Howard Ross, Author at Battaglia, Ross, Dicus & McQuaid, P.A.

Why Single Member LLCs Should Have an Operating Agreement

Howard Ross — Tue, 20 Jun 2023 19:17:42 +0000

When creating a single-member LLC, an operating agreement may seem like yet another piece of paperwork. And as it’s not legally required in Florida, you may think you can skip a step. If so, reconsider. We highly advise it to ensure stability and liability protection with your business moving forward.

What Are Single Member LLCs?

A single-member LLCs is a term given to a Limited Liability Company with just one owner. It is one of the most common kinds of business structures in Florida, often used for side hustles and passion projects. They come with the same pros and cons as multi-member LLCs.

Read Related: How to Start an LLC in Florida

What Key Documents Do Single-Member LLCs Need?

The two key documents you should be aware of when forming an LLC are:

Articles of Organization
Operating Agreement.

We go into Operating Agreements in detail below. But as a heads up, Articles of Organization need to be filed in Florida for your business to be ‘official’. The document will state your legal name, the company’s purpose, estimated duration, registered agent and management structure.

What is an Operating Agreement?

An Operating Agreement is a contract made between LLC members. It outlines the financial and functional decision-making of the company, including the members’ duties, rights and responsibilities.

Critically, it dictates what should happen if a member leaves, fails their duties or a member wants to sell their interest in the company.

OK, But Why Do I Need an Operating Agreement as a Sole-Member?

Good question. In Florida, you’re not even legally obliged to have an operating agreement. But the answer is for your protection.

Why do Single Member LLCs Need an Operating Agreement?

Liability Protection

Operating agreements are great at protecting your personal assets. This is one of the reasons you probably created an LLC in the first place, so don’t let yourself down by avoiding some paperwork.

Liability protection is ensuring that your business entity is liable for any lawsuits or claims, rather than your personal assets. An operating agreement allows for liability protection by separating members from the company.

To Avoid Default Florida State Rules

If your single-member LLC doesn’t have an LLC, Florida’s default state laws will apply to your LLC. While these rules are often OK, they can provide unwanted results.

For example, your spouse or child may inherit the assets of your LLC if you pass away or become incapacitated. This may not be the outcome you’d like. For example, you might prefer the assets are sold or the business is inherited by a close friend.

An operating agreement is critical in providing a custom path for what happens if you want your business to be taken over by someone of choice.

For Banks and Investors

When turning to banks for business loans, or are on the verge of gaining investment, then you may be asked for the operating agreement to prove that you own the LLC and have a solid plan moving forward.

What a Single-Member LLC Operating Agreement Should Include:

Purpose and Jurisdiction

Your LLC should act within the limits of its state purpose. This should be as specific as possible to your industry and business type, but also include changes in products and services you may sell. You must also list the jurisdiction your LLC will operate in.

Ownership and Shares

How and when the owner (you) should contribute capital to the LLC.
How profits and losses are determined and distributed.
What happens to your account if you leave, die, are divorced or become incapacitated?

Management of an LLC

As a single-member LLC owner, you will manage everything. But if you decide to hire a professional manager to reduce your workload, you should detail how the LLC must be managed.

Policies

Policy decisions should be recorded even as the only member. For example, record all your decisions of bank selection and legal counsel or accountants.

Transfer of Ownership

Single-member LLCs should have a section in their operating agreement that covers what should happen if they can no longer manage the business. The procedures should be described in detail.

Intellectual Property

Your operating agreement can include in language the details of what intellectual property (IP) the LLC owns and has the right to license. This may have been created by yourself or independent contractors.

What Happens If I Add Another Member to My LLC?

If you want to expand your business beyond the sole member size, then you’ll need to update your LLC’s operating agreement as per your agreement with the new member(s).

The more members you add, the more important an operating agreement becomes. But even one person added makes it critical, as you’re not impacted by the decisions and behaviors of another individual.

Do I Need a Lawyer for an LLC’s Operating Agreement?

It’s highly advised that you hire a Florida business contracts lawyer when drafting and reviewing an LLC operating agreement. You don’t want to start your business with a bad start, leaving you open to liability or issues later down the line.

Hire a Business Contract Lawyer in Riverview and St. Petersburg, FL

If you need to draft an Operating Agreement in Florida, then our Florida business contract lawyers can help you write a watertight and optimized document that ensures liability protection and maintains your vision for your LLC’s future.

We regularly help single-member LLC owners create Operating Agreements.

Free Consultation

Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced estate planning attorneys, they can help you create a will or trust.

Schedule a free consultation today to get started.

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How to Draft a Joint Venture Agreement in Florida

Howard Ross — Wed, 31 May 2023 16:35:22 +0000

Joint Venture Agreements in Florida are a very useful and unique type of business relationship, allowing you to collaborate and benefit from another party’s key strengths.

They’re especially useful for small businesses looking, but that also poses the risk of liability so any agreement should be drafted carefully and without overlooking any areas.

