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Construction Defects and Notice to Repair Florida Statute §558.004

January 18th, 2005

By Mark Schecter | No Comments »

Florida Statute § 558.004 specifies certain notice requirements that must be followed before a claimant can file suit alleging a construction defect

DEFINITIONS

1. 558.002(5) Defines a “contractor” as “any person. . . that is legally engaged in the business of designing, developing, constructing, manufacturing, repairing, or remodeling dwellings or attachments thereto.”

2. 558.002(7) Defines a “dwelling” as “a single-family house, manufactured or modular home, duplex, triplex, quadruplex, or other multifamily unit in a multifamily residential building designed for residential use in which title to each individual unit is transferred to the owner under a condominium. . . system. . . “

3. 558.002(8) Defines “service” as “delivery by certified mail, return receipt requested, to the last known address of the addressee.

NOTICE REQUIREMENTS

4. 558.004(1) In actions alleging a construction defect, the claimant shall at least 60 days before filing an action involving a single-family home …….., serve written notice of claim on the contractor as applicable, which notice shall refer to this chapter.

a. If the construction defect claim arises from work performed under a contract, the written notice of claim must be served on the person with whom the claimant contracted.

b. The written notice of claim must describe each alleged construction defect and provide a description of the damage (if known).

5. 558.004(2) Within 30 days after receipt of notice of the claim involving a single family home …….., the person receiving the notice of claim is entitled to:

a. Perform a reasonable inspection of the dwelling to assess each alleged construction defect. The claimant shall provide the person receiving notice and such person’s contractors or agents reasonable access to the dwelling during normal working hours to inspect the dwelling to determine the nature and cause of each alleged construction defect and the nature and extent of any repairs or replacements necessary to remedy each defect.

i. Allows party to perform destructive testing, under certain conditions listed in the statute.

6. 558.004(3) Within 10 days after receipt of the notice of the claim involving a single family home ……, the person receiving notice may:

a. Forward a copy of the notice of claim to each contractor, subcontractor, supplier, or design professional whom it reasonably believes is responsible for reach defect specified in the notice of claim and shall note the defect the in which that contractor, subcontractor, supplier, or design professional is responsible (and then they have a right to inspect the dwelling pursuant to subsection (2)).

7. 558.004(5) Within 45 days after receipt of notice of claim involving a single family home et al. …………., the person who received notice under subsection (1) must:

a. Serve a written response to the Claimant. The written response must provide:

i. A written offer to remedy the alleged construction defect; a description of the repairs necessary, and a timetable for the completion of such repairs’

ii. A written offer to settle the claim by monetary payment and a timetable for making payment;

iii. A written offer to settle the claim by a combination of repairs and monetary payment, description of the proposed repairs, and a timetable for completing the repairs and making the payment;

iv. A written statement that the person disputes the claim and will not remedy the defect of settle the claim; or

v. A written statement that a monetary payment, including insurance proceeds, will be determined by the person’s insurer within 30 days after notification to the insurer by means of forwarding the claim, which notification shall occur at the same time the claimant is notified of this settlement option, which the claimant can accept or reject.

8. 558.004(6) If the person receiving a notice of claim pursuant to subsection (1) disputes the claim and will neither remedy the defect nor compromise and settle the claim, or does not respond to the claimant’s notice of claim within the time provided in subsection (5), the claimant may proceed with an action against the person for the claim described in the notice of claim.

9. 558.004(7) A claimant who receives a timely settlement must accept or reject the offer by serving written notice of such acceptance or rejection on the person making the offer within 45 days after receiving the settlement offer.

10. 558.004(8) If the offeror does not make the payment or repair the defect within the agreed time and in the agreed manner, except for reasonable delays beyond the control of the offeror, the claim may proceed with an action against the offeror based upon the claim in the notice of claim.

11. 558.004(9) This Section Does Not Prohibit Or Limit The Claimant From Making Any Necessary Emergency Repairs To The Dwelling As Are Required To Protect The Health, Safety And Welfare Of The Claimant.

