The New Florida LLC Act is Coming Soon
On May 3, 2013, as the last piece of legislation to be enacted this session, the Florida House of Representatives unanimously passed the new Florida Revised Limited Liability Company Act (the “New Florida LLC Act”), a companion bill of which also passed the Florida Senate unanimously a week earlier.
Governor Rick Scott is expected to sign lolthe bill into law without any opposition. When signed, the New Florida LLC Act, which will become new Chapter 605 of the Florida Statutes, will be effective for every limited liability company (“LLC”) formed in Florida on or after July 1, 2014.
For Florida LLCs existing as of July 1, 2014, the New Florida LLC Act can become effective on an elective basis between July 1, 2014 and January 1, 2015, and the New Florida LLC Act will apply on a mandatory basis to all LLCs effective as of January 1, 2015.
The New Florida LLC Act may materially affect the provisions in your existing and future Florida LLC operating agreements. Thus, an understanding of the changes it will bring to LLC governance and operations is critical.
The Miami hotel market continues to be one of the most active hotel markets in the country. The impact from tourism and Miami’s location as a gateway city continue to attract real estate investors and the activity is expected to increase throughout 2013. As noted in recent articles in Law 360 and the South Florida Business Journal, Jones Lang LaSalle stated that the South Florida market already saw $200 million of hotel trades in the first three months of the year and predicts $750 million in investment activity over the year which is a 12% increase from 2012.
Miami Beach Historic District A Hot Commodity
The majority of activity is concentrated on Miami Beach with many of the acquisitions occurring further north on Collins Avenue. Investors continue to look for hotel opportunities in mid-beach and along the Collins Waterfront Historic District such as the Miami Beach Resort which recently sold for $117 million. Continue Reading
Earlier this month, the Florida legislature passed House Bill 85, which establishes statewide authorization and procedures for public-private partnerships. The law, which will be encoded as Section 287.05712, Florida Statutes, authorizes counties, municipalities, school boards, and other political subdivisions and entities to form public-private partnerships with the private sector to develop, operate, or maintain any facility or project that serves a public purpose. Eligible projects include, but are not limited to, wastewater management facilities, transportation facilities, and educational facilities.
Guidelines not Prerequisite for Entering into P3
The new law establishes a Public-Private Partnerships Guidelines Task Force, which is a 7-member group that will recommend guidelines, to be considered by the Legislature, for the review and selection process for P3s. The Task Force will submit its recommendations by July 1, 2014, and will terminate at the end of 2014. The new law makes clear that a government agency may adopt its own guidelines and the establishment of guidelines through the task force’s recommendation is not a prerequisite for entering into a P3.
In a previous post, I discussed Senate Bill 58 and House Bill 351, which were proposed bills that would have prohibited the application of foreign laws in family law disputes pending in the State of Florida unless the foreign body of law granted the litigants the “same” rights and protections as the Florida and U.S. Constitutions. After fierce opposition from the International Law and Family Law Sections of the Florida Bar, as well as from the Anti-Defamation League, the American Civil Liberties Union, and the Council on American-Islamic Relations, SB 58 stalled by one vote in the Florida Senate and subsequently died on calendar despite the best efforts of its sponsor, Florida Senator Alan Hays (R-Umatilla).
If prior years are any indication, Senator Hays and Representative Larry Metz will renew their efforts during next year’s legislative session, which will require the International Law Section of The Florida Bar to, once more, make the case that such legislation will be harmful to Florida’s pro-foreign business reputation and to its reputation as a center for international dispute resolution.
Miami residents have a long history of escaping to cooler climates during the summer months. While the advent of central air conditioning has made regular visits to the north more of a luxury than a necessity, vacation homes in such exotic locations as North Carolina, Maine, Vermont, Massachusetts and New York remain as popular as ever. Many Miami residents also own out-of-state real estate for reasons other than vacations, with many owning property for rental income, long-term investment, or present/future use by family members.
Review Your Florida-Centric Estate Plans
Florida resident owners of out-of-state real estate and tangible personal property (such as furniture, artwork, automobiles and boats) may be surprised to learn, however, that without proper planning their spouses or children may pay a steep tax price to inherit the property when the owner dies. Many owners may be even more surprised to learn that their current Florida-centric estate plans do not include planning to avoid or postpone the tax.