In this blog, we’ll explain what joint venture agreements are, how they are and how you can draft one in Florida.

What Is a Joint Venture Agreement?

A Joint Venture Agreement is a type of contract used between two or more parties when agreeing to pool their resources with the aim of completing an objective.
The purpose of a Joint Venture Agreement is to set out the terms and obligations of the involved parties and their shared goal.
They can be thought of as partnerships, but with the difference that the agreement focuses on the collaboration of a specific goal or project.
The agreement must be drafted with care to avoid one party misinterpreting a requirement, leading to litigation later.

How to Draft a Joint Venture Agreement in Florida

Hire a Business Contract Lawyer

Writing any business contract is rife with potential liability issues. Working with a reputable and experienced business contract lawyer will ensure your collaboration mitigates the risk of liability and is set up for success. Our lawyers can draft, review and oversee your joint venture agreement.

Create a Written Agreement

A written agreement may be legally necessary but it’s also highly advised.

By having the terms and stipulations in writing, you can mitigate the risk of litigation and protect each party in the event of a dispute. It generally increases the chances of success too, as each party has a defined expectation from the start.

You must include each party’s covenants and attached exhibits that they have the authority to enter the partnership. For example, an LLC would likely need consent from its members.

Joint Venture Term Sheet

Joint venture term sheets are documents that detail the deal points of each party involved. It allows you to gain a general understanding of the joint venture arrangement before putting your money, resources and other expenses at play via a signed contract.

Establish a Holding Company

Joint venture partnerships hold the involved parties jointly responsible for their liabilities and obligations. Therefore, you could face a lawsuit because of one of the other party’s actions.

To minimize these risks, you can consider setting up a limited liability company (LLC) or other business entity that acts as a holding company for your interest in the joint venture. The entity will provide liability protection. This is, however, complex as it must still meet the corporate formalities and not breach the corporate veil law. Please contact our Florida business lawyers for an expert opinion.

Read Related: How to Start a LLC in Florida

Determine Each Party’s Capital Contribution and Profit Interest

Determine the initial investment of each party is.
This may include funding, skill, labor, connections or other resources,
Determine the profit interest each party will receive.
This may be a percentage of the venture’s profit, in relation to their investment or effort levels.
What happens if additional capital is required?

Include Each Party’s Covenants

Covenants are promises that each party will make about their obligations to make the project a success. These often include:

Fiduciary obligations (duty of care, good faith, duty of loyalty).
The delivery of resources on defined dates
Non-disclosure or confidentiality agreements.
Non-competition agreements

Include Representations

Similarly, each party should include statements of fact about their skills, abilities and knowledge. This includes:

Their legal status as an entity in Florida.
Their skills, licenses, qualifications and abilities to complete their part of the project.
Their knowledge of any ongoing or potential litigation.

Include Terms for Dispute Resolution and Termination

Joint venture agreements in Florida should include terms for what happens if you need to terminate the partnership. This may include:

How to terminate the agreement
Liquidating the venture
Paying creditors
Final distributions
Right of first refusal
Terms that restrict the assignability of interests
How are disputes resolved: voting, arbitration or agreements?

Types of Joint Venture Agreements in Florida:

Joint ventures provide a lot of flexibility for businesses and individuals to approach collaboration. In Florida, we regularly see the following types of joint venture agreements:

Simple Joint Venture Agreement

Simple Joint Ventures are the ‘standard’ type of these agreements.
They can be used to meet the different needs of the involved parties.

Common examples:

Creating a special event
Selling products to a new market
Collaborating with designers or manufacturers

Real Estate Joint Venture Agreements

Real estate joint venture agreements are used to buy, develop, sell and manage real estate transactions.
The primary purpose is usually to address:
- The sharing of connections and capital when purchasing real estate.
- Working with skilled parties assisting in a real estate project.
- Providing funds to finance a real estate project.

Joint Venture Profit-Sharing Agreement

Profit-sharing joint venture agreements set each party’s right to profits into a legally binding contract.
It allows you to mitigate the risk of conflict later, via a predetermined profit allocation.
Can aid the motivation to join a collaboration, as you can negotiate the share of profits.
The party providing financing, capital, labor or resources often has increased power to a greater share of profit as they’re most at risk.

Why Use a Joint Venture Agreement?

Potentially experience better growth and profitability than you could alone.
Access new markets and distribution channels.
Gain new business connections.
Gain specialized expertise and resources
Increased financing and purchasing power.
Use another business’s licenses.

Hire a Business Contract Lawyer in Pinellas County and Hillsborough County

If you need to draft a Joint Venture Agreement in Florida, then our Florida business contract lawyers can help you write a watertight and optimized document that mitigates liability risk and keeps your options open.

We regularly help businesses and individuals create joint ventures so they can grow and utilize each other’s skills and resources.

Free Consultation

Schedule a free consultation today to get started.

