A New Legal Development That Could Impact Real Estate Disputes
Welcome to this week’s blog! While you’re likely accustomed to receiving real estate legal tips and advice aimed at enhancing your transactions, today I’d like to focus on a recent Florida case that could have significant implications for conflict resolution under the standard FAR/Bar Real Estate Contracts.
The Role of Attorney’s Fees in FAR/Bar Real Estate Contracts
As most real estate professionals know, the following standard FAR/Bar real estate contracts:
- The Residential Contract for Sale and Purchase;
- The “AS IS” Residential Contract for Sale and Purchase; and
- The Vacant Land Contract
contain provisions addressing:
- Default and breach of contract – What happens when a party fails to perform their obligations;
- Dispute Resolution – Steps that must be followed before litigation; and
- Attorney’s fees and costs – Who is responsible for legal expenses in a lawsuit.
These provisions are designed to work together to ensure a clear pathway for handling disputes. A crucial part of this framework is pre-suit mediation, a mandatory step before a lawsuit can be filed.
Pesantes v. Kelley: A Game-Changer for Attorney’s Fees in Litigation
A recent ruling in Florida, Pesantes v. Kelley, issued by the Florida Third District Court of Appeals in February 2025, provides important insight into the recovery of attorney’s fees and costs in lawsuits arising from these standard FAR/Bar real estate contracts. Specifically, the court focused on Section 17. Attorney’s Fees and Costs., which states:
“In any litigation permitted by this Contract, the prevailing party shall be entitled to recover from the non-prevailing party costs and fees, including reasonable attorney’s fees, incurred in conducting the litigation.”
At first glance, this provision seems straightforward: if you win the case, the losing party must pay your legal fees. However, the Third DCA found an important restriction hidden within this language.
The Catch: Pre-Suit Mediation is Mandatory
The court scrutinized the language of the first part of the sentence: “In any litigation permitted by this Contract…” and determined:
- Pre-suit mediation is a mandatory prerequisite – A party must attempt mediation before filing a lawsuit.
- Failure to mediate means no attorney’s fees – Even if you win the lawsuit, you cannot recover legal fees if mediation was skipped.
- Even an unwilling party benefits – If the other party refuses to mediate, they can still avoid paying attorney’s fees.
This outcome may seem unjust, particularly if the winning party attempted to mediate, but the other side refused to participate. However, the court acknowledged this potential inequity, addressing it in a footnote within the opinion. The court stated:
“In reaching this conclusion, we are mindful that the result of this appeal might be viewed as unfair by some because the subject form agreement clearly contemplates that the contracting parties will comply with the pre-suit mediation requirement and, Buyer, simply by failing to submit this dispute to mediation prior to filing this lawsuit, has avoided paying attorney’s fees to Seller, the prevailing party in the lawsuit. This result, though, is dictated by the narrow language of paragraph 17’s attorney’s fees provision.”
What This Means for Real Estate Professionals
If you’re considering pursuing a claim for breach under a standard FAR/Bar real estate contract:
- Consult a licensed Florida real estate attorney before filing a lawsuit.
- Ensure pre-suit mediation is concluded – even if you believe the other party won’t participate.
- Understand the financial implications – skipping mediation could mean absorbing your legal fees, even if you win.
The takeaway? Mediation isn’t just a recommendation – it’s a requirement if you want to preserve your right to recover attorney’s fees.
