent Ruling

Following a hearing, the general magistrate concluded that the arbitration provision in the original deed is a covenant running with the land, therefore binding the Hayslips, who knew of the original provisions in the first place. The general magistrate recommended mediation and/or arbitration, and the circuit court agreed.

The Question Before The Courts

Despite the favorable ruling for U.S. Home Corp., the court certified this question to the Florida Supreme Court:

“Does a mandatory arbitration provision contained within a residential warranty deed conveying residential property from homebuilder to original purchaser run with the land such that it is binding on subsequent purchasers where the intended nature of the provision is clear and the party against whom enforcement is sought was on notice of the provision?”

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