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Corporate/LLC Representative Shield From Liability for Corporate /LLC

Howard Ross — Fri, 30 Dec 2022 19:38:53 +0000

Torts Does Not Survive Active Participation in the Tort

Recently, the Fourth District Court of Appeal found that “a corporate office who actively participates in a fraud can be liable even while acting in a corporate capacity” and reversed a summary judgment that the trial court had entered in favor of a manager, president and controlling principal of an LLC and its wholly-owned subsidiary.

In the case of Costa Investors, LLC., v. Liberty Grande, LLC, So.3d (Fla. 4th DCA 2022), 2022 WL 17825542, Case No. 4D21-2676, December 21, 2022, has lessons for Business Litigators, entity representatives who are needed in order for the entity to act, and for the victims harmed by the wrongful act participated in by the entity representatives.

The opinion refers to torts and fraud and appears to apply to corporations and LLCs as well as fraud and torts. The opinion dealt with and found that the “independent tort doctrine” and the “corporate representative shield from personal liability” (a corporate officer is not personally liable for wrongful actions of the corporation taken in a representative capacity) did not shield the manager/president of an LLC because of his “active participation” in the fraud the LLC committed. In the Costa v. Liberty, Id.,there was no need to “pierce the corporate veil” to get personal liability for the manager/president.

The opinion seems to be concerned with the need to have active participation by a manager/president liability theory to create personal liability for that participating manager/president in entity torts or the participating manager/president “would be able to perpetrate this flagrant fraud and escape liability behind the shield of his representative character.”

The appellate court also dismissed the manager/president’s argument that two “no personal liability for LLC obligations” provisions in the loan documents insulate him from fraud liability. Additionally, an argument that a “merger clause” protected the manager/president did not work. The fact the manager/president was not an individual party to the agreements that contained the fraudulent representations and the protective provisions the manager/president was relying on is mentioned in the opinion that did not accept the argument.

The Case

The case originally arose out of the financing for the development of land for a hotel/condominium project. The land was purchased by Liberty Grande, LLC but was conveyed to Costa Hollywood Property, LLC, described as a wholly owned subsidiary of Liberty. An individual, Moses Bensusan, was the manager and controlling principal of Liberty and Coast Hollywood Property; Bensusan, as a representative of the LLC, signed a deed that conveyed the property to Costa Hollywood Property, LLC. He also signed a Loan and Security Agreement that had Liberty grant a security interest, lien and mortgage to property that was no longer owned by Liberty in his LLC representative capacity.

The loan documents from Liberty included provisions that were inconsistent with its recent transfer of the property. The loan documents represented Liberty as owning the property and not Costa Hollywood Property, LLC. Bensusan knew this since he signed the deed and the loan documents. The loan documents also represented that Liberty was granting a security agreement which Liberty could not do since it no longer owned the property. The opinion cites authorities, including one that says: “[I]t appears that a director or officer may be held directly liable for his or her own wrongful act—as is any agent or employee or servant—such as negligence, fraud, illegal or irregular issuance of securities, conversion, and the like.

The cases stress participation—or at least knowledge amounting to acquiescence in the wrongful act.” “What did the [representative] know and when did [they] know it” from years past appears to be relevant. Absolute knowledge of the wrongful act may not be necessary if it is something the representative should have known. The opinion indicates that this liability can extend to personal liability for a breach of an entity contract proximately caused by a tortious act from which the breach proximately resulted.

In addition to not participating in entity tort, because the representative is a prime target, the representative should practice preventative law in the documentation that the representative is unaware of any improper entity conduct. Insisting on third party due diligence by the representative can help a later claim of some wrongful conduct. It appears that more than just blind reliance on the various shields that historically have been the protection of the representatives may be necessary.

The persons harmed by representative participation in torts may find easier ways to pursue the representative that has participated in the harm. The use of active participation theory to get to personal liability may be easier than piercing the veil.

Quality Representation in a Broad Range of Litigation Matters

At Battaglia, Ross, Dicus & McQuaid, P.A., we strive to protect our clients, aggressively litigate, and effectively resolve our clients’ disputes. Contact our experienced litigators at 727-381-2300 today. Our litigation lawyers will provide a free consultation to review your case.

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Do I Need a Lawyer When Selling a Business?

Howard Ross — Tue, 25 Jan 2022 17:43:35 +0000

When selling a business, a business transaction lawyer is highly advised to navigate the often incredibly complex tasks. Seemingly small mistakes can bring vast amounts of unnecessary stress and expenses.

While you might think it’s excessive to hire a Florida business transaction lawyer, doing so will help you make the process much smoother and quicker.

In many cases, people will need to turn to a lawyer at a later stage to unravel mistakes made earlier.

In this blog, we’ll explain why you need a lawyer when selling a business:

Why Hire a Business Transaction Lawyer?

