More often than not, a commercial landlord will ask for a personal guaranty from a prospective tenant when negotiating a lease. A personal guaranty gives the landlord the ability to seek from the guarantor any unpaid rent in addition to the business entity that is renting the space. Many times, the guarantor is the owner of the commercial entity seeking to lease the commercial space and is providing a personal guaranty in his/her individual capacity.
Over the past few years, we’ve seen an increase in legislation relating to community associations. That trend continues this year, with approximately eleven bills affecting community associations having been introduced when the 2019 legislative regular session convened on March 5th.
The following is a summary of the bills affecting homeowner and condominium associations that have been introduced and are currently working their way through committees:
SB 610 /HB 1259
What is specific performance?
Specific performance is an equitable remedy that forces the other party to perform under a contract, provided that party seeking performance (i.e., the plaintiff) is ready, willing and able to comply.
In most instances, the remedy of specific performance is brought by a buyer, who asks the court to order the seller to convey the property in exchange for the purchase price stated in a contract. The court’s judgment can serve as a valid transfer of the property, much like a deed.
Historically, and especially during the crazy real estate boom of the early 2000s, specific performance claims against buyers were rarely pursued. In fact, many sellers were happy to have a buyer back out, since it usually meant that the seller could sign a new contract with a new buyer at a higher price.
Impact of a declining real estate market on specific performance claims
HB911 is proposed legislation that would substantially revamp Ch. 558, Florida Statutes, by substantially doing away with pre-suit notice requirements and replace those requirements with mandatory non-binding arbitration to take place within 180 days of the lawsuit being filed.
Notably, the new provisions would apply not only to completed projects (like the current version) but also to ongoing projects.
Impact of HB911 on Florida Construction Defect Insurance Claims
Given its status as a tourist destination, and the proliferation of online rental platforms, it would seem that Collier County is the perfect place for Airbnb and similar services to thrive. While these platforms continue to grow, both the City of Naples and Collier County have taken the position that daily, weekly, and/or monthly rentals of single-family homes (also known as vacation rentals, short-term rentals, transient rentals, and/or transient occupancy) are generally prohibited.
Home rentals have been popular in Florida for decades. Prior to the age of Airbnb (which launched in 2008), short-term rentals were allowed to exist “off the radar” with little to no zoning-based enforcement. Successive single-family rentals were not particularly problematic in single-family zoning districts before the internet. As technology continues to evolve, renters, neighbors, elected officials, and code enforcement have easy access to vacation rental information.
In 2011, amendments to state law preempted local governments from adopting ordinances relating to the “use” and “occupancy” of short-term rentals. In 2014, this preemption was removed and replaced with a preemption on local regulation of “duration” and “frequency” of short-term rentals. The remainder of this post will explain the current status of regulation of short-term rentals of single-family homes in the City of Naples and in unincorporated Collier County.
City of Naples Short Term Rentals
The kids show Sesame Street began running in 1969 and provided useful lessons for kids. Sesame Street featured the characters Bert and Ernie. Ernie would greet Bert each time with “Hey, Bert!” Today, I’d like to focus on another “Bert” that impacts property owners — The Bert J. Harris, Jr., Private Property Rights Protection Act (the “Act”).
Vale v. Palm Beach County
As mentioned in a previous post, the Florida Supreme Court strictly interprets the Act and the Fourth District Court of Appeal has followed the Supreme Court’s lead and provides a useful lesson in the decision Vale v. Palm Beach County.
In the Vale case, the plaintiffs owned homes in a planned unit development next to a golf course. The golf course owner obtained permission from Palm Beach County to redevelop the golf course. After that, the plaintiffs sued the County under the Bert Harris Act, claiming the redevelopment diminished the value of their homes.
The County moved to dismiss the lawsuit on the grounds the County had taken no direct action against the plaintiffs’ property and therefore the Bert Harris Act did not apply. The trial court granted the County’s motion to dismiss and the Fourth District Court of Appeal upheld the dismissal, citing the Florida Supreme Court’s opinion in Hardee County, Florida v. FINR II, Inc., which specified that
“Owners whose property has not been directly acted upon by a governmental entity may not state a claim under the [Bert Harris] Act.”
As previously blogged, if it’s not your property, you have no claim under the Bert Harris Act. Claims involving government acts or regulation and their impact on real property can be complicated and we may be able to help. Please feel to contact me at firstname.lastname@example.org or by phone at 239-344-1326.
In 2018, we shared an article explaining the Florida Legislature’s decision to reduce the business rent tax (“BRT”) from 5.8% to 5.7% for leases commencing in 2019 and beyond. On Election Day 2018, the voters in Lee and Collier counties voted in favor of a discretionary sales tax (the “Sales Tax”), 0.5 percent and 1 percent respectively.
According to the Florida Department of Revenue, if a county has a discretionary sales tax, then the Sales Tax should be collected in addition to the BRT. In other words, the voters in Lee and Collier counties have increased the tax on commercial tenants by voting in favor of the Sales Tax. For example, a landlord of commercial property in Lee County should collect the BRT of 5.7% and Sales Tax of 0.5%.
Therefore, the effective tax rate for commercial tenants in Lee County is 6.2%. Below, we have detailed the effective tax rates for select southwest Florida counties:
- Lee 6.2%
- Collier 6.7%
- Charlotte 6.7%
As with all tax matters, please consult with your tax professional. If you have any questions regarding the Business Rent Tax, the discretionary sales tax and its effects, please feel free to contact us at either email@example.com (239-344-1125) or firstname.lastname@example.org (239-344-1164).
Commercial space is rarely “walk-in ready” for the tenant. As a result, landlords and tenants must negotiate for leasehold improvements in order for the leasing transaction to move forward. This can impact new leases, amendments or renewals of existing leases.
Below are some tips when negotiating and drafting the work letter for leasehold improvement responsibilities, originally published in the January 2019 issue of SuiteLife Magazine: Continue Reading Six Tips for Negotiating Leasehold Improvements
If you have been in the business world for any reasonably length of time, or if you have leased property or entered into a contract for construction or remodeling, you have probably been a party to a contract that contains an indemnification provision.
The concept of the indemnification provision is generally very simple. If one contracting party (the indemnitee) becomes liable to a third party as a result of wrongful conduct on the part of the other contracting party (the indemnitor), the at fault party (the indemnitor) must compensate or indemnify the party who is not at fault.
Indemnification provisions are prevalent in construction contracts, independent contractor agreements, leases and other business arrangements where there is a possibility that one party might get sued as a result of someone else’s conduct.
The problem is that few people appreciate the significance of the indemnification provision or how it works and Florida courts have reached some decisions that would likely be surprising, if not shocking, to the uninitiated.
“I might have to pay because I’m potentially liable?”
Florida’s Third District Court of Appeal handed down a win for local governments on Wednesday when the Court reversed a previous Circuit Court injunction that barred the City of Miami from enforcing a ban on short-term rentals in residential areas of the City.
In 2017, the City of Miami adopted a resolution that affirmed the City’s zoning regulations “as they pertain to short-term/vacation rentals,” and stated that neighborhoods zoned as T3 were limited to permanent residential use, which precluded rental accommodations per night, week, or anything less than one month.
Notably, the T3 zone encompassed most of the City’s single-family houses and duplexes. When residents who had been using Airbnb to rent their properties spoke against the resolution, residents were directed to state their name and address for the record, and the City Manager made the comment that the City was “now on notice” of those who spoke against the City’s code and that he would direct his staff to enforce the City code.