12. 558.003 A claimant may not file an action without first complying with the requirements of this chapter. If a claimant files an action alleging a construction defect without first complying with the requirements of this chapter, on timely motion by a party to the action the court shall abate the action, without prejudice, and the action may not proceed until the claimant has complied with such requirements.

Spot Zoning: When does reverse spot zoning occur?

November 3rd, 2004

By Mark Schecter | No Comments »

Reverse spot zoning occurs when a zoning ordinance prevents a property owner from utilizing his or her property in a certain way, when virtually all of the adjoining neighbors are not subject to such a restriction, creating, in effect, a veritable zoning island or a zoning peninsula, in a surrounding sea of contrary zoning classification. City Com. of Miami v. Woodlawn Park Cemetery, Co ., 553 So.2d 1227 (Fla. 3d DCA 1989).

In characterizing the elements of spot zoning, a spot zoning challenge typically involves the examination of the following: (Bird-Kendall Homeowners Association v. Metropolitan Dade County Board of Commissioners, 695 So.2d 908 (Fla. 3d DCA 1997))

1) The size of the spot;

2) The compatibility with the surrounding area;

3) The benefit to the owner; and

4) The detriment to the immediate neighborhood.

PROCEDURE TO CHALLENGE ZONING

A. APPEALS TO THE CITY

Usually a municipality provides for a process for administrative appeals. Frequently, a planning and zoning board reviews and decides appeals from any person adversely affected by a decision of the administration. The planning and zoning board may modify, reverse or affirm the administrative official’s decision interpreting or applying the provisions of the Land Development Code.

Administrative appeals are filed using a written application provided by the department of community development.

A party aggrieved by application of statute or ordinance must invoke and exhaust administrative remedies provided thereby before he may resort to courts for relief. Wood v. Twin Lake Mobile Home Homes Village, Inc., 123 So.2d 738 (Fla. 2d DCA 1960).

  • JUDICIAL APPEALS

Zoning decisions of county commissions and other local governmental bodies are generally classified as either legislative or quasi-judicial. Certiorari is the proper method to review the quasi-judicial actions of a Board of County Commissioners, whereas injunctive and declaratory suits are the proper way to attack a Board’s legislative actions.

Courts have frequently discussed the distinction between the standards of review which furnish the guidelines to determine the validity of different types of zoning actions. It has long been established that in reviewing a legislative action, e.g., enactment of a zoning ordinance, courts must uphold a properly enacted and constitutional ordinance as long as it is “fairly debatable.” Harrell’s Candy Kitchen v. Sarasota-Manatee Airport Authority, 111 So.2d 439 (Fla.1959). In reviewing quasi-judicial actions, however, courts are called upon to determine if the action of the local governmental body is supported by substantial, competent evidence. De Groot v. Sheffield , 95 So.2d 912 (Fla.1957). This difference in the scope of review is appropriate. The judicial deference inherent in the “fairly debatable” standard is suitably employed to review legislative actions whereby a governmental body makes local policy decisions.

Whether a board’s zoning decision is considered legislative or quasi-judicial appears to turn on whether the local governmental body is enacting an ordinance, in which case it is acting legislatively, or enforcing it, in which case it may be acting quasi-judicially. Thus, creating zoning districts and rezoning land are legislative actions, and as the court said in Naples Airport Auth. v. Collier Dev., 513 So.2d 247, 249 (Fla. 2d DCA 1987), trial courts are not permitted to sit as “super zoning boards” and overturn a board’s legislative efforts.

Zoning decisions, including those approving or disapproving a request for a variance or a special exception, resulting from a proceeding in which zoning provisions are applied to a specific property affecting a limited number of people, are quasi-judicial in nature . Thus, the proper procedure would be for the person/entity to challenge the decision by certiorari within 30 days of the decision.

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When is a Florida Real Estate Broker entitled to a real estate commission as the procuring cause of a sale of property?

