SW Legal studies in Business

Right to Rescind Not Necessarily Same as Statute of Limitation for Litigation
Description

Appeals court held that a federal statute requires a property buyer to file a notice to rescind a purchase within two years if proper disclosure forms were not provided. The statute of limitations provided by the statute is three years, but if notice is not filed within two years, the right to litigate is lost.

Topic Real and Personal Property
Key Words

Disclosure Form; Right to Rescind; Time Limit

C A S E   S U M M A R Y
Facts

Mastropietro bought a condominium in 2004 from Harbour. Almost three years later, in 2007, he moved to rescind the purchase because Harbour failed to provide a property report approved by the Department of Housing and Urban Development (HUD) as required by federal law under the Interstate Land Sales Full Disclosure Act (ILSFDA). Harbour moved to dismiss the complaint stating that the right to rescind because of a defective property report is two years. Mastropietro contended that he had three years, which is the statute of limitations set by ILSFDA. The trial court dismissed the complaint as untimely. Mastropietro appealed.

Decision

Affirmed. The condo buyer who sued the seller seeking rescission of the purchase agreement, due to the sellerís failure to provide a written property report in violation of ILSFDA, failed to invoke the right to rescind the contract within two years of signing, as required by the law. If the notice to rescind had been provided within the two-year limitation period, then the buyer would have had a third year in which to pursue litigation in the event the seller did not agree to rescind. ILSFDA requires that notice of intent to rescind be filed within two years, at which point a three-year statute of limitation would apply as to when litigation must commence.

Citation Mastropietro v. Harbour Phase I Owners, ---So.3d--- (2010 WL 2696521, Ct. App., Fla., 2010)

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