The Third District Court of Appeal recently issued an opinion that is a game changer for third-party purchasers of condominium units at foreclosure sales. The Third District’s opinion in Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc., Case No. 3D11-2545 (Fla. 3d DCA 2013), absolves third-party purchasers of responsibility for a prior owner’s past-due maintenance, assessments, and late fees in circumstances where a condominium association has previously foreclosed on a lien.
Condominium associations have suffered through the economic downturn due to lost revenue from unit owners who have defaulted on their obligations to pay regular maintenance and special assessments. In order to try to recoup some of these losses, many associations have taken advantage of the provisions of Florida law that create a lien in favor of condominium associations for unpaid maintenance and assessments. Florida law also allows associations to foreclose on their liens, subject, of course, to a bank’s mortgage on the property. The functional result is that condominium associations regularly take possession of units and rent them out until the bank foreclosure process is completed. This allows an association to collect rent from a defaulted unit for several months or years until the bank’s foreclosure sale is completed.
Until the Aventura Management decision, potential purchasers of condominium units had to account for significant uncertainty in the amount of money it would take to purchase a condominium property out of a bank foreclosure. The great unknown was whether the third-party purchaser would be responsible for the past-due payments accrued by the former owner of the unit.
The Florida real estate market remains a prime target for Canadian investment, with a particular focus on South and South West Florida. These Canadian purchasers are being credited with playing a role in the rebound of the Florida housing market, which has seen a 12% increase since its April 2011 low. Indeed, notwithstanding competition from South American buyers and emerging interest from Asia, a recent BMO Financial Group report indicates that Canadians are Florida’s number one foreign buyer of real estate.
Canadian Dollar Remains Strong
This is particularly true as the Canadian dollar remains strong as compared to the U.S. Dollar, a far cry from the historical exchange rates seen before the economic downturn. As a result, Canadian buyers continue to flock to Florida – not just for the sun and the sand, but for the investment opportunity as well.
Chapter 11 filings in the Southern District of Florida continue to trend downward. Since 2010, annual chapter 11 filings have declined by about 25%. The decline is consistent with the national bankruptcy experience.
Variety of factors contributing to decline in filings
To some extent, the current low filing rate is attributable to a robust local economy, particularly in the hospitality and commercial development sectors, leading segments of the South Florida economy. Generally speaking, however, the decline in filings is also fueled by other dynamics (less favorable) including delays in foreclosure proceedings putting off the need for bankruptcy relief; paucity of debtor in possession financing; prevalence of “bad boy” guaranties which makes borrower filings a Hobson’s Choice for guarantors; the requirement that “new value” plans of reorganization be market tested making insider exit strategies less predictable; and, complicated capital structures that make reaching consensus on an exit plan difficult.
After three consecutive years of similar declines in chapter 11 filings, perhaps that fact alone is not necessarily a key indicator of economic recovery. The decline in no small part may well be testimony that chapter 11 is no longer regarded as the best way to navigate through financial extremis.
U.S. companies with, or that were seeking to acquire, foreign operations often fretted over the possibility that plaintiffs in the foreign jurisdiction would seek to invoke the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, and commence actions in the U.S. in an attempt to seek redress for egregious conduct (violations of the “laws of nations”) committed by the foreign subsidiary or affiliated companies.
Recently, ATS cases have involved foreign plaintiffs seeking redress for atrocities purportedly committed by state actors on behalf of the foreign corporations and for the damages and costs associated with cleaning up environmental pollution that purportedly was caused by the foreign corporations.
WHAT THIS DECISION COULD MEAN FOR YOU
As discussed below, the U.S. Supreme Court decided that the ATS cannot be invoked as a basis for federal jurisdiction where the “relevant conduct” occurred within the territory of a sovereign other than the U.S. This substantial narrowing of the scope of the ATS likely will cause putative ATS plaintiffs to think twice about bringing their claims, since they likely will have to make a strong showing that the “relevant conduct” that led to the injury occurred in the U.S. Since the majority of ATS cases have involved acts that occurred in foreign countries, corporate clients likely will have to worry less about the possibility of ATS litigation relating to their foreign operations.
We recently wrote about the Florida House and Senate bills regarding public-private partnerships that are currently under consideration. As a brief update, House Bill 85 was approved on Tuesday by the House Appropriations Committee. It is next scheduled to be considered by the State Affairs Committee, and from there, it could be considered for adoption by the full House. The progress of the bill can be tracked by clicking here.
Meanwhile, Senate Bill 84 is pending review by Senate Appropriations. Its progress can be tracked here.