March 17th, 2004

By Mark Schecter | No Comments »

One of the means under which a Florida Real Estate Broker (“Broker”) would be entitled to a real estate commission is if it were the procuring cause of a sale of property. If a Broker is the procuring cause, the Broker would be entitled to a commission. In short summary, the buyer and seller must have been brought together and the sale consummated as a result of continuous negotiations of the Broker. Sanson v. Dutcher, Higginbotham, and Bass, Inc., 401 So.2d 913 (Fla. 4th DCA 1981)

For a Broker to be considered the “procuring cause” of a sale, the Broker must have brought the purchaser and seller together and brought about a sale through continuous negotiations inaugurated by him unless the seller and buyer intentionally exclude the Broker. Lee Giusti Realty, Inc. v. L.D. Corporation, 603 So.2d 39 (Fla. 4th DCA 1992).

The following four cases are illustrative of factors that the courts utilize in determining whether or not a Broker is entitled to a commission as a consequence of being a procuring cause of a sale:

(i) Lee Giusti Realty, Inc. v. L.D. Corporation, 603 So.2d 39 (Fla. 4th DCA 1992). A real estate broker sought a commission following a sale of real estate. The broker claimed that he was a procuring cause of the sale because he had shown a property to one partner of a joint venture and the purchaser was another partner in the joint venture. The court held that because the actual purchaser had no association with the broker, and the vendor had represented that there was no vendor involved, the broker was not entitled to a commission.

(ii) Kotler v. Kroop, Inc., 354 So.2d 110 (Fla. 3d DCA 1978). Real estate broker sued to obtain a brokerage commission. The court held that broker was not entitled to a commission where the broker was not the procuring cause of the sale because the sale was separately negotiated between the buyer and seller with no assistance from the broker.

(iii) Leon Realty, Inc. v. Hough, 310 So.2d 767 (Fla. 1st DCA 1975). Brokers brought suit against the broker who eventually sold the property to recover a real estate commission. In Leon Realty, the brokers had a verbal contract with the property owner to sell his property. The brokers did not perform under the contract. The owner contracted with a second broker, the Defendant, who successfully sold the property. The court held that the first broker was not entitled to a real estate commission since the first broker neither procured, nor consummated the purchase, because they did not affect the sale as a result of continuous negotiations.

(iv) Earnest & Stewart, Inc. v. Codina, 732 So.2d 364 (Fla. 3d DCA 1999). A real estate broker brought an action against the sellers and purchasers, alleging tortuous interference with rights to a commission. In this case, the court held that the real estate broker’s sole and simple act of telling eventual purchasers that a piece of property was for sale, did not, as a matter of law, entitle the broker to recover commission under any viable theory of broker compensability, since single act did not amount to producing ready, willing, and able purchasers of the property, or result in the broker being a procuring cause of the sale.

The Lee case further seems to suggest that for the Broker to be entitled to the commission, it must bring together the seller and purchaser, and not just a person associated with the seller or purchaser. Furthermore, the Kotler and Leon Realty cases suggest that where the Broker is not involved in the negotiations between the buyer and seller, it is not entitled to a commission. Finally, the Condina case clearly shows that the simple act of informing a potential purchaser, who eventually purchases the property, about a prospective purchase is not enough for the Broker to be a procuring cause in the sale.

In conclusion, each case will be decided on the facts and circumstances, as a Broker must prove the essential elements of being a procuring cause by a preponderance of the evidence.

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Selective Enforcement of a Condominium Regulation

January 29th, 2004

By Mark Schecter | No Comments »

Whether a director of a condominium association can be personally liable for the selective enforcement of a condominium regulation.

Florida Statute §617.0834 sets forth the standards of performance required of directors of a not for profit corporation. The statute essentially provides that directors are immune from liability in their individual capacity, absent fraud, criminal activity, or self-dealing/unjust enrichment. Fox v. Professional Wrecker Operators of Florida, Inc., 801 So.2d 175 (Fla. 5th DCA 2001).

