November 18, 2014
It was seller’s remorse—not buyer’s regret—that derailed a $3 million real estate deal at the closing table and launched a two-year legal brawl between the seller and would-be investor.
The sale of the property in Miami’s Wynwood neighborhood was scheduled to close in late 2012, just as the area was becoming a development hot spot north of downtown Miami. But attorneys say the seller had a change of heart, suspecting the property would soon be worth several times its last asking price.
Plus they argued the seller, M&S Investment LLC, found out late in the deal it would be subject to a $250,000 early-termination penalty on its Bank of America mortgage, prompting a push for a bigger payday. “We closed on the property after two years, one month and three days of hard litigation,” said Remy Jacobson, an investor whose Wynwood Propco LLC was poised to purchase the nearly 27,000-square-foot warehouse and commercial parcel at 2001 NW 21st and 210 NW 22nd streets. “At closing, they were not sure how much more they wanted. They wanted to wait and see the market.”
Jacobson said he had the property under contract for about four months at that point, and his team arrived early Sept. 28, 2012, for a morning meeting with M&S. But the other side didn’t show until around 4 p.m., and it was clear they no longer wanted a deal, he argued in court. “They were looking for ways to cancel the closing,” said Jacobson’s attorney, Michael Joblove, a partner at Genovese Joblove & Battista in Miami.
M&S attorneys Michel Weisz and Fred Goldberg of Berger Singerman did not respond to requests for comment by deadline. But court documents show their client blamed Wynwood Propco for the bungled deal.
Willing To Close
M&S argued the buyer freed it from further obligation and breached the contract by not having financing in place to close. So at around 5:30 p.m. on closing day, M&S attorneys informed Wynwood Propco that the deal was off.
Wynwood Propco denied it lacked financing and said M&S had already agreed to accept payment by the following Monday. “There was a mistake,” said Joblove, who worked with associate Aaron Blynn on the case. “Three individuals had to sign the guarantee, and one signed on the wrong line. But all of the lender’s money was in a trust account ready to be dispersed. Bridge Invest was ready to fund, but the seller canceled so the deal didn’t go through.”
In early October 2012 Jacobson filed suit in Miami-Dade Circuit Court, seeking “equitable remedy of specific performance.” He asked the court to force M&S to adhere to the deal and complete the sale for the $3 million asking price. “I had a contract, and I was going to respect my contract,” he said.
Judge Marc Schumacher presided over a bench trial in January. In a final order dated Feb. 4, he found M&S contributed to the delay in closing and would not have suffered any material loss if it had waited one business day for funding. He ruled in favor of the buyer and ordered M&S to pay Wynwood Propco’s attorney fees, reducing the property’s selling price by more than $283,000.
“The buyer remains ready, willing and able to close,” Schumacher wrote, ruling M&S wrongfully terminated the sales agreement. M&S appealed the order, but Third District Court of Appeal Judges Leslie Rothenberg, Thomas Logue and Edwin Scales affirmed the trial court’s decision September 17.
Wynwood Propco closed on the property this month, according to a deed recorded Nov. 6. Jacobson said he’s considering creating a mixed-used retail complex on the development site. “They taught me a valuable lesson—patience,” he said. “I would have bought the building in 2012 and sold in 2013. I would have probably sold it for two times what I bought it for, but now the property is probably worth five times more. It was a very valuable and very lucrative experience, and patience paid off in the end.”