AAR’s Legal Team monitors state and federal appellate courts to bring you takeaways from cases that could impact your clients/customers or your business.

11th Circuit Court of Appeals 

As-Is Sales

The 11^th Circuit Court of Appeals recently considered Austin and Austin v Regency Realty Inc. et al., a case involving out-of-state consumers purchasing an Alabama property. The Austins lived in Colorado when they purchased a home in Alabama. After closing, they discovered the home had a significant termite infestation. The owner of the home the Austins bought was also the owner of the real estate company that they were working with (although they had an agency relationship with a licensee with the company and didn’t work with the owner directly). The Austins sued, claiming their agent, the company, and the seller committed breach of contract and fraud by failing to disclose the termite infestation. The District Court ruled against the Austins, and they appealed to the 11^th Circuit Court of Appeals.

On appeal, the 11^th Circuit found that the Austins signed an as-is purchase agreement that was not contingent upon an inspection, although they had the option to request an inspection contingency. This was central to both the District Court’s and appellate court’s decisions. First, regarding the Austins’ claim that their agent breached the agency agreement, the court noted that the agreement required the clients to obtain an inspection and make their offers contingent on inspection. Because the Austins did not follow these requirements, they could not claim their agent breached the contract. Second, the as-is nature of the purchase agreement affected the Austins’ fraud claim. In Alabama, fraud requires showing that the plaintiff “reasonably relied on” the defendant’s actions or statements. Here, the Austins could not demonstrate reasonable reliance, because they signed an as-is agreement that specifically excluded any liability for the property’s condition. Ultimately, the appellate court affirmed the District Court's decision.

This case serves as an important reminder that when a buyer waives an inspection contingency in an as-is contract, their ability to seek remedies for defects not disclosed by the seller is extremely limited. Buyers assume most of the risk, and licensees should make sure clients understand this before waiving inspections.

Alabama Supreme Court

Termination of Tenancy 

The Alabama Supreme Court recently issued an opinion in Weaver v Frios Gourmet Pops, LLC et al., a case involving a commercial tenancy. In that case, Frios and its owners entered into a 10-year lease agreement with Weaver. The lease agreement provided a space in Gadsden from which Frios conducted business operations. However, about 3 years into the lease, Frios was bought by a Mobile-based company and its operations were moved to Mobile. One of the previous Frios owners, who was a party to the lease with Weaver, continued to use the leased space for a different business venture for about a year. However, that business venture then ended, and eventually that previous Frios owner stopped paying rent on the leased space. Weaver terminated the lease and sued for unpaid rent, property insurance premiums, and property taxes, as well as rent that Weaver would have collected had the lease run its full 10-year term.

The trial court granted Weaver’s requests for the unpaid rent, property insurance premiums, and property taxes, but did not grant him the rent that he would have collected had the lease not been terminated. Weaver appealed the trial court’s decision. In reviewing the case, the Alabama Supreme Court noted “[i]t is the general rule that a landlord may recover only rent that has accrued at the time of the termination of the tenancy.” (Weaver, citing Hardin v Kirkland Enters., Inc. 939 So.2d 40, 42 (Ala. Civ. App. 2006)). However, the Court further noted that “parties to a lease may contractually agree that a defaulting tenant must pay liquidated damages in an amount equal to the value of the unpaid future rent.” (Weaver, citing Camelot Music, Inc. v Marx Realty & Improvement Co., 514 So.2d 987, 990 (Ala. 1987)). In this case, the lease between Weaver and Frios did, in fact, provide for such liquidated damages. Therefore, the Alabama Supreme Court reversed the trial court’s decision and remanded the case for further consideration.

If a landlord intends to seek damages for the value of unpaid future rent after a tenancy is terminated, the lease must specifically provide for such damages. Lease agreement terms should be carefully considered prior to execution of the lease. If the landlord and tenant seek to make an atypical arrangement, an attorney should be consulted.

Arbitrability

Another Alabama Supreme Court decision, Ex parte Brian Smith, involved arbitration provisions in real estate land-sale contracts and whether disputes must be decided by a court or an arbitrator. In this case, Smith and several development companies formed by Smith purchased property in the Lake Martin area. After the transactions closed, Smith and his companies initiated arbitration proceedings with the American Arbitration Association (“AAA”) against several parties involved in the transactions, including real estate companies, agents, and a closing company alleging fraud, breach of contract, and conspiracy related to the land-sale transactions.

In response, the real estate companies, agents, and closing entity filed a lawsuit in circuit court, arguing they could not be required to arbitrate the dispute because they had not signed the land-sale contracts containing the arbitration provisions. The trial court stayed (paused) the arbitration proceedings so it could determine whether a valid arbitration agreement existed between the parties.  

The Alabama Supreme Court reversed. The Court explained that although courts usually decide whether a dispute must be arbitrated, that issue can be delegated to the arbitrator if the contract clearly provides for it. The Court noted, “the arbitrator shall have the power to rule on his or her own jurisdiction, including disputes about the existence, scope or validity of the arbitration agreement.” quoting Federal Ins. Co. v. Reedstrom, 197 So.3d 971, 976 (Ala. 2015); Eickhoff, 265 So.3d at 222; Managed Health Care Admin., Inc. v. Blue Shield of Alabama, 249 So.3d 486, 493 (Ala. 2017); Bugs ‘R’ Us, LLC v. McCants, 223 So.3d 913, 919 (Ala. 2016); Anderton v. The Practice-Monroeville, P.C., 164 So.3d at 1102 (Ala. 2014); and CitiFinancial Corp., L.L.C. v. Peoples, 973 So.2d 332, 340 (Ala. 2007).

Because the land-sale contracts both incorporated the AAA Commercial Arbitration Rules and expressly stated that disputes about “arbitrability” must be arbitrated, the Court held that the arbitrator and not the court must determine whether the claims were subject to arbitration.

This case is an important lesson that arbitration clauses in real estate land-sale contracts can have broad procedural effects. When a contract delegates questions of arbitrability to an arbitrator, disputes involving brokers, agents, or other transaction participants may be sent to arbitration even if those parties did not sign the contract.

Further Reading

The appellate courts have released other recent opinions that relate to real estate and/or property law, but hinge upon legal procedural issues or other issues outside the scope of this article. These cases can be viewed at the following links: Denhardt v. Wells Fargo N.A. (11^th Cir. 2026); F Family South, LLC v. Property Owners Association of Ono Island, Inc. (Ala. Civ. App. 2026); Sanford and Sanford v Geer Properties, Inc. (Ala. Civ. App. 2026)