The courts allowed personal liability of condominium directors in very few instances. The few cases in existence deal with the individual director gaining a personal, monetary benefit at the expense of the condominium association (self-dealing/unjust enrichment). For example, in Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4th DCA 1992), the developer-director was found to have breached his fiduciary duty by failing to renew the fire insurance on the development’s clubhouse, yet the fourth district did not hold the director personally liable. The Munder court reasoned that the individual directors cannot be held liable for negligent actions even if such actions were clearly erroneous. Id. Further cases illustrating the court’s reluctance to impose personal liability on condominium directors include:

a. Taylor v. Wellington Station Condominium Association, Inc., 633 So.2d 43 (Fla. 5th DCA 1994) (holding that in order to hold a director, who was a shareholder in developer’s corporation and who had failed to collect monies from developer to the detriment of the condominium association, individual and personally liable, there must be evidence of willfulness)
b. Olympian West Condominium Association, Inc. v. Kramer, 427 So.2d 1039 (Fla. 3d DCA 1983) (directors are not personally liable for failure to correct construction defects)
c. Bodin Apparel Inc. v. Superior Steam Service, Inc., 328 So.2d 533 (Fla. 3d DCA 1976) (directors not personally liable in tort action despite failure to provide workers compensation insurance for employee).
d. Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997) (directors could not be liable where directors had failed to properly administer the insurance funds)

Therefore, pursuant to case law, the only way to impose personal liability on an individual director is to show that the director has committed an act or omission in bad faith or with a malicious or evil purpose. Although “bad faith” is not defined in Florida Statute §617.0834, the term bad faith has been equated with the actual malice standard. Parker v. State of Florida Board of Regents, 724 So.2d 163 (Fla. 1st DCA 1998). In order to show actual malice, a party must show that there was an evil or malicious intent. City of Hollywood v. Coley, 258 So.2d 828, (Fla. 4th DCA 1971). In addition, maliciousness means without reasonable cause, out of ill will and with a desire to do harm for harm’s sake; a wrongful act without reasonable excuse. K-Mart Corp. v. Sellars, 387 So.2d 552 (Fla. 3d DCA 1983).

Accordingly, unit owners of condominiums will face serious difficulty when attempting to hold an individual director liable for his or her actions. In most cases, the courts will not allow cases to go forward which attempt to impose liability on a director because he or she took actions in his or her role of director.

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Trade Secrets, Employement, and Competition

October 20th, 2003

By Mark Schecter | No Comments »

May a former employee of a corporation, without knowledge of trade secrets and without a contract with the former employee forbidding working for another corporation, work for a competitor corporation?

Under Florida law, a former employee is free to compete against a former employer absent a noncompetition agreement to the contrary. Harllee v. Professional Service Industries, Inc., 619 So.2d 298 (Fla. 3d DCA 1992). In the absence of such an agreement, an employee, after his term of service has expired, is entitled to compete in business with his former employee on the same footing as a stranger. Connelly v. Special Road & Bridge District No. 5, 126 So. 794 (Fla. 1930). Generally speaking, competition for business by a competitor is to be expected from former employees who are not bound by a noncompete contract. Langford v. Rotech Oxygen & Medical Equipment, Inc., 541 So.2d 1267 (Fla. 5th DCA 1989). Such competition is not actionable. Id. However, even in the absence of a noncompetition contract, where an employee acquires during the course of employment a special technique or process developed by the employer, the employee is under a duty not to disclose such skills, techniques or processes in his or her new employment for the employee’s own or another’s benefit to the detriment of the previous employer. Lee v. Cercoa, Inc., 433 So.2d 1 (Fla. 4th DCA 1983).

