A New Mortgage Refinancing Fee. Here’s What You Should Know!

As of December 1, 2020, a new refinance fee is now in effect. This comes at a time when we are having record-low mortgage rates, a great time to refinance. “The Federal Housing Finance Agency (FHFA) will begin charging a mortgage refinance fee that could impact the cost of your mortgage.”

What is the fee and how will it affect me?

The “adverse market refinance fee,” of 0.5%, will be added to any new refinanced mortgages beginning December 1, 2020. This new fee is designed to help Fannie Mae and Freddie Mac offset some of the COVID-19 related losses.

“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” Fannie Mae explained in a letter announcing the fee.

The new fee could potentially increase the interest rate homeowners are quoted if they do not negotiate with the lender to waive the fee.

“On the whole, borrowers don’t seem too concerned about this fee because it’s baked into the rate they’re being offered by their lenders.” However, our team at Gulati Law, like our borrowers to be well informed of the potential increased costs on your mortgage.

Below are a few things borrowers should know:

  • Some Borrowers are exempt if they fall under the following:
    • If your principal is less than $125,000;
    • Borrowers refinancing VA or FHA loans; and
    • If you are buying a home and taking a new loan.
  • Lenders might find different ways to charge the fee.
    • The FHFA charges the fee directly to lenders. Some may role it into the interest rate, while others may role it into the closing costs.

This fee should not deter you from refinancing, as the rates are the lowest on record. This new fee may still be negotiated with your lender. It is advisable to discuss with your Real Estate Attorney, to make sure all fees charged by the lender are reasonable and if it is even worthwhile to refinance based on how much the borrower can potentially save.

The fee may not last, however, it is still here for now! Stay informed and discuss it further with an Attorney at Gulati Law.

Source: Forbes 


Breaking News: Bars to Re-Open Monday at 50% capacity in Florida!

This evening, the Florida Department of Business and Professional Regulation (DBPR) issued Emergency Order 2020-10, which permits bars to re-open on Monday, September 14, at 50% capacity.

Under the Order, bars and other alcoholic beverage vendors may resume sales of alcoholic beverages for consumption on premises beginning Monday, provided that their operations comply with the parameters of Phase 2 of Governor DeSantis’ “Safe. Smart. Step-by-Step. Plan for Florida’s Recovery as established in Executive Order 20-139.

On Monday, these vendors may operate at 50% capacity of the facility’s indoor capacity, allow bar service to seated patrons, and permit outdoor seating and service with the appropriate social distancing.

“In meetings with hundreds of owners of bars and breweries across the state, I’ve heard their stories of struggle, and I’ve observed their serious commitment to making health and safety a continuing priority in their businesses,” said DBPR Secretary Halsey Beshears. “It’s time that we take this step, and it’s vital that we start moving forward with this sector of our hospitality industry who have endured one of the toughest paths for sustaining a business during this pandemic.”

For more details, please see the complete Emergency Order linked below:

DBPR Emergency Order 2020-10

Source: FRLA

Foreign National Seller of Florida Real Property- FIRPTA Withholding FAQ’s!

If you are a foreign national or you are assisting a foreign national client in selling real estate, you are most likely familiar with Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”).  When you are handling a real estate transaction involving a foreign seller, depending on the value of the property and how it will be used, the transaction is generally subject to a 15% withholding on the purchase price due to FIRPTA.   The Act places the responsibility of the Buyer for this withholding.

For the purposes of FIRPTA, a foreign seller is defined as either a non-resident alien individual, a foreign corporation not treated as a domestic corporation, or a foreign partnership, trust or estate.  A person is considered to be a resident alien under FIRPTA if they have legal permanent resident status in the U.S. (they have a Green Card), and they meet the substantial presence test which sets a minimum number of days they must be physically present in the United States.  

The formula for the substantial presence test is as follows:

  • 31 days during the current year;
  • 183 days during 3-year period
    • All the days present in the current year, &
    • 1/3 of the days present in the first year prior, &
    • 1/6 days present in the second year prior.

If you are buying or selling a property, and the Seller is a foreign national, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.

Florida Amended Lease Requirements- Bill Signed into Law!

