(As published in the “Roundtable” in the July 2020 Issue of Suite Life Magazine)

While residential tenancies have many terms and protections set out in the Florida statutes that cannot be waived, the same cannot be said about commercial tenancies. As a result, the general rule of thumb is that if a condition or situation is not addressed by your commercial lease, the Florida statutes will be of no use.

Thus, commercial property owners and landlords should always strive to use the most comprehensive lease agreement with their tenants. Below are some of the most common “absent provisions” that have come back to bite a commercial landlord.

Tenant Improvements

Your lease should be specific about which party has the authority to approve all plans and hire the contractors. The lease should also contain very specific information about the payment of any tenant improvement allowance (lump sum versus payment in the form of rent abatement) and the timing of such payment.

Casualty Loss

In the event of a casualty (fire, storm, etc.), the lease should state who is entitled to the insurance proceeds. There should be deadlines within which the landlord or tenant are required to make repairs, and there should always be a provision that addresses whether a lease may be terminated in the event of a casualty that renders the property unusable.

Non-Monetary Default

Continue Reading Commercial Leasing: The Devil is in the Details

Guest post by Nick J. Oliveri, Summer Law Clerk

In late June, Governor DeSantis approved Florida’s version of the Uniform Commercial Real Estate Receivership Act (“UCRERA”) and the Act became effective July 1, 2020. This law begins its life in a time of great uncertainty for the Florida business community as the Sunshine State’s recently-relaxed business restrictions underwent a near full reversal as COVID-19 cases spiked around the state. This retightening of COVID-19 business restrictions and the uncertainty associated with it will likely mean Florida businesses may continue to struggle. This is where UCRERA comes in.

UCRERA codifies Florida common law around receivership and even expanded it in some cases. Those involved in Florida’s commercial real estate industry, whether on the lending or the borrowing side, would do well to take note of these changes as an increase in foreclosures is predicted as a result of COVID-19’s negative impact on Florida’s businesses.

What do Florida lenders need to look out for?

If you are a commercial lender, this law is definitely in your favor due to the expansive powers it gives receivers to help pay back the commercial lenders who appoint them. Lenders should focus on three things:

  • the mandatory receivership duties under UCRERA;
  • what actions receivers are allowed to do “in the ordinary course of business” and outside of it; and,
  • what actions they need court approval for.

The latter two things often go hand in hand as you will see below.

Impact on Borrowers

Although this sounds bad for borrowers, borrowers should be on the lookout for language like “with court approval” because that means a borrower will likely have the chance to contest whatever the receiver is trying to do.

Continue Reading Understanding Florida’s Commercial Property Receivership Act and its Impact on Lenders and Borrowers Amidst COVID-19

Most of us in the construction industry are familiar with contractual provisions which require one of the parties to obtain insurance on the project (frequently called “builder’s risk” policies). These provisions are typically accompanied by “waiver of subrogation” provisions. Usually, if everything goes well on a construction project, these provisions don’t ever come up for discussion. However, in the event there is an accident during the course of construction, these provisions can be critical for purposes of allocating risks and potentially protecting a contractor or its subcontractors from liability.

How do these provisions work?

Typically, a construction contract will require the owner (or the contractor) to obtain property insurance to protect the project during the course of construction. For example, the standard AIA General Conditions require the owner to “purchase and maintain property insurance upon the entire work at the site to the full insurable value thereof.” This insurance is to include the interests of the owner, the contractor and all subcontractors. In short, the insurance is intended to protect the project against all “perils” and is generally intended to provide protection for everyone involved in the work.

A “Waiver of Subrogation” provision is typically designed to prevent an insurance company from asserting claims against the party who may have been responsible for causing damage to the property. Thus, if the project is damaged during construction and the insurance company is forced to pay for the damage, the insurance company is prohibited from asserting claims against the contractor or its subcontractors or others who may have been responsible for the damage.

Florida Law

Continue Reading Construction Contracts: Property Insurance and Waiver of Subrogation Provisions

Permit Extensions for Emergency Declarations

Pursuant to Florida Statute 252.363, the Governor’s declaration of a state of emergency tolls the period remaining to exercise rights under a permit or other authorization, essentially extending the life of the permit or authorization.

The expiration date of the permit or authorization is tolled for the duration of the emergency declaration plus an additional six months, and applies to the following:

  • development orders issued by a local government;
  • building permits;
  • permits issued by the Department of Environmental Protection or a water management district; and
  • the buildout date of a development of regional impact.

On March 9, 2020, Governor DeSantis issued Executive Order 20-52 declaring COVID-19 a public health emergency. Such declaration triggers the provisions of Florida Statute 252.363 and allows extensions of the permits and authorizations mentioned above.

Requests for extensions must be submitted to the appropriate permitting authority within 90 days after the emergency declaration has expired. Executive Order 20-52 is set to expire on May 8, 2020, unless further extended.

Suspension of Mortgage Foreclosures and Evictions

Continue Reading COVID-19: Real Estate Updates Halfway Through the Stay-at-Home Order

On March 27, 2020, citing a “great risk” to Florida residents relating to external travelers bringing COVD-19 virus to Florida, Governor Ron DeSantis signed Executive Order No. 20-87. The order places severe, but temporary, restrictions on vacation rentals throughout Florida.

By its terms, the duration of the Governor’s order was 14 days, and the temporary restrictions would have expired on Friday, April 10th. However, both Lee County and Governor DeSantis took steps late afternoon on Friday the 10th to extend the prohibition through the end of April 2020 – with Lee County adopting Lee County Emergency Order 20-01, and Gov. DeSantis signing Executive Order 20-103. The substance of both the state and county versions of these orders is virtually identical, and both extend the rental restrictions from April 10th “until April 30, 2020” with the ability to extend by subsequent order(s).

