By: Eric J. Neuman, Esq., Buckingham Doolittle & Burroughs, LLP
In Pugliese v. Pukka Development, 524 F.Supp.2d 1370 (S.D. Fla. 2007) the Federal U.S. District Court for the Southern District of Florida issued a decision that directly contradicts existing Florida State caselaw regarding the impact of a developer’s qualifying for the so-called “Under 100 Lot” exemption from the Federal Interstate Land Sales Full Disclosure Act 15 U.S.C. 1701 et seq. (“ILSA”).
Specifically, the Pugliese Court held that even where a project qualifies for the Under 100 Lot exemption under ILSA, a developer must nevertheless include in its purchase agreements certain ILSA mandated disclosures and provide for certain rights to purchasers. Such disclosures and rights include those that were previously required only on HUD registered ILSA developments (i.e., over 100 lots), such as allowance of a 20-day opportunity to cure a purchaser default and a limitation on the portion of a security deposit developers may retains in the event of a default by purchaser.
In arriving at its conclusion, the Court in Pugliese acknowledged that it was breaking with established Florida law on this issue, previously established in Mayersdorf v. Paramount Boynton, LLC, 910 So.2d 887 (Fla. 4th DCA 2005), and contravening an opinion letter from HUD’s Office of RESPA and Interstate Land Sales.
The decision in Pugliese is persuasive authority that has already been subsequently followed by the same District Court in its December 14, 2007 decision in Meridian Ventures, LLC v. One North Ocean, LLC, 538 F.Supp.2d 1359 (S.D.Fla. 2007) and its February 13, 2008 decision in Trotta v. Lighthouse Point Land Company, LLC, 2008 WL 413962 (S.D.Fla.). Such decisions are not controlling on the Florida State Courts, which are still bound by preexisting caselaw, nor are they binding on other Federal Courts. Nonetheless, these decisions creates a new gray area in the law on the implications of the Under 100 Lot exemption.
If this new line of decisions survive appeal, they are sure to have an important impact on the ability to enforce existing contracts relying upon the Under 100 Lot exemption. Moreover, in light of these decisions, developers would be wise to reevaluate their form of purchase agreements and purchasers should reexamine their rights under pending contracts.