At the begining of the year, the Florida legislature passed a bill amending Florida Statutes § 689.01 which eliminated the requirement of having two witnesses for the execution of a lease on real property.

On June 27, 2020, Governor De Santis signed this bill into law. Until such time, Florida law has clearly stated that a lease for a term of more than one year could be created only by an instrument in writing signed in the presence of two subscribing witnesses.

Under the new amended law, which is now in effect, no subscribing witnesses will be required for leases of real property in Florida.

As a firm who has assisted both Landlords and Tenants in drafting and reviewing commercial and residential leases, we pride ourselves on keeping current with changing requirements and ensuring that no Landlord or Tenant is left executing a lease which is unclear or subject to contesting. 

Should you find yourself entering into a lease, whether commercial or residential, it is highly recommended that you obtain legal counsel to guide you through the complex particulars and ensure that the financial obligation you are about to embark on is drafted specific to your needs and in your interest. For any questions or assistance, please contact us as we would be happy to guide you.

Business legal document concept : Pen and glasses on a lease agreement form. Lease agreement is a contract between a lessor and a lessee that allow lessee rights to use of a property owned by lessor

Uniform Commercial Real Estate Receivership Act Is NOW THE LAW IN FLORIDA

The Uniform Commercial Real Estate Receivership Act (hereinafter “UCRERA”) became law July 1, 2020, marking a new era for Florida courts.

“Of course, this couldn’t have been anticipated, but with the economic fallout from COVID, and all the closures, the first thing that will be effected when people stop paying their rent is commercial real estate.”

Florida is one of only nine states that have adopted UCRERA since 2017.

UCRERA creates a process for state courts to appoint a receiver in disputes that arise over commercial real estate, typically a default. Once appointed by the court, a neutral receiver can manage an asset and prevent it from falling into disrepair.

Florida judges have the power to appoint receivers, but before UCRERA, there was no statute that addresses the process for commercial real estate disputes.

HB 783 and a companion, SB 660 by Sen. Lori Berman, D-Boynton Beach, passed both chambers unanimously.

For more questions regarding your Commercial Real Estate investment, call Gulati Law today!

Source: Florida Bar Article


The Coronavirus pandemic has caused many businesses to experience severe income loss, many already unable to cover their bottom-line business expenses. As a result, our firm has begun actively working with clients applying for economic disaster loans. Please reach out to us immediately for help in preparing your application as deadlines are quickly approaching.  Due to the urgency and time sensitivity of these applications, we are making these are highest priority.

Below is a list of the business loans that may be available to you (on a case by case basis): 


  • Purpose: Designed to “bridge the gap” between the disaster occurrence and when the business secures long term recovery resources
  • Amount: Up to $50,000.00 per small business (up to $100,000.00 in some occasions)
  • Term: Requires repayment within 12 months
  • Interest: 0% for the first 12 months after which interest is charged at 12%
  • Eligibility:
    • Florida must be the designated disaster area
    • Must maintain a place of business in Florida and established prior to March 9, 2020
    • Demonstration of economic injury as a result of Coronavirus
    • Individual or individual who owns at least 51% equity of entity
    • At least 2-100 employees**
  • Use: Proceeds MUST be used for maintaining or restating business (use of proceeds to pay off debts already incurred on case by case basis)
  • Supporting Documentation Required:
    • Government ID          
    • Federal Business tax returns for the last 2 completed years
    • Employer tax documentation.
    • Personal tax returns for the last 2 completed years with attached Schedule C
    • Additional information that the applicant believes would assist the Loan Review Committee in making its decision (such as a loan summary).
  • Application Deadline: May 8, 2020 – Website: https://floridadisaster.biz/


  • Amount: Up to $500,000.00 in state and federal funds ($40,000,000.00 available)
  • Term: Case by case basis
  • Interest: Market interest rates
  • Eligibility:
    • Existing and new businesses that were impacted directly or indirectly by a disaster to rebuild and expand
    • Industries identified by the state as key strategic markets for future growth and will focus on creating and enhancing the diversification and resiliency of Florida’s economy
  • Use: Inventory purchases, construction or renovation, working capital needs, capital start-up loans, machinery and equipment purchases, equipment financing


