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Dealing with the Sale of Florida Commercial Property When There is a Contractual Right of First Refusal

Almost anytime you are dealing with a sale of commercial property, you are dealing with a transaction that has the potential to encounter roadblocks or pitfalls and become a complex matter. As with any business matter where there is a large sum of money possibly at stake, it pays to, as one American motivational speaker has put it, “expect the best but plan for the worst.” In other words, be prepared from the beginning to be ready for any outcome, even the worst-case scenario. Part of that preparation means having an experienced South Florida real estate litigation attorney on your side from the very start.

That’s because, in any transaction like this – but especially in one that becomes disputed – details matter a lot. A recent case from Palm Beach County involving a contractual right of first refusal is an example. The holder of the right of first refusal was an entity that owned a senior living facility in Boynton Beach. That facility sat next door to the property over which the entity held the right. In the fall of 2013, the owner of that property next to the senior facility found a buyer for the property.

The owner of the senior facility (a/k/a the neighbor) exercised its contractual right and agreed to purchase for the same price and same conditions as the buyer had agreed to. A year later, though, the neighbor canceled its contract to purchase, having decided that “the current development environment” made the purchase “both time and cost prohibitive.”

The following May, the seller found a new buyer. The neighbor requested delivery of a copy of the proposed deal, as was required under the right of first refusal contract. The seller refused, stating that the neighbor’s contract rights were terminated when the neighbor terminated the purchase contract the previous September.

The neighbor sued for breach of contract and the seller countersued. As part of that litigation, the most recent proposed sale contract was disclosed to the neighbor as part of the pre-trial discovery process. Nevertheless, later on in the trial, the neighbor sought a ruling from the court that the seller was in breach because it had failed to deliver the second proposed sale contract to the neighbor as required by the right of first refusal contract. The seller argued that delivery had already occurred as the neighbor was already in possession of the contract.

Does a discovery disclosure count as delivery?

The court concluded that a mandatory disclosure as part of a party’s pre-trial request for production “could hardly be” considered a delivery. That’s because, in commercial law, delivery necessarily includes an element of voluntariness. When you hand over a contract because the rules of court procedure demand it (or else you face possible discovery sanctions,) that action is not completely voluntary.

Nevertheless, the neighbor still did not win its breach argument on appeal. Why didn’t it succeed? The problem was a detail of the litigation. The neighbor did not advance this argument about voluntariness in its appeal brief. Whether you are arguing before a trial judge or an appellate panel, it is incumbent on you to make all the arguments in your favor. The courts are not required to locate and advance your arguments for you. So, even if the appeals court identifies the existence of an issue – like voluntariness in this case – it is not required to rule in your favor if you did not include that in your appellate brief.

Details matter and, sometimes, details matter a lot. To get the thorough and detail-oriented representation your case needs, count on the diligent South Florida real estate litigation attorneys at Stok Kon + Braverman.

Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.

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