Articles Posted in Real Estate

Almost anytime you are dealing with a sale of commercial property, you are dealing with a transaction that has the potential to encounter roadblocks or pitfalls and become a complex matter. As with any business matter where there is a large sum of money possibly at stake, it pays to, as one American motivational speaker has put it, “expect the best but plan for the worst.” In other words, be prepared from the beginning to be ready for any outcome, even the worst-case scenario. Part of that preparation means having an experienced South Florida real estate litigation attorney on your side from the very start.

That’s because, in any transaction like this – but especially in one that becomes disputed – details matter a lot. A recent case from Palm Beach County involving a contractual right of first refusal is an example. The holder of the right of first refusal was an entity that owned a senior living facility in Boynton Beach. That facility sat next door to the property over which the entity held the right. In the fall of 2013, the owner of that property next to the senior facility found a buyer for the property.

The owner of the senior facility (a/k/a the neighbor) exercised its contractual right and agreed to purchase for the same price and same conditions as the buyer had agreed to. A year later, though, the neighbor canceled its contract to purchase, having decided that “the current development environment” made the purchase “both time and cost prohibitive.”

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If your business operates from a leased space, one of the most important business acts in which you’ll engage is the negotiation of your commercial lease. During this process, and before you sign on the line, it is important to sure that you understand all of the terms of your lease, including what each provision can do and what it can’t do (both for you and against you.) Once your experienced South Florida commercial real estate attorney has armed you with all of that knowledge, then you can make the best decision about whether or not to execute that document.

A North Miami Beach restaurant’s case is an example of this point. The restaurant signed a lease agreement in 2011 to rent a space in a shopping mall. The lease term was 10 years and stated an amount of “minimum rent,” which was $19,481 per month. The lease agreement also contained an “additional rent” provision that made the tenant responsible for paying, among other things, a certain amount of operating expenses.

The contract also stated that the tenant’s operating expenses portion of additional rent would increase by the fixed amount of 3% per year, “notwithstanding the actual amount of Operating Expenses otherwise allocable to the” space the tenant leased.

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The commercial contracts you create can provide you with many potential benefits if negotiated and executed properly. One of these benefits can, in some circumstances, be protection against certain types of legal claims. For example, if a party seeks to sue you under a quasi-contract theory of unjust enrichment, it can only do that if the subject matter that was the basis of your alleged unjust enrichment wasn’t covered by an actual contract. In other words, you can’t be sued under a quasi-contract theory about something if it is governed by an actual contract. For help with these and other commercial and business issues, it is wise to rely upon experienced South Florida commercial litigation counsel.

A recent case from the Florida Panhandle provides an illustration of this issue of contract versus quasi-contract. The dispute involved the ownership of commercial space in a condo building in Panama City Beach. A resort LLC owned four commercial spaces on the ground floor of the condo building and owned them in fee simple, meaning that the LLC had absolute ownership of those properties. The condo building’s owners association sued the LLC, alleging that the spaces could not be owned outside the “condominium form of ownership.” The relief the association sought was the LLC’s ejection from the building and the distribution of the ground floor commercial spaces to the association’s members. The association also alleged that the resort was being unjustly enriched because it wasn’t paying its fair share of “utilities and other expenses in the building.”

The trial court ruled for the resort on the ownership issue, granting summary judgment in favor of the LLC. That meant that the resort did not have to go to trial on the issue of its ownership of the ground-floor spaces and its right to occupy that property. The court did hold a trial on the association’s unjust enrichment claim, and ultimately issued a judgment in the association’s favor, ordering the resort to pay $332,000 in unjust enrichment damages.

Sometimes, commercial litigation actions come down primarily to merits. One side’s facts were stronger than the other side’s, and the former received a successful result. Other times, however, success in a commercial litigation action is less about the facts; it comes down to the law and the rules of procedure, using those effectively to achieve a winning outcome. Giving yourself the best chance of success means making sure you have a Florida commercial litigation attorney who can effectively represent you both in your factual arguments and your legal ones.

A recent South Florida case was an example of procedural rules, litigation strategies, and the profound impacts both can have. The case was a battle between two creditors regarding which creditor’s lien had priority. One of the creditors was based in Miami Beach, the other was a Panamanian entity. The case started when the Miami Beach entity’s predecessor-in-interest filed an action in state court in Miami-Dade County.

At some point, the Miami Beach entity sought, and obtained, a default judgment in the case. Default judgments can be helpful tools in obtaining relief from the courts, even though the opposing party has refused to participate in the litigation. In order for a default to be valid, though, the plaintiff must ensure that the defendant received service of process that complied with the law.