  • Amount: Up to $2,000,000.00 in assistance available (determined on a case by case basis but may not exceed what the applicant could have paid had the disaster not occurred)
  • Term: long term prepayment up to 30 years
  • Interest: 3.75% for small businesses; 2.75% for non-profits
  • Eligibility:
    • Must have less than 500 employees
    • Physical presence in the disaster area
    • Substantial economic injury
    • Applicant’s credit history
    • Financial position of the business (must be able to repay loan)
    • Business’s potential to accumulate funds necessary to operate
    • Estimated loss incurred or that will be incurred
    • Businesses with credit available elsewhere are not eligible (This may be removed by approved CARE Act)
    • Must have collateral for loans over $25,000
    • Ineligible: Agricultural, religious, charitable, gambling, unclear about cannabis industry
  • Use: Proceeds MUST be used to pay fixed debts, payroll, accounts payable, and other bills that are unable to be paid as a result of Coronavirus impact
    • Cannot be Used To: Refinance debt incurred prior to disaster; Service current SBA loans, Pay directly or indirectly any obligation of tax or non-tax penalty due to a violation; Pay dividends or disbursements to owners except for reasonable remuneration directly related to performance of services for the applicant business
  • Step: (1) Apply via SBA website; (2) Review, verification and processing; (3) Loan closing and disbursement
  • Supporting Documents Required:
    • Online SBA Application – Form 5 – To be completed online (Registration required)
    • IRS Form 4506T- Tax Transcript authorization for tax verification
    • Copy of most recently filed tax return
    • Personal financial statements for all owners of 20% or greater ownership interest – SBA Form 413
    • Schedule of liabilities – SBA Form 220
    • Current year to date profit and loss statement
  • Disbursement: Initial disbursement within 5 days after approval (approval usually takes 3-4 weeks but could be more given the extent of the pandemic)
  • Application: Within 9 months of state of disaster declaration

SMALL BUSINESS ASSOCIATION 7(A) (Loans given not specifically as a result of Coronavirus)

  • Amount: Maximum of $5,000,000.00
  • Term: Maximum of 25 years
  • Maximum Guarantee: 85% for loans up to $150,00.000 and 75% for loans greater than $150,000.00
  • Interest: Negotiable
  • Eligibility: Case by case basis.

CARES ACT (initial proposal-not yet approved)

    • Extension of EIDL Loan availability to $10 Billion.  
    • Waiver: Creates waiver of personal guarantee for loans of less than $200,000.00
    • Emergency Grant: Creates emergency grants of $10,000.00 to be distributed by SBA within 3 days while an application is pending. No repayment even if denied EIDL loan.
    • Eligibility:
      • Nonprofits with fewer than 500 employees
        • Business must be in operation on March 1, 2020 and had employees for which it paid salaries and payroll taxes
    • Basis is only on credit score
    • Use: Proceeds MUST be used for working capital, payroll support, salaries, mortgage payments, rent, utilities, and certain other existing debt obligations
    • Purpose: to cover the period of time from March 1, 2020 to December 31, 2020. Designed to ensure employees are paid even as their employer’s business is currently closed
    • Amount: Government to make available $350,000,000,000.00 in guarantees to obtain loans to cover expenses during Coronavirus Pandemic. Maximum to business is an amount equal to 4 times the borrower’s total monthly expenses (monthly average over last 12 months) capped at 10 million
      • Expenses include payroll, mortgage, rent, payments on other debt obligations
    • Interest: No more than 4%
    • Waiver of Fees: SBA to waive all applicable fees.
    • Deferment: Lenders required to defer payments for not less than 6 months
    • Loan Forgiveness: Equal to the costs incurred or payments made by borrower during an 8-week period after the origination date of the loan including:
      • Payroll costs
      • Interest payments on any mortgage (existing prior to Feb 15, 2020)
      • Rent payments (after Feb 15, 2020)
      • Utility service payments (service began before Feb 15, 2020)
      • Forgiveness reduced by reduction in employees or reduction in employee pay greater than 25%
      • Borrower will not be penalized for reduced payroll if borrower rehires workers previously laid off (unclear as to time limits)
    • Eligibility:
      • No more than 500 employees (applies per physical location unless gross receipts exceeds $500,000,000.00) Standard cannot be more than 500 employees in the aggregate of all affiliates.
      • Cannot be receiving other assistance related to the Coronavirus Pandemic, any pending application will eliminate availability of SBIL
      • Not limited by geography or to states that have been declared as disaster areas
    • Use: Paid sick leave, group health care benefits, employee salaries, mortgage payments, rents, utilities, payment of other debt obligations.
    • Application: Accepted through SBA qualified lenders
    • Approval or denial within 36 hours
    • Can be a term loan or line of credit
    • Amount: Maximum of $350,000.00 to be increased to $1,000,000.00 then reduced to $500,000.00 after December 31, 2020
    • Loans up to $50,000.00 made through nonprofit lending organizations directed to underserved market applicants
    • Average loan size of $14,000.00
    • Secondary Market Loans: Up to 6 months
    • Loans Not Sold on Secondary Market: Lender can use the Colsons Customer Service Online Request for deferral of less than or equal to 12 months, including lender notification of unilateral 3-month deferral
    • SBA 504 Loans: The amount deferred should not exceed 6 cumulative monthly payments or 20% of original loan amount whichever is less         
    • Borrower financial info will be reviewed prior to deferral to ensure cash flow problems are not long term
    • If loan is more than 60 calendar days past due and problems appear long term deferral will not be granted
    • Interest will continue to accrue during deferment period with payments optional
    • Details not yet available but will be a direct lending program from the federal reserve to businesses


