Municipal codes, as they relate to real property, serve to protect the welfare of local communities. They set standards for health and safety and aim to prevent treacherous conditions that may not be obvious to the lay person. Code violations may result in fines and will require that the owner of the offending property remedy the issues at their own expense. Existing code violations present issues for prospective buyers of property and may impact the marketability of title.
Municipal Code Violations Run with the Land
In Florida, code violations “run with the land.” This means that buyers of property found to be in violation of municipal code may be liable for bringing the property into compliance. This has been the case since 1997 when the Florida Court of Appeals rendered its decision in Monroe County v. Whispering Pines Associates. The court there said that “by necessity and logic…as the party who has the power to bring the land into code compliance, the current owner should be charged with that responsibility.” This highlights the importance of an understanding of applicable municipal codes, careful drafting of land sale contracts, as well as diligence in inspecting property.
Municipal Code Violations Do Not Always Render Title Unmarketable
Despite the impairment of the value taken by the buyer, code violations by themselves do not render title to the property unmarketable. This was settled in 2008 by the Florida Court of Appeals in Henley v. MacDonald. There, the court said that “city code violations have been found to render title unmarketable only where the contract specifically warrants against such code violations.” As such, it is important as a buyer to ensure that any contract for purchase of real property specifically provides for such a warranty against code violations. Otherwise, it will be impossible to rescind the contract for failure to deliver marketable title. As explained above, code violations run with the land and are the responsibility of the land’s current owner. Failure to include a warranty against code violation in the land sale contract could potentially create a situation where a buyer is stuck with financial responsibility for code violations that he did not create.
In some situations, however, it is possible that code violations will, in fact, render title unmarketable. The first, as explained above, is when the contract specifically warrants against code violations. The other is when a code violation results in a fine and is recorded in the public records. This has the effect of creating a lien against the property. Liens against property presumptively render title unmarketable. The presence of a lien can be discovered by a search of the public records. Because a lien renders title unmarketable, the seller will have to satisfy the lien before closing or face recession of the sale contract at the buyer’s election.
Attorneys Can Help with Real Estate
Municipal code violations are one of myriad ways the purchase or sale of real property may be complicated. Given the complexity of the legal questions involved with any real estate transaction, it is advisable to hire a real estate attorney, like the ones at Adam Law Group to guide you through the process.