Typically, as in the Lee case, a legal action may be possible when the employee has knowledge of trade secrets. Id. A “trade secret” is information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Fla. Stat. §688.002(4). If the employee has such knowledge of a trade secret, a court may only enjoin the employee from working for a competitor when the employee has either divulged or is threatening to divulge trade secrets. Del Monte Fresh Produce Company v. Dole Food Company, Inc., 148 F.Supp.2d 1326 (S.D. Fla. 2001); Fla. Stat. §688.003(1).

Under Florida Statute §688, which adopted the Uniform Trade Secrets Act, the misappropriation of trade secrets, meaning the acquisition, disclosure, and/or use of the information to the disadvantage of the owner of the trade secret is prohibited. See Fla. Stat. §688.002(2). In order for a former employer to enjoin the former employee from working for a competitor, the employer must show that there is actual or threatened disclosure of a trade secret. Id. In Florida, in order to show threatened disclosure, a party must show that the former employee possesses knowledge of a trade secret, but that there is also a substantial threat of impending injury. Id. (citing International Bus. Mach. Corp. v. Seagate Tech., Inc., 941 F.Supp. 98, 101 (D. Minn. 1992). The reasoning for this rule is that in absence of a covenant not to compete or a finding of actual or an intent to disclose trade secrets, employees should be able pursue their chosen field of endeavor in direct competition with their employer. Id. Merely possessing trade secrets and holding a comparable position with a competitor does not justify an injunction. Id. In addition, the mere suspicion or apprehension of injury to the former employer will not merit an injunction. Id.

In addition, in order to obtain an injunction, the former employer must establish that the knowledge of the employee constitutes a trade secret. In order to establish the existence of a trade secret, the plaintiff must establish:

1. That the process is secret;
2. The extent to which the information is known outside of the owner’s business;
3. The extent to which it is known by employees and others involved in the owner’s business;
4. The extent of measures taken by the owner to guard the secrecy of the information;
5. The value of the information to the owner and to the owner’s competitors.
6. The amount of effort or money expended by the owner in developing the information; and
7. The ease or difficulty with which the information could be properly acquired or duplicated by others. See Thomas v. Alloy Fasteners, Inc., 664 So.2d 59 (Fla. 5th DCA 1995).

In conclusion, an employee should be aware of potential hazards when deciding to work for a competitor. The employee should make sure that he or she did not sign a non-competition agreement and that he or she is either unaware of any trade secrets or, if aware of trade secrets, will not be in a position where disclosure will be necessary. Heeding these warnings, an employee (and future employer) will likely be protected from future liability.

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Offer of Judgment Statute

September 5th, 2003

By Mark Schecter | No Comments »

Generally, the Offer of Judgment Statute creates a right to recover reasonable costs and attorney’s fees incurred after a settlement offer is made when (1) a party has served a demand or offer for judgment, and (2) that party has recovered at trial a judgment at least twenty-five (25) percent more or less than the demand or offer. Dictiomatic, Inc. v. United States Fidelity & Guaranty Company, 127 F.Supp.2d 1239, 1244 (Fla. 1999). The statute applies to both plaintiff and defendant settlement offers. See Fla. Stat. §768.69(1). In order for a party to recover attorney’s fees and costs, the statute requires that “the offer:

1. Be in writing and state that it is being made pursuant to this section;
2. Name the party making it and the party to whom it is being made;
3. State with particularity the amount offered to settle a claim for punitive damages, if any; and
4. State its total amount.” See Fla. Stat. §768.79(2).
The purpose of this statute is to terminate all claims, end disputes, and eliminate the need for further intervention by the court by encouraging all parties to reach a settlement. Dictiomatic, 127 F.Supp.2d at 1244. This statute will apply to any civil action for damages. Beyel Bros. Cran and Rigging Co. of South Florida, Inc. v. Ace Transp., Inc., 664 So.2d 62 (Fla. 4th DCA 1995). However, the courts have held that because the statute is punitive in nature, the statute must be strictly construed. Schussel v. Ladd Hairdressers, Inc., 736 So.2d 776 (Fla. 4th DCA 1999).