  • Term: 12 calendar months
  • Eligibility:
    • The employer must describe a plan for giving notice, if feasible, to an employee whose workweek is to be reduced, together with an estimate of the number of layoffs that would have occurred absent the ability to participate in STC.
    • Participating employees must be full-time (at least 32 hours per week prior to Short Time Compensation reduction), permanent employees (not seasonal) and the employees must have a set number of hours (excluding overtime) that they work each week in order to participate. Employees paid piece rate, on commission, or who are hired to do certain jobs regardless of the time required are not eligible for participation.
    • Short Time Compensation benefits are payable when normal hours of work are reduced from 10-40 percent. If normal work hours exceed 40, the percentage will be based on 40 hours.
    • Each week that Short Time Compensation benefits are claimed, at least 10 percent of the employees from the total staff or within a particular unit must be working reduced hours. (Two employees is the minimum for a staff or unit of less than 20 employees.)
  • Use: to retain employees during a temporary slowdown, avoid the expense of recruiting, hiring, and retraining new works when business resumes, a transition to layoff
  • Application: Requires log in.


  • Amount: $100,000,000.00 in cash grants and AD credits determined on a case by base basis
  • Eligibility: Details to come
  • Use: Proceeds may be used to assist with rent, keep workforce, connect with more customers, and cover operational costs.
  • Application not out yet, can sign up on https://www.facebook.com/business/boost/grants?ref=eml to obtain updates


  • Emergency Credit for existing Borrowers affected by the Coronavirus outbreak
  • Amount: up to ₹ 200 crore or 10% of existing fund based on working capital limits
  • Term: 12 months
  • Interest: 7.25%
  • Eligibility:
    • Current standard account
    • Account not classified as SMA 1 or 2 as of March 16, 2020
  • Deadline: June 30, 2020

Please note many of the loan options above are provided on a case by case basis and are not set in stone, as they are changing depending on what is available, and the laws being enacted. It is important you understand your options and the loan terms being offered during this period.

We are immediately available to assist you through the application process, contact Gulati Law at 407-900-5054 to get started immediately. We recommend getting your applications in as soon as possible as processing can take weeks. 

Handling Your Hotel Loans Amid the Coronavirus Pandemic

With the sudden arrival of the Coronavirus Pandemic, the hospitality industry has been hit hard. Between the fear, anxiety and social isolation of consumers and the government ordered lockdowns and no travel orders, occupancy of many hotels is down to an alarming level. It is anticipated, by the American Hotel & Lodging Association that more than half of U.S. Hotels may close before the end of 2020.