To Help With Decision Making

The first step in selling a business is making a decision. For example, you need to decide whether to sell the company’s assets or sell the ownership interests of the existing company.

The decision has significant legal and tax consequences. A Florida business transaction lawyer will be able to help you decide on which strategy is right for you and what is compatible with your needs.

The seller may also need to decide whether they’ll finance some or all of the purchase price. Sometimes, it may be better to pass on a buyer than agree to finance part of the purchase price.

If the financing is not repaid, the business will be taken back later and likely with decreased value. Plus the cash flow situation may be dire. However, this risk may be required to get the business sold.

Without a Florida business attorney, you may overlook crucial considerations such as these that can have a significant impact on your future.

To Get Favorable Terms

A Florida business transaction lawyer will protect your interests during every step of the process to ensure you make a sale without additional liabilities.

They will also gather details about outstanding liens while ensuring the transaction meets all existing laws.

Business lawyers also have vast professional experience and information concerning value to negotiate a more desirable revenue from the sale.

To Handle Paperwork

The paperwork involved in selling a business is intense – from quantity to complexity. Sometimes sellers hit a roadblock when they’re unable to complete all the required documents.

A Florida business transaction lawyer can take the burden of paperwork away and fill every document in as required and in your best interests.

These documents include purchase agreements, financial statements and forms, non-disclosure confidentiality agreements and inventory lists. By ensuring the sale has no missing documents or loose ends, liability can be prevented.

For Legal Counsel and Representation

When you hire a Florida business transaction lawyer, you gain strong professional legal counsel.

Our job is to ensure that you (the seller) have a clear understanding of the process from start to finish, enabling the sale to happen smoothly. We represent you on your behalf so that we can settle internal tensions before the sale and all communications with the buyer and any financial parties.

Legal counsel from a Florida business transaction lawyer can be critical in any situation that involves a court or meeting with other groups. They will represent and defend you as a seller and advise you on decisions before approving any transaction.

Considering a buyer will likely have an attorney on their side, you leave yourself at risk of being severely overpowered if you go at it alone. Our Florida business attorneys regularly handle appraisers, financial planners, accountants, insurance brokers and opposing lawyers.

Dealing With Tax Implications

When selling a business, an eye-watering tax bill can arise fast. But a Florida business transaction lawyer can help you find ways to minimize the impact of taxes.

Negotiating a Sale

Negotiations are a critical point of any sale. Without the confidence, expertise and legal standing to handle the power dynamics of negotiations, you may be exploited or pressured into a price you’re unhappy with. Whether you’re selling your entire business or some assets, our Florida business sale lawyers can help.

A Smooth Closing

When closing a business sale, the seller transfers their business over to the buyer. A Florida business transaction lawyer can prepare the pertinent paperwork to make the closing process as faultless and smooth as possible.

Efficiency From Start to Finish

Efficiency is another extremely beneficial use of a lawyer when selling a business. Communication, document preparation and information exchange become quick and streamlined, without confusion and misunderstandings. This can help the transaction close as soon as possible for the benefit of both parties.

What to Be Aware of When Selling a Business?

When selling a business, you must be aware of the following factors:

Ensure that as a seller, you are paid on time.
If seller financing is required, ensure your lawyer prepares all documents on your behalfs, such as promissory notes and security agreements.
Sellers must avoid making unreasonable representations or warranties in the Purchase and Sale Agreement to avoid future liability.
Sellers must recognize and resolve any potential issues with the business before listing it for sale.
A seller should consider getting an appraisal before listening to the business for sale.
The seller should receive expert legal advice before making any decisions.
Sellers should always conduct a judgment and lien search on their business to resolve issues ahead of the sale. Which can help avoid sale failure and litigation in the future.
Sellers should have all documentation such as annual minutes and filings up to date – especially if you’re selling a LLC or corporation.
Sellers must check that all business licenses are valid and satisfied.
By preparing documents such as tax returns, financial statements and more, the chance of a quick and smooth sale is significantly increased.

Hire a Business Transaction Lawyer in St Petersburg, FL

If you’re considering selling a business in St Petersburg, Florida, contact us today.

Our lawyers, Ross and Purdun at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience that can help you in every step of the sale, from drafting to negotiations and closing. Contact us today to schedule a free consultation.

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What Type Of Business Entity Should A New Company Choose?

Howard Ross — Fri, 28 May 2021 21:26:34 +0000

Deciding on a type of business entity for your new business can be a complex legal challenge. Things to consider before making a decision include:

The new company’s financial needs
Risks you are willing to take
The ability for the business to grow

Once you have decided on a type of business entity and registered your business, reversing the decision and switching the legal structure can be difficult. Therefore, new business owners should consider their choices carefully when it comes to choosing their type of business entity. Business owners have many issues to consider that could have long-term legal ramifications, including the choice of business entity. A seasoned business transactional attorney at Battaglia, Ross, Dicus & McQuaid, P.A. can help with the decision-making progress business owners face with legal advice and guidance. We can be here for you and help your business get off to a successful start. Call us today for a free consultation: 727-381-2300.