Therefore, the statutory requirements of an offer of judgment are that:

1. It must conform to statutory requirements.
2. The offer should be clear and capable of execution without a need for judicial interpretation. Lucas v. Calhoun, 813 So.2d 971 (Fla. 2d DCA 2002).
3. The proposal must also specifically refer to the statute or rule. McMullen Oil Co., Inc. v. ISS Intern, 698 So.2d 372 (Fla. 2d DCA 1997).

The offer need not contain a certificate of service or have been otherwise verified to support recovery under the statute when the offeror’s attorney files notice of service of the offer. Bailey v. Chambelee, 697 So.2d 972 (Fla. 2d DCA 1997). Further, the actual written offer need not be filed unless it is accepted. See Fla. Stat. §768.79.
Procedurally speaking, once a court enters a final judgment, a party seeking to recover costs and attorney’s fees under the offer of judgment statute must make a demand by motion within 30 days to allow recovery. Tampa Letter Carriers, Inc. v. Mack, 649 So.2d 890 (Fla. 2d DCA 1995). Once a party establishes that he/she has complied with the statutory requirements, a trial court determines whether to award the costs and attorney’s fees. Camejo v. Smith, 774 So.2d 28 (Fla. 2d DCA 2000).

The only basis for a court’s refusal to award costs and attorney’s fees at this point is if the court finds that the settlement offer was made in bad faith. Fla. Stat. §768.79. Whether or not the offer was made in bad faith is a matter of discretion for the trial judge and is to be determined from the facts and circumstances surrounding the offer. Fox, 745 So.2d 330. However, the determination of whether an offer of judgment was served in good faith turns entirely on whether the offeror had a reasonable foundation upon which to make the offer. Disney v. Vaughen, 804 So.2d 581 (Fla. 5th DCA 2002). The courts have held that a nominal offer of settlement will only be suspect where it is not based on any assessment of liability and damages. Fox v. McCaw Cellular Communications of Florida, Inc., 745 So.2d 330 (Fla. 4th DCA 1998). A mere belief that the figure will not be accepted does not necessarily suggest an absence of good faith. Levine v. Harris, 791 So.2d 1175 (Fla. 4th DCA 2001). Because establishing that an offer of judgment was made in bad faith requires such a high burden of proof, few courts refuse to award attorney’s fees and costs because of bad faith.

If there is to be an award of attorney’s fees and costs, the court will determine the reasonableness of the award pursuant to the Florida Statute §768.79. Fla. Stat. §768.79(7)(b). The statute lists several factors the court must consider:

1. The then apparent merit or lack of merit in the claim;
2. The number and nature of offers made by the parties;
3. The closeness of questions of fact and law at issue;
4. Whether the person making the offer had unreasonably refused to furnish information necessary to evaluate the reasonableness of such offer;
5. Whether the suit was in the nature of a test case presenting questions of far-reaching importance affecting nonparties; and
6. The amount of the additional delay cost and expense that the person making the offer reasonably would be expected to incur if the litigation be prolonged. Fla. Stat. §768.79(7)(b).

In conclusion, the offer of judgment statute encourages settlement before trial due to the risk of having to pay the other party’s costs and attorney’s fees. Such an incentive makes the offer of judgment statute a powerful tool in any litigation proceeding.

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Limited Liability Companies (LLC)

August 6th, 2003

By Mark Schecter | No Comments »

Limited Liability Companies (Florida Statute Chapter §608)

A limited liability company resembles a limited partnership without general partners. It resembles an S corporation for state law purposes and a general partnership for federal tax purposes. The purpose of this form of organization is to allow each member to enjoy limited liability, yet for the organization to be taxed as a partnership for federal income tax purposes.

