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The Factors a Florida Court Will Use in Setting a Supersedeas Bond in Your Commercial Real Estate Case

When you decide to enter into a contract to purchase (or sell) commercial real estate, you always hope the transaction proceeds seamlessly, free of any unexpected “snags,” and that both sides walk away with a completed transaction with which each is satisfied. Regrettably, not all transactions are seamless and, when problems or disputes erupt, your skilled South Florida real estate attorney may be even more valuable to you than ever. Disputes often mean litigation, and the right attorney can help you navigate that process in a way that protects your rights and business interests.

A Virginia-based LLC found itself caught in one of those non-seamless transactions where litigation took place. After it had signed a contract to purchase commercial real estate in 2016, a dispute arose, and litigation ensued.

In that legal action, the trial judge concluded that the contract had an indefinite duration. Based on that conclusion, the trial court ruled for the Miami-based seller and granted it the declaratory judgment it sought.

The buyer appealed and, as part of its overall appeal strategy, it asked for a stay of execution of the trial court’s judgment until the appeals court made its decision. In many circumstances like this, the court may grant the stay but only on the condition that the appellant pays what’s called a “supersedeas bond.” This is a surety bond “required of one who petitions to set aside a judgment or execution and from which the other party may be made whole if the action is unsuccessful,” according to Black’s Law Dictionary.

Florida law establishes certain things that a supersedeas bond must do. One of those is that the bond must be in an amount big enough that it will sufficiently protect the party who won at the trial court-level by ensuring that that party will get paid if the lower court judgment is upheld by the appeals court.

In its ruling for the buyer, the appeals court provided several factors that trial judges should look at when setting the amount of a supersedeas bond, including: “(1) the time value of the property; (2) the diminution in value or destruction of the property, quantified as the cost of insurance on the property; (3) the cost that the appellee will incur for the appeal; (4) the estimated taxes for the property; and (5) any other expenses that the appellee will incur as a result of the delay caused by the appeal.”

For the Virginia buyer in this transaction, the trial court set the amount of its supersedeas bond at $1.68 million. That was erroneous, according to the appeals court, because the trial court neither explained what factual findings or legal conclusions it used nor did it explain how it went about calculating the $1.68 million sum.

Wherever you are in the process of buying and selling commercial real estate, make sure to protect your business interests by securing skilled legal counsel. Reach out to the experienced South Florida real estate attorneys at Stok Kon + Braverman to provide you with the powerful and effective legal representation you need.

Contact us online or by calling (954) 237-1777 to schedule your consultation.

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