Sole Proprietorship

According to the University of Richmond, sole proprietorships can have various advantages over other types of business entities. Sole proprietorships are not government-regulated and are easy to form. Proprietors tend to do business under their own names and retain full control over their businesses and profits. However, one major disadvantage sole proprietors have to consider is that they can be personally held to account for any losses and liabilities.

S-Corporation

S-Corporations can be set up by an individual business owner and do not require other shareholders or owners. Other important considerations regarding S-Corporations include:

The legal and tax structure of the S-Corp is separate from the business owner(s)
S-Corporations have a limit on the number of shareholders
Personal assets of the owner(s) are held separate from any business debts
Business owners report their business’ profits and losses on their personal tax returns
S-Corps have to hold annual meetings and keep meeting minutes

Limited Liability Company – LLC

Limited liability companies (LLCs) are a particularly versatile and popular type of business entity. Advantages of LLCs can include that, unlike a corporation, an LLC does not have to hold annual meetings or keep records of meeting minutes. There is generally no limit on the number of owners that an LLC can have. An LLC is taxed depending on whether there is one owner with tax implications similar to a sole proprietorship, or several owners when an LLC will be taxed similar to a partnership.

C-Corporations

C-Corporation is an entity where the owners are taxed entirely separately from the business. C-corporations have to pay corporate income taxes. This typically results in double taxation since the business is taxed at the corporate as well as at the personal level. A C-corporation must hold annual meetings and keep minutes of those meetings.

Partnership

A partnership is a formal arrangement by two or several parties to operate and manage a company and share any profits from the business. There can be several ways to set up a partnership, including by forming an LLC. In a partnership business, all partners will typically share profits and liabilities equally. However, partners may also have limited liability. Some businesses have so-called “silent partners” that are not involved in the everyday running of the company. Choosing the wrong type of business entity for your start-up may necessitate restructuring your business at considerable effort and expense later. Contact Battaglia, Ross, Dicus & McQuaid, P.A. to help you choose a business entity that can lay the foundations for a thriving business for many years to come.

Factors to Consider Before Deciding on a Business Entity

Some important consideration every new business owner should get clear on before deciding on a business entity include:

Control

A corporation typically entails having a board of directors making decisions for the company. If you intend to retain complete control of your business, you might want to consider a sole proprietorship or setting up an LLC.

Flexibility

Does the type of business entity you are considering give your business enough room to grow or could it hold you back from reaching your goals and aspirations?

Liability

If personal liability is a major concern, you may want to set up your business in a way that creates an own entity, such as a corporation or LLC. These entities prevent creditors from accessing the personal assets of business owners.

Complexity

Depending on the nature and intended scope of your business, particularly if you do not need any outside funding, you may want to keep it simple. A sole proprietorship is the easiest of all business entities allowing individuals to do business without any major formalities. LLCs and corporations, on the other hand, have to adhere to state and federal reporting requirements.

Our Experienced Attorneys Can Protect Your New Business

If you are in the start-up phase of your business, or even if you are further along, our legal team can help answer your questions and ensure your legal rights remain protected. Some of the ways in which our dedicated and experienced attorneys can guide you and protect your business include but are not limited to:

Providing you with direction on the steps needed to start a business
Advising you on the best type of business entity and structure for your business
Helping you with the formation of a new business or the restructuring of an established business
Protecting your assets
Drafting shareholder, member, and partnership agreements
Drafting operating agreements
Guiding you with contracts and financing
Drafting non-disclosure and non-competition agreements
Dealing with insurance issues

Our legal team at Battaglia, Ross, Dicus & McQuaid, P.A. know that some start-up businesses have limited resources and we can advise you on the steps you can take yourself versus those that should be supported by an experienced business transactions attorney. Contact us now to speak to a member of our team for free and find out how we could help your business today: 727-381-2300.

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Consequences of Breaches of Commercial Real Estate Contracts

Howard Ross — Fri, 28 May 2021 21:21:12 +0000

Purchasing the perfect commercial property can feel like finding a needle in a haystack, as the perfect commercial real estate can be exceedingly hard to find. Selling commercial property can also be full of challenges. The consequences of one party breaching a commercial real estate contract can result in frustrations as well as considerable losses for the other party. When a seller breaches a contract and wants to keep hold of the property or sell to a higher bidder, a buyer may not only have financial losses due to the planned move and expansion but may also face considerable trouble finding another suitable property. Likewise, if the buyer backs out, the seller has lost the expected proceeds of the sale, wasted precious time, and potentially turned down other offers. They will most likely have to start again from scratch, trying to find a buyer for their commercial property. However, those involved in a commercial property transaction must remember that a contract is legally binding and the party who is negatively affected by the other party’s breach is generally entitled to seek damages and remedies. If you have been affected by the breach of a commercial real estate contract, contact St. Petersburg Real Estate Attorneys, Ross & Pardun to get clear on your legal rights and remedies. Call us now to schedule a free consultation: +(197) 0232-0268

Why Do Parties Breach Commercial Real Estate Contracts?

