Real estate sellers and buyers are often required to provide contractual notices to their counterparties relative to all kinds of different issues. For instance: cancelling a contract requires timely notice, objecting to title issues requires notice, and financing issues require notice, to name just a few.
How does one party provide notice to another? The answer is different under every contract. But the vast majority of contracts do contain a provision which sets out explicit instructions for permissible/required methods for providing notice. For instance, Paragraph 18.B. of the current version of the FARBAR contract addresses notice by requiring: “Notice and delivery given by or to the attorney or broker (including such broker’s real estate licensee) representing any party shall be as effective as if given by or to that party. All notices must be in writing and may be made by mail, personal delivery or electronic (including “pdf”) media.”
What happens if the contractually-required method for delivery of notice is not used? A Florida court recently answered that question in the context of a real estate contract. In MegaCenter US, LLC v. Goodman Doral 88th Court, LLC the parties were fighting over entitlement to a $250,000.00 EMD, and whether a proper and timely notice of cancellation had been provided by the buyer during a due diligence period. The buyer did not provide notice to everyone listed in the notice section of the contract, and the seller argued that the buyer had defaulted by failing to provide proper notice. The trial court agreed with the seller (goodbye $250,000.00). Luckily for the buyer, the appellate court agreed that the buyer’s notice had, in fact, been sufficient (hello $250,000.00). The appellate court noted the fact that even though the buyer had not strictly complied with the notice section of the contract, there was no dispute that the seller actually had received timely notice.
So, what are the takeaways? First, always pay attention to a contract’s notice requirements: they vary greatly from contract to contract. Second, provide notice to as many counterparties as you can – the more people that receive notice, the harder it will be for them to argue that they didn’t receive notice. You’re always better off providing notices to more people than to fewer. Finally, so long as you are able to prove that someone on the other side received notice, you are probably OK. Ending important emails with “please confirm receipt,” and then following up to ensure that someone received a notice is a great ‘best practice.’ It might save your buyer $250,000.00!
