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

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

1031 Like Kind Exchange Tips

1031 Like Kind Exchange Tips -Identifiying Properties 

With Real Estate being so hot, we have seen such an increase in 1031 Like Kind Exchange’s in the past few years.

Here are a few tips to consider when thinking about doing the exchange:

The Basic 1031 Identification Rule Is:

The Exchanger has only 45 days from the day of closing on its relinquished property to identify possible replacement property.

WARNING: Section 1031 and the IRS regulations thereunder have strict requirements for the identification of replacement property.

Identification of all replacement property must be made in writing, must be signed by the Exchanger, and must be delivered to the Qualified Intermediary on or before midnight of the 45th day.

The Exchanger may identify any type of investment or business real property in the USA, including a single-family rental, apartment building, hotel, office building, warehouse, vacant land, shopping center, etc.

The Exchanger/Taxpayer may not identify replacement property or amend its identification after the 45th day has expired.

Identifying Multiple Properties:

The Exchanger may identify more than one property, as follows:

(1) The Exchanger may identify as many as three (3) properties, regardless of their total value (known as the “3-Property Rule”) See Example # 1 below; OR

(2) The Exchanger may identify any number of properties provided their aggregate fair market value on the 45th day does not exceed 200% of the aggregate fair market value of all of the Exchanger’s relinquished property on the date of its transfer (known as the “200% Rule”) See Example #2 below; OR

(3) The Exchanger may receive, by the end of the Exchange Period, Replacement Property which the Fair Market Value of, is at least 95% of the aggregate Fair Market Value of all of the Replacement properties identified (known as the” 95% Rule”) See Example #3 below.

“The Exchanger is not required to acquire all the property it has have identified. Therefore, many gurus in our industry recommend that the Exchanger identify alternative properties should the closing on the Exchanger’s preferred property fail for any reason. Any property acquired prior to the 45-day Exchanger’s identification expiring, counts as an identified property.”

EXAMPLE #1 – 1—3 PROPERTY RULE:
Mr. and Mrs. Trembling (Exchangers) sell their investment property that they have owned for 17 years for the sum of $695,000.00. They, within 45 days of the relinquished transaction, e-mail to their Qualified Intermediary a list of three (3) properties for the following amounts: Property # 1: $1,200,000.00; Property #2: $500,000.00; Property # 3; $400,000.00.

As long as the Exchangers purchase property of equal or more value than their relinquished property ($695,000.00) any tax they may have owed will be deferred. There is NO dollar amount limitation on the properties they have identified. The only limitation they have using this rule is that they can only identify 3 properties.

EXAMPLE #2 – 200% RULE:
Mr. and Mrs. Anderson (Exchangers) sell their investment property that they have owned for 3.5 years for the sum of $500,000.00. Within the 45-day time limit, they e-mail to their Qualified Intermediary, the following list of possible Replacement Properties: #1: $150,000.00; #2: $300,000.00; #3: $250,000.00; #4: $100,000.00; and #5: $199,000.00.

The Exchangers are allowed to identify any number of properties, but they cannot total together more than 200% of what they sold.

The 5 properties they identified combined total: $999,000.00, which is under the $1,000,000.00) they would be allowed to identify and therefore their Identification is valid. They do not have to purchase all of these properties, but if they want to defer all of their gains, they must obtain at least $500,000.00 of replacement property.

EXAMPLE #3 – 95% RULE:
Mr. Thomas Franklin (Exchnager) sells his investment property for the tidy sum of $800,000. He identifies the following properties as possible replacement properties: #1: $600,000; #2:$ 300,000; #3: 900,000; #4: 700,000 and #5: $200,000.

The total valuation of all the properties together is: $2,700,000.

He cannot use the 200% rule because he has identified more than 200% of his relinquished property’s selling price ($800,000 x 200% = $1,600,000). But he can still use the 95% rule. He must purchase 95% of the valuation price of the properties he identified. That would be: $2,565,000 ($2,700,000 x 95% = $2,565,000). If he purchases less than the 95%, his 1031 exchange will be disqualified.

After reviewing the above 3 Rules for Identification, most Exchangers select the 3 Property rule, because it is a lot easier. It has no dollar amount restrictions, but the exchanger is limited to only 3 properties for identification purposes.

Source: Stephen Wayner of Liberty 1031.

DISCLAIMER: We always recommend that the taxpayer consults with their tax and/or legal counsel on all matters dealing with the Internal Revenue Serice.

Commercial Developers- Environmental Update-Sand Skink Season

If you have property that you are planning on developing, or obtaining development approvals, before March of 2019, in Lake, Polk, Marion, Highlands, Putnam, and portions of Orange and Osceola counties that meet the 3 criteria established by the U.S. Fish and Wildlife Service (USFWS), i.e. location, soils, and above 80′ msl elevation, then you are required to conduct a survey for the Florida sand skink.

The survey is a two-tier approach. First, a pedestrian survey is conducted. This can be conducted any time of the year. If the results are negative, than a coverboard survey is initiated. You can only conduct the coverboard survey for sand skinks from March 1st through May 15th and the survey must occur over 4 straight weeks.

The USFWS requires the placement of 40 coverboards, 2’x2’x.50″, per acre. The boards are to be made of plywood or another similar rigid material. The coverboards should be allowed to acclimate for 7 days before the first sampling event. Each board is to be checked for signs of sand skinks a minimum of once a week for 4 straight weeks.

Following the completion of the survey, a report is prepared and submitted to the USFWS. The USFWS will issue a “Clearance Letter” if the survey was negative for the presence of sand skinks. The boards can be deployed at anytime.