Violations could result in jail time

Under the order, “all parties engaged in rental of vacation rental properties” (as defined in Chapter 509, Florida Statutes) must “suspend operations”. Additionally, new reservations, new bookings, and new guest check-ins are prohibited under the Governor’s order. Violation of the order is a second-degree misdemeanor, which carries a maximum sentence of 60 days in jail.

Are there any exemptions? What if I rent my home to a healthcare worker?

Continue Reading COVID-19: Lee County and Florida Governor extend prohibition on vacation rentals until April 30, 2020

On April 2, 2020, Governor Ron DeSantis issued Executive Order No. 20-94 (“E.O. 20-94”), which addressed mortgage foreclosure and eviction relief. In the preamble (i.e., the “whereas” section), the Governor recited that the Federal Housing Administration implemented an immediate foreclosure and eviction moratorium for FHA-insured single-family mortgages for at least 60 days, and recited that the Federal Housing Finance Agency similarly directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for Enterprise-backed single-family mortgages for at least 60 days. Based on those Federal moratoriums, Gov. DeSantis issued E.O. 20-94.

The language of E.O. 20-94 states:

  • Section 1: I hereby suspend and toll any statute providing for a mortgage foreclosure cause of action under Florida law for 45 days.
  • Section 2: I hereby suspend and toll any statue providing for an eviction cause of action under Florida law solely as it relates to non-payment of rent by resident tenants due to the COVID-19 emergency for 45 days.
  • Section 3: Nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.

Continue Reading COVID-19: Mortgage Foreclosure and Eviction Relief

It’s no secret that the COVID-19 epidemic is affecting virtually every sector in some way, shape, or form. The real estate sector is no exception. Although the modern real estate world has slowly moved away from face-to-face deals, there are still aspects of real estate that require some type of face-to-face contact.

How do we keep moving forward while remaining safe and healthy?

With most banks, law firms, and offices closing up to the general public, you may be wondering how to fulfill the time constraints of your contract and how a deal can be closed. In our downtown Fort Myers office, we have set-up a drive-thru conference room for signings.

Discuss the best options and next steps with your real estate attorney. Depending on the contents of your contract and individual situation, a contract extension may be the best option. However, it may also be feasible to continue to closing using the proper resources.

Force majeure clauses

Continue Reading COVID-19 Impact on Real Estate Contracts and Closings

Impact fees charged by Lee County for roads, parks, and schools increased by 2.5% on March 7, 2020. The increase is part of a regularly scheduled increase adopted by the Lee County Commission in 2018, but will still leave fees at 50% of their full established rates adopted by the County.

Background

Impact fees are charged by the County at the time of building permits to offset the impacts of new development on roads, parks, schools, and fire/ems services. The rates are reviewed and updated periodically to reflect current costs associated with these services.

As an economic stimulus in 2013, the County adopted a reduced “collection rate” for fees charged for roads, parks, and schools to 20% of their established fee. The reduction was not applicable to fire/EMS fees. Initially established for a period of two (2) years, the reduced collection rates were extended an additional three (3) years in 2015, but at a revised collection rate of 45%.

In 2018, the County revisited both the amount of impact fees (Ordinance 18-07) and the collection rate charged (Ordinance 18-08). At that time, the County generally increased the fees for most uses; for example, the full 100% road impact fee for a single-family dwelling increased from $6,458 to $9,996. However, the County also decided to continue collecting these fees at a reduced 45% rate, meaning the $9,996 road impact fee for a single-family dwelling would effectively be reduced to $4,498.

Additionally, the County provided for a gradual 2.5% annual increase in the collection rate over the ensuing five (5) years. The collection rate increased to 47.5% in 2019 and, as noted above, increased to 50% on March 7, 2020.

Next Scheduled Increase in Impact Fees

The last 2.5% increase is scheduled to occur on March 10, 2022, and will raise the collection rate to 55% at that time. It is expected that the County Commission will revisit both the amount of the fees and the collection rate in 2022-23.

For further information on impact fees, please contact me at richard.akin@henlaw.com.

It’s an election year, and that means voters have a lot to think about before casting their ballots in the August and November elections. In every election cycle, citizens have the opportunity to go through the initiative petition process for the opportunity to put Florida constitutional amendments on the ballot as ballot measures.

How does the Petition Process Work in Florida?

Below is an overview of a not-so-quick process.

Continue Reading Foresight is 2020: A Look at the Constitutional Amendments on the November Ballot

Oil, gas, and mineral (“OGM”) rights are not uncommon, especially in Collier County and certain areas of Lee County. Unfortunately, outdated OGM leases and rights reservations can often cause a headache for buyers when these issues show up on title. Below are some tips for combating OGM rights issues on your property.

Before the contract is signed

Sometimes, if a seller knows there may be OGM rights on the property, there will be provisions in the contract to account for those rights. Be wary of provisions that limit seller’s obligation to cure issues related to OGM rights. For example, some contracts may provide that seller has an obligation to cure a title defect related to OGM rights only if there is a right of entry. Even if there is no right of entry, an OGM right may still create a cloud on title that would make buyers uncomfortable.

If you cannot reach an agreement for seller to cure the OGM issues, make sure to have a long due diligence period and try to tackle OGM issues early. OGM issues are complex, and removing them from title can be cumbersome.

After the contract is signed

Continue Reading Options for Commercial Property Owners When Handling Oil, Gas & Mineral Rights