Enforcing Privacy Rules in Florida Real Estate

– Florida courts look to section 542.335 of the Florida Statutes to determine the enforceability of restrictive covenants.
– The party seeking to enforce the restrictive covenant bears the burden of proof and must establish each element of their cause of action by a preponderance of the evidence.
– In pursuing a claim for breach of contract, the plaintiff must establish a valid contract, a material breach, and damages.
– A recent Florida appellate court decision in Rauch, 313 So.3d 625, sets forth the boundaries of enforceability for restrictive covenants, specifically confidentiality agreements, in real estate transactions and brokerage agreements. – The restrictive covenant must be set forth in a writing signed by the person against whom enforcement is sought
– The party seeking to enforce the restrictive covenant must prove the existence of legitimate business interests justifying the covenant
– The party seeking to enforce the covenant must prove that the specified restraint is reasonably necessary to protect the legitimate business interest
– The confidentiality agreement in the case of Rauch was found to be a restrictive covenant
– The purchaser did not breach the confidentiality agreement because she did not disclose any confidential information
– The confidentiality agreement was found to be indefinite in time, but the court had the authority to construe the provision more narrowly to protect the broker’s legitimate business interests
– The court determined that a reasonable time limit for the confidentiality agreement would have been the length of the listing agreement
– Using this time frame, the court found no violation of the confidentiality agreement occurred 1. The appellate court upheld the trial court’s reliance on section 542.335 in its decision.
2. The original broker failed to prove that the restriction was reasonably necessary.
3. The court emphasized that the statutory requirements for restrictive covenants are essential elements and not affirmative defenses.
4. The Rauch decision limits the use of confidentiality agreements and other restrictive covenants in real estate transactions.
5. It establishes that there must be a legitimate interest behind the covenant, the reasonable necessity of the provision, and that it is signed by the other party.
6. The party seeking to enforce the restrictive covenant is responsible for pleading and proving these elements.
7. Florida courts will interpret restrictive covenants to be as least restrictive as possible.
8. It is important to consult with an experienced attorney when incorporating a confidentiality agreement or restrictive covenant into a transaction to ensure compliance with section 542.335 and the Rauch decision.

https://www.jimersonfirm.com/blog/2021/10/confidentiality-agreements-restrictive-covenants-enforceable-florida-real-estate-transactions/