A few decades ago, a U.S. president once famously responded to a question under oath by noting that “it depends on what the meaning of ‘is’ is.” Whatever one’s opinions of that statement, the reality is that, in the law, sometimes the outcomes of disputes hinge upon small phrases or even single words, and the very precise definition of those terms. That is especially true when it comes to commercial contracts and commercial litigation. That is why you should make sure you have highly skilled Florida business and commercial attorneys to meet your commercial contract needs.

As an example, take a recent case that originated in Palm Beach County. A real estate contract called for the making of payment if one of a list of several triggers took place. The first of those criteria was a “sale of the property’ at a designated street address. Eventually, the property in question was sold… at a foreclosure sale.

The party scheduled to receive payment under the contract argued that this was a valid trigger and payment was owed. The party owing payment contended it was not and refused to make the payment. The case went to trial and the singular key to the outcome was: what did the contract mean when it said “sale of the property”? Did that term include any sale or did it implicitly exclude involuntary sales like foreclosure sales? More specifically, was it clear what the contract meant? If it was not, then the parties were entitled to bring in outside “parol evidence” at trial. If it was clear, then outside evidence was inadmissible.

In any contract, including commercial leases and their associated personal guarantees, the choice of language is often extremely important. Sometimes, even seemingly small things make huge differences. That’s why it is so important to make sure that you carefully negotiate each term and then diligently defend the rights and benefits that you negotiated in your agreement. To ensure that you have the resources you need to make this happen, make certain you have experienced Florida commercial litigation attorneys on your side.

One example of a case in which the agreement’s precise wording made all of the difference was a landlord-tenant dispute at one of Orlando’s popular outlet malls. The tenant was a Caribbean restaurant, and the lease agreement called for the restaurant’s founder to sign a personal guaranty. Personal guarantees have become more commonly included terms within commercial leases ever since the economic downturn of the previous decade.

In the restaurant’s case, the guaranty provision in the lease said that, if the tenant defaulted, the guarantor would become responsible for paying the sums that remained due and owing. One key aspect of the case was the choice of wording used in the guaranty clause. The guaranty provision said that the guarantor “shall on demand of Landlord fully and promptly pay all Rental and other sums, costs, and charges to be paid by Tenant, … and in addition shall, on Landlord’s demand, pay to Landlord any and all sums due to Landlord under or pursuant to the terms of the Lease.”

In science, there is something called the “butterfly effect.” This is a concept that Google defines as a “phenomenon whereby a minute localized change in a complex system can have large effects elsewhere.” An example is a 1972 article in a science journal entitled, “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?” Just as is true in science, there are situations in legal matters in which sometimes seemingly small changes or decisions can have massive impacts down the road. Thus, when you are faced with a contract dispute, it is important to have skilled Florida contract litigation counsel, who can advise you about all of your options and the possible ramifications of each decision.

A recent case originating from Palm Beach highlights this concept. The transaction that led to the litigation was a sale of a commercial property, specifically, a cemetery in Boca Raton. The buyer agreed to pay $6.125 million. After the sale, however, the sellers learned that an attorney had been working both sides of the deal and had received a $100,000 kickback from the buyer after the transaction closed.

This discovery led the seller to sue both the buyer and the lawyer. The seller alleged that the lawyer’s misconduct led it to sell the property for less than fair market value. The lawsuit stated claims for breach of contract, intentional misrepresentation, and conspiring to breach a fiduciary duty. The lawyer settled, but the case went to a trial against the buyer. The jury ruled for the seller and awarded it $4.2 million, with $2.2 million of that being punitive damages. The other $2 million was “damages relating to attorneys’ fees and costs incurred in connection with the transaction.”

If you encounter problems related to a commercial arrangement into which you entered, there are several things you need to keep in mind. One of these is that the law gives you a limited time to act. If you wait too long to sue, you may lose your right to seek recovery entirely. That is but one reason among many why it pays to retain skilled Florida commercial litigation attorneys for your case. Experienced counsel can help you be sure that your case meets all mandatory deadlines and that you are not blocked from suing by an improperly calculated statute of limitations.

One commercial litigation action in which the statute of limitations took center stage was a lawsuit arising from the fallout of a relationship between a Palm Beach county marina and the engineering firm it retained to construct a concrete runway slab. The marina intended for the slab to serve as a means for forklifts to transport boats from a boat barn to a water launch area.

At first, the marina was apparently satisfied with the slab. However, over time, that changed. The slab began developing “cracks, spalling and other deterioration.” The marina eventually came to the conclusion that the slab the engineer had constructed was defective, so it sued for damages based upon the defective slab.

A Palm Beach County real estate agent got a renewed opportunity to go after the large commission she alleged she was owed after working for nearly a year to sell a $4.7 million property on Palm Beach Island. As is true in many contract dispute cases, the details were key to the agent’s success. The broker whom the agent sued did not have enough of the proper type of evidence to establish that it was entitled to keep or split the commission, so it wasn’t entitled to summary judgment in the agent’s case.

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