Sun Bank of Miami v. Lester
404 So. 2d 141 (1981)
Rule of Law:
When a real estate contract explicitly states that 'time is of the essence' and waives notice for defaults consisting of failure to pay monies, a buyer's late tender of a required deposit constitutes an incurable default, and contractual provisions waiving specific performance as a remedy are enforceable.
Facts:
- Rozanne G. Lester, a licensed real estate salesperson, contracted to purchase a condominium unit from Sun Bank of Miami.
- On January 17, 1979, Lester made an initial deposit of $7,000 as required by the contract.
- The contract stipulated that an additional deposit was due by May 1, 1979, and included a clause stating 'time is of the essence' and that failure to pay monies when required would allow the seller to terminate the agreement, with no prior notification for such defaults.
- The contract also included a provision that 'No action of specific performance of this agreement shall lie in favor of either party.'
- Lester failed to pay the additional deposit by the May 1, 1979, deadline.
- Sun Bank's agent notified Lester by telephone that her initial deposit was being returned.
- Lester offered to pay the additional deposit immediately, but her offer was refused by Sun Bank.
- Lester sent a check for the additional deposit on May 3, 1979, accompanied by a transmittal letter dated May 9, which Sun Bank received on May 16, 1979, but Sun Bank refused to reinstate the contract.
Procedural Posture:
- Rozanne G. Lester (plaintiff) sued Sun Bank of Miami (defendant) in the Dade County Circuit Court (trial court) seeking specific performance and declaratory relief.
- Sun Bank of Miami filed an answer and counterclaimed for attorney fees.
- Both parties moved for summary judgment.
- The trial court granted Lester's motion for summary judgment, reserving its ruling on damages, costs, and attorney fees.
- Following a non-jury trial, the summary judgment was incorporated into a final judgment, which awarded Lester $6,500 in attorney fees and granted specific performance.
- Sun Bank of Miami (appellant) appealed the final judgment to the District Court of Appeal of Florida, Third District.
- Lester (appellee) cross-appealed, urging an inadequate award of attorney fees.
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Issue:
Does a buyer's failure to tender a required monetary deposit by the specified deadline, in a contract explicitly stating 'time is of the essence' and waiving notice for such defaults, constitute an incurable default that precludes specific performance and allows the seller to terminate the agreement?
Opinions:
Majority - Barkdull, J.
Yes, a buyer's failure to tender a required monetary deposit by the specified deadline, in a contract explicitly stating 'time is of the essence' and waiving notice for such defaults, constitutes an incurable default that precludes specific performance and allows the seller to terminate the agreement. The court found that the contract clearly made 'time of the essence' and explicitly indicated that no notice would be given if a default resulted from the 'failure to pay monies when required.' The buyer, Lester, admittedly failed to make the additional deposit by the May 1, 1979 deadline. Following this default, the seller, Sun Bank, declared the default, rendering Lester's subsequent attempt to cure the default by tendering the payment too late. The court affirmed that contractual provisions waiving specific performance as a remedy are valid and enforceable, citing Dillard Homes, Inc. v. Carroll and Black v. Frank. The court also distinguished other cases cited by the appellee, Lance v. Martinez-Arango and Blanton Lake Properties, Inc. v. WWW, Ltd., finding them factually dissimilar to the instant case. In Lance, payment was tendered before a default was declared and the seller attempted to forfeit the deposit, whereas here the deposit was returned. In Blanton, the payment was timely, but a scrivener's error in the check was corrected quickly upon notice.
Dissenting - Ferguson, J.
No, a strict enforcement of the 'time is of the essence' provision should not be upheld in this case because it unreasonably and unjustly penalizes Lester. The dissenting judge argued that under the specific facts, the seller suffered no actual damages from Lester's two-day delay in tendering the balance of the deposit, especially given that the purchase was for a pre-construction condominium unit. The unit's value had significantly appreciated from $126,000 to $225,000 by the time of trial, implying the seller stood to gain substantial profits by refusing the late payment. Additionally, the developer had not yet notified the buyer of a selected mortgage lender, a step required by a mortgage rider to the agreement. Furthermore, the deposit was required by Florida Condominium Law to be held in an interest-bearing escrow account until closing, meaning it was not available for use by the developer. The dissent contended that while a technical default occurred, enforcing the clause rigidly would result in an excessive penalty and an unjust forfeiture of Lester's right to purchase, advocating for equitable considerations over strict contractual enforcement, citing authorities like Corbin on Contracts and the Restatement of Contracts (2d) which suggest 'time is of the essence' phrases do not always demand strict enforcement.
Analysis:
This case reinforces the principle of strict adherence to contract terms, particularly 'time is of the essence' clauses, when the default is monetary and the contract clearly specifies the consequences and waiver of notice. It underscores the importance of precise contract drafting and the enforceability of remedies waivers, even in situations where equitable arguments might suggest leniency. The majority's decision limits the ability of courts to grant equitable relief, such as specific performance, when parties have clearly defined their rights and obligations within a contract, especially regarding payment deadlines. Future litigants will need to ensure strict compliance with deadlines in 'time is of the essence' contracts to avoid an incurable default, and parties should be aware that clear contractual waivers of remedies will likely be enforced.