Commercial real estate can include a wide variety of different properties such as:

Retail spaces
Office buildings
Hotels and resorts
Malls
Restaurants and bars
Healthcare facilities
Industrial/Warehouse
Manufacturing

Since commercial real estate encompasses a wide range of buildings and facilities, breaches of contracts can occur for a variety of reasons. Parties may breach a contract due to:

Legal complications with the deed or title of a property
External or internal damage to the property
A party other than the seller has partial ownership
The buyer experiences financial issues
The seller decides they want to keep the property
The seller receives a higher offer

However, whatever reasons a party might have for breaching the contract, the non-breaching party generally has legal recourse and can pursue damages.The consequences of breaches of commercial real estate contracts can potentially impact both the buyer and the seller. Therefore, whether you are selling or buying commercial property, having a real estate lawyer protect your rights can give you peace of mind and reassurance that even if a deal falls through, your lawyer can protect you from some of the financial and legal consequences. Generally, those involved in real estate transactions should consider consulting with an experienced real estate attorney before entering into any contract and sale transaction to ensure the relevant paperwork is legally valid.

Remedies Available for Those Affected by the Breach of Contract

If either party in a commercial real estate contract fails to adhere to the terms and conditions stated in the agreement, they have breached the contract. However, if you are affected negatively by a breach of contract, you could potentially seek several remedies. If a seller breaches the contract, the buyer could:

Sue the seller for damages
Terminate the real estate contract
Insist on a return of the deposit
Demand specific performance such as the completion of the sale

If the buyer has defaulted on the contract, the seller could:

Keep the good-faith deposit
Terminate the contract entirely
Sue the seller for damages
Insist on specific performance

What Is Specific Performance?

When it comes to commercial real estate contracts, either party may not be satisfied with monetary damages but insist on the actual performance of the contract. Specific performance is a way of “forcing” one party, typically the seller, to fulfill certain aspects of the contract. Specific performance is a court-ordered request for the defaulting party to perform a specific action which could be:

Signing the real estate contract
Signing the deed
Delivering the deed to the buyer

Which Monetary Damages Could Be Available?

Monetary damages can be available to the party affected by the breach of contract, whether that may be the seller or the buyer. If either party backs out at the last minute, the other party could face significant costs. Monetary damages can include the difference between the agreed purchase price and the actual value of the commercial property in question. The party who has defaulted could also potentially be held to account for other damages such as lost profit damages. Breach of commercial real estate contracts can cause severe inconvenience and monetary losses to both parties. If you have been affected by a breach of contract, an experienced real estate attorney can help you determine your legal rights and fight for what you deserve. Your lawyer can help you find legal recourse in court and pursue damages arising from a breach of contract.

Contact an Experienced St. Petersburg Real Estate Attorney for Help Today

Whether you are the buyer or seller in a commercial real estate transaction, an attorney can help you avoid headaches by handling your property transaction from beginning to end. Commercial real estate attorneys can help you with your transaction in several ways, including but not limited to:

Providing legal advice and guidance
Negotiating a sale or purchase
Ensuring legal validity of the contract
Analyzing a contract and flagging up any inconsistencies
Handling title insurance matters
Facilitate the closing

A real estate attorney can also help you with a number of other issues pertaining to commercial property including financing, zoning, tax issues, environmental considerations, and others. Buying and selling any type of property can be a challenging and stressful experience, however, the issues surrounding commercial property sales and purchases can be particularly convoluted. A dedicated real estate lawyer can help you make informed decisions and ensure you have all the legal information you need if the other party defaults on the contract or you are encountering any unforeseen issues. You do not have to embark on the purchase or sale of commercial real estate on your own. We can help make your property transaction a smooth process and handle your sale or purchase from beginning to end. Contact St. Petersburg Real Estate Attorneys, Ross & Pardun today to find out how we can help you: +(197) 0232-0268.

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Can Differently Licensed Professionals Co-exist in the Same Professional Corporation?

Howard Ross — Wed, 23 Aug 2017 18:26:03 +0000

Do P.A. Mixed Marriages Work?

