## Facts

- Four purchaser families contracted (March–May 1972) with H & H Construction Company, owned by Howard P. Horton, to buy homes being built on land titled to Overlord Investments, Inc.
- After completion in summer 1972, the purchasers took possession without closing under rental agreements, with closing conditioned on curing title defects.
- The purchasers learned the property was encumbered by a federal tax lien exceeding \$94,000 and were repeatedly assured the lien would be removed.
- Relying on those assurances, the purchasers stayed in possession for about 22 months, paid rent, and made improvements.
- In March 1974, Horton notified the purchasers that clearing title was impossible and offered either return of earnest money or new (higher) rental agreements.
- Overlord filed actions to oust the occupants; the purchasers responded and sued Horton and Overlord for specific performance and damages, alleging an agency relationship.

## Issues

1. Whether purchasers may recover benefit-of-the-bargain damages for a vendor’s inability to convey marketable title when the vendor’s breach is not in bad faith.
2. What measure of damages applies in Florida to a good-faith failure to convey marketable title under a land-sale contract.

## Decision

- The appellate court reversed the trial court’s damages award to the extent it used a benefit-of-the-bargain measure.
- The court held that, absent bad faith, Florida applies the English rule limiting a purchaser’s damages for failure of title.
- The case was remanded for recalculation of damages consistent with the English rule.
- The denial of specific performance and Overlord’s exoneration from liability to the purchasers were not disturbed.

## Legal Principles

- In Florida, when a vendor in good faith cannot convey marketable title, the purchaser generally may not recover expectation damages for the lost bargain.
- Absent vendor bad faith, the purchaser’s recovery is limited to restitution and related expenditures, typically including:
  - return of purchase money paid (including deposits),
  - interest on sums paid, and
  - reasonable expenses incurred to investigate title and prepare for conveyance.

- Benefit-of-the-bargain damages may be available in land-sale contract cases only upon a showing of fraud, bad faith, or willful breach.

## Conclusion

The court required use of the English rule for damages where a vendor, without bad faith, fails to convey marketable title, limiting purchasers to return of payments with interest and certain transaction-related expenses rather than the property’s lost appreciation or other expectation damages.


Horton v. O’Rourke, 321 So. 2d 612 (Fla. Dist. Ct. App. 2d Dist. 1975)