How will Lender’s respond to the crisis?

Unfortunately, we cannot predict how the Banks are going to be responding to the sudden and severe financial distress of their Hotelier Borrowers. Unless your loan agreement, note, and mortgage specifically includes a force majeure clause or a similar clause including a viral pandemic (see Gulati Law Blog Coronavirus and How it Affects your Contracts) providing some type of cure, then the Lender has the right to default you and pursue all legal remedies including acceleration of the debt and foreclosure of the property.

What Can I do to Get Ahead of the Crisis?

It is important not to wait until you receive a notice of default to take action. Reaching out to your Lender in anticipation of default is vital to reaching a resolution. Gulati Law has trained attorneys who are able to reach out to your lender to discuss forbearance, deferment of payments, or other solutions that work for both you and your lender.

Is Refinancing an Option?

Even before the start of the pandemic, mortgage loan interest rates had been at an all time low. It is the hope of the industry that these will stay low or continue to fall leaving an opportunity for hotel owners to refinance their existing loans. It is of the utmost important to have a qualified attorney review any refinance documents prior to execution. Gulati law has been successful in negotiating refinances with the best terms for our clients and can close all loans in house.

In addition to the option of refinancing, there may be other options as Congress convened over the weekend to discuss legislation intended to provide stimulus for the American economy, called the CARES Act. Stay tuned for more updates on this proposed Act.

 Information Needed Prior to Reaching out to the Lender

  1. Actual Borrower Name, any Guarantor Names, Property Address and ID Number;
  2. History of good payments;
  3. Positive stories about the quality of your hotel and customer service;
  4. Occupancy issues and other current financial strains; and
  5. Possible financial payments you CAN make (if any) until the economy recovers.

Contact Gulati Law, P.L. for Assistance

We cannot reiterate enough that you should contact a qualified attorney to correspond with your lender on your behalf. Contact our office today to discuss retaining our services immediately (initial letters to your Lender may be complimentary on a case by case basis).

Remember to stay positive! We believe that once this crisis passes, we will be stronger than before!


Sources: Congress.gov, AHLA, AAHOA, Hospitality Mgmt

Coronavirus and How it Affects your Contracts!

As the number of Coronavirus (COVID-19) cases in the United States and Internationally continues to rise, many business owners are feeling the effects of quarantines, social distancing, travel bans, and more. In the short amount of time since the virus has emerged, businesses, especially in the hospitality and service industries, have experienced significant and devastating disruption.

What is a Force Majeure Clause?

A Force Majeure clause is a provision in a contract that allows for a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.

Examples of Force Majeure events include war, riots, fire, flood, hurricane, typhoon, earthquake, lightning, explosion, strikes, lockouts, slowdowns, prolonged shortage of energy supplies, and acts of state or governmental action prohibiting or impeding any party from performing its respective obligations.

Force majeure clauses must be clearly stated in the Contract and are interpreted strictly.

Is Coronavirus a Force Majeure Event?

The severe disruption to businesses around the world, resulting from the effects of Coronavirus (both physical and emotional), are clearly affecting business owner’s ability to function in the declining economy.  In approaching business operations and all the contracts that accompany the same, you may be wondering “can I get a break” and the Force Majeure clause may be the way to get just that. While unfortunately Coronavirus is not likely to be specifically stated in your clause, as it is a world event unanticipated in our lifetime, it can most certainly be argued that, depending on the business sector, the response to the Coronavirus (such as mandatory lockdowns, social distancing, and business closures) are in fact acts of government which are impeding a party from performing its respective obligations. It may not fully excuse non-performance or cancel existing contracts, but in some cases may defer or alter the terms.

What Does this Mean for Me?

For these reasons it is vital that business owners carefully review the language of their agreements, and not simply choose not to perform and expect to escape without consequences.  In entering this uncharted territory of business operations in a consumer panicked society, it is important the business leaders in the industry stay calm and solution oriented by doing the following:

Detailed Review – Review every contract you have that requires some form of fulfillment of goods or services, or some sort of financial action or commitment over the next 6 months.