Recently I have become aware of two Florida Professional Corporations (“P.A.”) that have, as shareholders, professionals with different licenses. One was in a transactional setting and one was in a litigation setting. “Is that possible?” is the question that arose. Chapter 621 of the Florida Statutes (2017), Professional Service Corporations and Limited Liability Companies, has multiple sections that refer to shareholders of a P.A. as limited to persons that “render the same professional services” or “render the same specific professional services.” See: Fla. Stat. §§621.01; 621.03(2); 621.05; 621.09(1); see also: Street v. Sugarman, 202 So.2d 749, 750-751 (Fla. 1967); Corlett, Killian, Hardeman, McLintock and Level, PA v. Merritt, 478 So.2d 828 (Fla. 3d DCA 1985); Hewlett Packard Financial Services Company v. Brevard County Clerk of Court, 2014 WL 1464410 (M.D. Fla. Apr. 15, 2014) and cases cited therein and relying thereon. Chapter 621 does not provide what happens if the shareholders are not licensed to “render the same specific professional services.” Florida Statutes Section 621.10 does provide that if a “member, officer, shareholder, agent or employee” of a Chapter 621 entity “who has been rendering professional services to the public becomes legally disqualified to render such professional services…that person shall sever all employment with, and financial interest in, such corporation or limited liability company forthwith.” The statute does not say what is to happen when two or more professionals with different licenses form a P.A. initially so the legal disqualification occurred before the P.A. started rendering services. It seems logical that Florida Statute Section 621.10 requires that if a P.A. is formed by persons with different licenses as members, officers, shareholders, agents, or employees, then the persons who are not licensed to perform the same specific professional services as those for which the P.A. was formed “shall sever all employment with, and financial interest in, such corporation or limited liability company forthwith,” just like a professional shareholder who has lost his/her license after the P.A. was formed. As to the return of capital contributions, equity should take care of seeing that the former shareholder is dealt with equitably, but the minority shareholder rights of the former shareholder, who never was a proper shareholder, are doubtful. The Florida Statute Section 621.10 inclusion of agents and employees may be overkill since they do not have a statutory right to share in the net profits of the P.A. which can only be shared among properly licensed professionals if they are not shareholders. If the officers, employees or agents are not owners of the P.A. sharing in the professional fees earned by the P.A., they should not have to sever. I did not find any precedent on the issue of what happens if people with different licenses are the shareholders of the P.A. notwithstanding Chapter 621. In a minority shareholder derivative suit, I raised the issue in a motion to dismiss with prejudice that was heard by the Court on the papers pursuant to Administrative Order No. 2015-056 PA/PI-CIR. The motion was denied without any findings or comments from the Judge. After the issue was raised again as an affirmative defense with additional factual allegations, the case settled, so the matter will not be resolved after the presentation of evidence in that case. What would be the result if the purpose for the formation of the P.A. includes some services that one shareholder can legally perform and some services that a different shareholder can legally perform? Chapter 621 mentions “the same specific professional services” which appears to prevent that loophole. The prohibition on splitting of fees that require a license to be lawfully earned also appears to prevent that loophole. My feeling is that Chapter 621 requires that all of the shareholders in in P.A. need to have the “same specific” license as is required to earn the fees that are the revenues of the P.A.

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Is It Time To Put Some Teeth Into The Resident Agent Statutes?

Howard Ross — Wed, 22 Mar 2017 16:35:53 +0000

It appears that corporate and limited liability company defendants have an advantage over plaintiffs if they are willing to avoid the resident agent statutory requirements or circumvent the requirements by using multiple layers of entity resident agents that have no entity officers or employees present at the resident office. Hopefully a change in the laws to level the playing field can be made to prevent those that are willing to abuse the system by not having a human being available that can easily be served for their resident agent. This will possibly include the imposition of meaningful fines and sanctions. The legislature by its laws and the Florida Rules of Civil Procedure create the rights and obligations of the parties to a lawsuit so the interference of access to the judicial system and the right to present the merits of the case to the Court by avoiding service of process should not be tolerated and should be punished where warranted. A member of the legislature reported a situation where Corporation A appointed Corporation B as its resident agent. Corporation B appointed Corporation C as its resident agent and Corporation C appointed Corporation A as its resident agent to complete the circle. I am waiting to see legislation on the subject. Another problem occurs when the resident agent uses office suites where the only person around is a receptionist who is employed by the owner of the office suites. For corporations the resident agent requirements are: (2) Every corporation shall keep the registered office open from 10 a.m. to 12 noon each day except Saturdays, Sundays, and legal holidays, and shall keep one or more registered agents on whom process may be served at the office during these hours. The corporation shall keep a sign posted in the office in some conspicuous place designating the name of the corporation and the name of its registered agent on whom process may be served. §48.091 (2) Fla. Stat. (2017).

How Frequently Is That Statute Ignored or Circumvented?

Two recent cases, Green Emerald Homes, LLC v. Nationstar Mortgage, LLC, 2017 WL 650961, (Fla. 2d DCA 2017) and Jupiter House, LLC v. Deutsche Bank National Trust Company, 198 So. 3d 1122 (Fla. 4th DCA 2016) demonstrate the problems and additional expense the plaintiff was put through because the defendant did not have a human being available who could be served. In both cases the defendant had no one available to be served and the plaintiff had to comply with the tedious and time consuming process for substituted service on the Department of State by serving the Secretary of State. In both of these cases, because of an omission in the Florida Revised Limited Liability Act relating to service of process on a limited liability company which appeared to provide the entire procedure necessary for substituted service, the defendants not only had to spend the time and money to comply with the substituted service statute, but also had to endure further cost and delay on appeal. There are many protections and advantages provided to individuals by electing to operate as a corporation or a limited liability company. The ability to use subterfuge to avoid or delay service of process should not be one of them. If you have encountered this situation and need legal help in serving a corporation, contact an experienced business litigation attorney.