Guest writer- Stillwater Enviromental

Purchased a New Property In Florida? Beware of Solicitations!

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As many of you know, the process of purchasing a new home, or commercial property involves quite a few important documents that you need to be familiar with. Title and Deed documents are given to you by your attorney. Usually, these documents are also accessible online via your county’s property appraiser’s website FOR FREE. In instances where you have purchased a new property, you may receive a letters in the mail that might look like an official county or state document which states that you will need to take additional steps to finalize documentation, or that you will need to order vital documentation that shows ownership of your property.

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This mailing will have your name, parcel number, and property address on it. What Record Transfer Services is doing might not be illegal; however, these services are usually already performed either before or at closing by a title company or real estate attorney. A title search is usually performed by a title company or an attorney, who researches the vested owner, the liens or other judgments on the property, the loans on the property and the property taxes due before the closing is done. If duplicates are needed or documents are misplaced from your records, these documents can usually be found via your county property appraiser’s website or you may contact your real estate attorney.

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Given that the letter includes a deadline for which to request for these documents, it appears to be an official document, however, make special note of the disclaimer in fine print at the bottom of the letter: “This product or service has not been approved, or endorsed by any government…” Generally, if you receive a solicitation asking for more money after your closing, it is not necessary and is rarely legitimate. If you are not sure or you would like more information, contact your Florida Real Estate attorney or title company as soon as possible.

Interested in Florida Real Estate Investment? Here are Some Tips!

Real estate investing can be an extremely rewarding process, but it can also carry some worth-noting risks.  Troubleshooting for these issues begins before the purchase takes place and continues throughout ownership.  Here are some tips to help get you started.

The thing to address first and foremost is the financial aspect.  Buying profitable real estate means investing in properties that are cash flow positive. Rentals should provide a fair rate of return on the invested equity.  Also make sure to secure long-term fixed rate financing. Financing or refinancing a property can end up costing you more in the long run or effect transfer issues.

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When it comes to “fixer-uppers,” you may want to look elsewhere.  Projects that involve extra remodeling or renovations are very much likely to loose money in the end.  Estimating the cost of repairs can be difficult to the average buyer, except for construction contractors that have experience in such. Obtain experienced contractor opinions before you consider a “fixer-upper”.

Take an in-depth look through all title documents.  This includes the title insurance policy, title abstract, schedule of exclusions, and a survey of the property.  Schedule some time with an Florida Real Estate Attorney to assist you in going through all items in detail and addressing any issues before you go forward with the purchase.

Proper insurance should always be put into place for each specific property and circumstance.  Speaking with an experienced Title Insurance Agent will make it easier to cover all liabilities and reduce the chances of anything severely impacting your finances.

All areas touched on above are great places to start when considering a new real estate investment.  If you are relatively new to property investment, speaking with seasoned long-term investors and Florida Real Estate Attorneys may offer some insight into how to go about taking on a new project. At Gulati Law, we are able to work with you in all these areas. Contact us for more information today!

Source: Zillow Blog

Foreign Buying Flipside- Published in Orlando Realtor Magazine

We are honored that our very own Attorney Gulati’s Article on Foreign Buying Flipside was published in the Orlando Realtor’s Legal Resource Winter Edition.

This Article discusses the FIRPTA withholding in Real Estate Transactions. To read more click here.

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The Biggest Estate Planning Mistake

The most common mistake that can be made when estate planning is the failure to keep your forms and documents up to date.  As simple as it sounds, there are countless instances where people who did not have updated beneficiary forms inevitably ran into complications later in the process.

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Without proper documentation, the money and property you saved for your loved ones may fall into the hands of ex-spouses, irresponsible or untrustworthy family members, or other unintended heirs.  Besides having control over who gets your money and how much, designating a beneficiary also avoids probate in some circumstances.  Updating your estate plan regularly, you can be certain your wishes will be carried out in your absence the way you want them to.

Here are some of the forms that you should update regularly: bank accounts beneficiary lists, retirement accounts, life insurance benefits, and so on.  If a divorce, death, or any other life or relationship change occurs that will affect how you plan your estate, it is imperative you make those document changes immediately.  Contact us today to speak with a Florida Estate Planning Attorney and ensure you are protected in all aspects of your estate planning.

Source: Estate Planning Digest 

Is Commercial Real Estate a Worthwhile Investment?

If you have been investing in residential real estate for some time now, you might have been considering commercial investments.  The absolute best way to get involved with investments is by doing research, getting advice, and contrasting the familiarity’s with some of the differences.  Knowing the pros and cons before getting involved in a big purchase can help you weigh your options and find out what is best for you.

One major difference between commercial and residential real estate is how the bank values them.  Commercial bank loans tend to require a higher down payment that can easily be more than 30 percent.  Check with your lending institution to find out if they deal with commercial real estate. We have a list of commercial lenders we have worked with in the past, just contact us today and we will be happy to provide them to you!

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Commercial real estate offers the potential for increased cash flow and higher stability.  Renting out several spaces in a multi-unit property means more income, and the return is usually higher per square foot if you’re getting the full potential out of the property.  This can also mean less risk. If one of several tenants leaves, you will only lose a portion of the return.  Commercial leases offer steady income because they are also usually much longer in duration.

As with both residential and commercial investments, it is always important to ask questions and do your research.  There are many parts to look into when purchasing commercial real estate specifically.  Some of these include questions about former management, lease renewals, population income, and the seller’s cash flow statements, among others.  See our Top 10 Do’s and Don’ts of Purchasing Commercial Real Estate- click here.

Source: Entrepreneur Article 

 

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