Be Proactive – Reach out to your business contacts regarding the impact of the Coronavirus. It is likely that they too have felt the effects and discussing how to mitigation potential damages is valuable to all parties.

Modify your Clause – Whilst the world hopes that we never see another pandemic as tragic as Coronavirus, this should be a wakeup call for all contract participants to ensure that the Force Majeure clause is included in every contract and shall include the extreme scenarios.

Retain Legal Assistance – If you, your business, your real estate, or your pending construction is at risk, contact Gulati Law to discuss your options. As a firm with vast experience dealing with contract delays, performance challenges, payment concerns and force majeure clauses we have the skills to assist you through this difficult time and preserve your current relationships. Most importantly stay safe!



How to decide which structure and tax election is best for you?

Should you incorporate as a C-Corporation or an S-Corporation? To answer that question, you need a clear vision of your business goals. Operationally these entities are similar, yet they have significant differences when it comes to taxation and growth potential.


C-Corporations, or “C-Corps,” are known as “default” corporations. These entities are the default designations given to corporations when businesses first file their “Articles of Incorporation,” a series of documents unique to each state.

Advantages. Some advantages include the ability to raise capital, the ability to be publicly traded, and the ability to issue multiple types of stock. C-Corps can raise a significant amount of capital because they have fewer restrictions when it comes to shareholders. These entities may have an unlimited number of shareholders and can seek financial backing globally. For these reasons, C-Corps are generally favored by larger corporations.

Disadvantages. However, there is a significant drawback when it comes to C-Corps, and that is “double taxation.” The “double taxation” of a C-Corp refers to the taxation upon the dividends paid out to shareholders individually and on the profit of the corporation itself. This drawback is typically one of the deciding factors in choosing which type of taxation is best for your entity.


S-Corporations, or “S-Corps,” are different from C-Corporations in that you must explicitly elect to become an S-Corp. To be taxed as an S-Corp you must file Internal Revenue Service Form 2553, also known as “Election by a Small Business Corporation.”

Advantages.  The biggest advantage is lack of double taxation. Unlike C-Corps, an S-Corp’s profits are not taxed, only the income dispersed to the shareholders is taxed. This is the trade-off for S-Corps, in exchange for reduced size they can keep more of their profits, which is why this model is generally favored by small businesses. However, it should be noted that some states do actually “double tax” S-Corp. Those states include the District of Columbia, New Hampshire, Tennessee, and Texas.

Disadvantages. The disadvantages include the limit of a maximum of 100 shareholders, it may only issue one kind of stock, and it cannot be owned by a C-Corp or another S-Corp.

Limited Liability Company Election

Don’t be misled by the “corp” reference, an LLC can also to be taxed as either a C-Corp or S-Corp with the same advantages and disadvantages.

The question of whether to become an S-Corp or a C-Corp can be easily determined with the right guidance. Speaking with a knowledgeable Business Law firm such as Gulati Law, along with your accountant is the best way to determine which structure is best for the needs of your corporation and to set your business up for lasting success.

Hotel Investor’s Number One Question in Today’s Market!

We have had a strong decade of growth in the Hospitality Industry, however, the number one question we get from Hotel Investors in Florida is- are we approaching the next great recession?

“Both Hotel ADR* and RevPAR* Growth Trends are starting to slow down, which could indicate a stabilization in the hotel economy. This notion aligns with a survey conducted by Marcus & Millichap Research Services, where it was concluded that hotel investors expect stabilized hotel property values soon.

Moving forward, hotel investors must be cautious and astute in preparing their investments and maintaining adequate reserves in the event of a recession.

Contact us today with your Florida Real Estate Hospitality questions. Attorney Gulati of Gulati Law is Certified in Hotel Industry Analytics (CHIA designation) and deals with Hotel transactions within the Firm.

*ADR: Commonly referred to as Average Daily Rate is a statistical unit that is often used in the lodging industry.

*RevPAR: Commonly referred to as Revenue per available room which is a performance metric used in the hotel industry.

Sources: Marcus & Millichap Research Services, BEA, BLS, U.S. Census Bureau, Federal Reserve, STR, Inc

Contact Us Today!

    Gulati Law