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When is a Transaction Broker Liable?

Howard Ross — Thu, 27 Oct 2016 13:45:36 +0000

Is There a Duty to Disclose Defects in a Florida Real Estate Sale? Who Is Responsible For Failure to Disclose Defects That Materially Affect the Value of the Property?

The opinion of Goodman v. Rose Realty West, Inc., 193 So.3d 86 (Fla. 4th DCA 2016) indicates that a seller’s real estate agent’s knowledge of defects that materially affect the value of the property which were not readily observable and not disclosed to the buyer could make the seller’s broker for whom the agent worked liable to the buyer. The case has some procedural and other facts that may distinguish it when it is cited as authority, but the law cited in the case and the conclusions reached do not appear to be affected by those facts. The opinion is a reversal of a summary judgment in favor of the seller’s broker who was sued by the buyer because of unspecified issues of fact concerning the broker’s liability. The seller of the house was also the seller’s real estate agent for the transaction. The broker who employed the seller/real estate agent is a named defendant. The opinion notes that “when the seller replaced his seller’s hat with that of a real estate agent, his knowledge about the conditions of his home remain the same” and also “the duty of disclosure announced in Johnson extends to a seller’s real estate broker.” The opinion also states, “[I]f the seller/agent withheld material information, this was done during his work as a real estate agent to facilitate a sale, which was in interest of the principal/broker, who would earn a commission.” (Emphasis supplied.) In almost every real estate transaction in which a real estate agent is involved, either a seller’s agent, a buyer’s agent or a transactional agent, the broker(s) are looking to earn a commission and their efforts in the transaction are to facilitate a sale. I have seen a lot of closing statements that include a commission for one or more brokers. If the duty to disclose arises because of the desire to earn a commission, then it would appear that the liability is the same whether there is a seller’s, buyer’s, or transaction broker/agent involved. All brokers/agents have the same desire to earn a commission. In a strong market where commissions are plentiful, there should be less incentive to not disclose information that could kill a sale. Weak markets do occur and an overabundance of brokers/agents even in a strong market may create incentive to remain silent so as not to kill the deal by disclosing hidden property defects. If you have any questions or concerns about selling or buying a home or other real estate, or about the duty to disclose hidden defects in a Florida real estate sale, I recommend contacting an experienced real estate attorney. Howard P. Ross, Esq., B.C.S. has over 50 years’ experience representing clients in both residential and commercial real estate transactions.

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Changing Sun Biz Information Without The Proper Authority Can Be a Problem You Do Not Want

Howard Ross — Fri, 16 Sep 2016 19:27:46 +0000

During marital divorces and business divorces, people occasionally rush to change the information on the Secretary of State’s Sun Biz website without first determining whether they have the authority to do so. Sometimes, the portions of the corporate/LLC records that grant the authority to replace officers, directors, managers, or persons with authority are not reviewed for many years preceding the dispute, even though circumstances have changed since the initial granting of the authority or elections to office. While most business owners are busy running their business, trying to make a profit, dealing with the day-to-day business activities, and other various problems, there is very little time left to review corporate/LLC records. It is easy to just file the annual report without reviewing what authority one has to make the entries that appear in the report. Section 817.155 Florida Statutes (2016) provides:

A person may not, in any matter within the jurisdiction of the Department of State, knowingly and willfully falsify or conceal a material fact, make any false, fictitious or fraudulent statement or representation, or make or use any false document, knowing the same to contain any false, fictitious, or fraudulent statement or entry. A person who violates this section is guilty of a felony of the third degree punishable as provided in s.775.082, s 775.083, or s. 775.084.

The punishment violating the above Florida Statute can be incarceration for up to five years. Additionally, commission of a felony can trigger provisions and remedies in contracts and a violation of a criminal statute can possibly provide for relief or at least leverage in civil cases. Furthermore, the commission of a felony could affect licenses granted by the state. While prosecution for filing false, fictitious, and fraudulent information on Sun Biz is infrequent and, to date, WestlawNext has not reported any cases under Section 817.155 Florida Statutes (2016), why become the person who is punished just because you are angry with your cheating spouse or stealing business partner. If you want to make a changes on the information contained in the annual report or file an amendment, first, I suggest taking a deep breath and then second, making sure that you have been elected to the proper office and/or you own a sufficient majority of the business to make the change by yourself. If you have a question as to whether you or someone else has the proper authority to change your business information on Sun Biz feel free to contact me at hross@brdwlaw.com.

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