The advantages of a limited liability company include:

1. Limited liability for all members, i.e. the liability of the members is limited to their contributions to the capital of the LLC. Fla. Stat. 608.436
2. Not taxed at the company level for Florida or federal income tax purposes. Rather, the company is taxed as a partnership.
3. The period of duration is unlimited. Dissolution occurs upon the death, retirement, resignation, bankruptcy or expulsion of a member, unless the remaining members consent to continue business or a right to continue is contained in the articles of organization.
4. No limitations on the number or type of shareholders, or on having multiple classes of stock, as with an S corporation.
5. Management can be handled by members, non-members, or both. A particularly attractive feature of the LLC entity is its flexibility of management. The statutes governing LLCs do not set out strict rules for the issuance of ownership interests, creation of classes of interest or distributions to different classes. There are no requirements for complex hierarchies of directors, shareholders and officers, or delineations of power to amend bylaws, elect managers, or authorize distributions. The members of an LLC are able to determine the entity’s management structure (or lack of it) themselves through the operating agreement that initiates the company.
6. As in partnership, a member’s tax basis is increased by his or her proportionate share of liabilities.
7. Less restrictions than Florida Revised Uniform Partnership Act.
8. A member’s contribution may be in cash, property, or services.
9. As in a partnership, there is flexibility to allocate income and losses for federal income tax purposes.
10. Foreign entities and nonresident aliens can transact businesses in the form of LLCs and take advantage of the key benefits LLCs offer, such as limited liability, passthrough taxation and member control. Passthrough taxation cannot be achieved by foreign persons through an S corporation since only a U.S. resident individual (or a qualified trust benefiting a U.S. resident) is allowed to be a shareholder of an S corporation. I.R.C. § 1361(b)(1)(C);
The main disadvantage to LLC’s is that any transfer of a member’s interest must have the consent of the majority of the other members. An assignment of a member’s interest entitles the assignee to share in the company’s profits and loses, but does not entitle the assignee to exercise any rights or powers of a member. Fla. Stat. §608.432. However, from the perspective of a member who seeks personal asset protection this could be considered an advantage. Another disadvantage is that there is little case law analyzing the limited liability company.

FORMATION OF AN LLC (Fla. Stat. §608)

A limited liability company may be organized for any lawful purpose and once organized has the same powers as an individual to do all things necessary to carry out the company’s business and affairs. One or more persons may form a limited liability company by executing articles of organization and filing them with the Department of State. The name of a limited liability company must contain the words “limited liability company” or “limited company,” or the abbreviations “L.L.C.” or “L.C.,” or the designations “LLC” or “LC” as the last words of the name of every limited liability company. The word “limited” may be abbreviated as “Ltd.,” and the word “company” may be abbreviated as “Co.” Omission of these words or abbreviation in the use of the name of the limited liability company will render any person who knowingly participates in the omission, or knowingly acquiesces in it, liable for any indebtedness, damage, or liability occasioned by the omission.

Unless otherwise provided in the articles of organization or operating agreement, responsibility for management of the limited liability company vests in its members in proportion to the then-current percentage or other interest of members in the profits of the limited liability company owned by all of the members or elected managing members. If the articles of organization or the operating agreement provide for the management of the limited liability company by a manager or managers, responsibility for management vests in a manager or managers and the company shall be a manager-managed company. Generally, neither the members nor the managers of a limited liability company can be held personally liable for the debts or obligations of the company.

ARTICLES OF ORGANIZATION (§608.407)

In order to form a limited liability company, articles of organization of a limited liability company shall be executed and filed with the Department of State by one or more members or authorized representatives of the limited liability company. The articles of organization shall set forth:

a. The name of the limited liability company.
b. The mailing address and the street address of the principal office of the limited liability company.
c. The name and street address of its initial registered agent for service of process in the state. The articles of organization shall include or be accompanied by the written statement required by s. 608.415.
d. Any other matters that the members elect to include in the articles of organization.
e. A limited liability company is formed at the time described in s. 608.409 if the person filing the articles of organization has substantially complied with the requirements of this section.

The articles of organization shall be executed by at least one member or the authorized representative of a member.

If the limited liability company is to be managed by one or more managers, the articles of organization may, but need not, include a statement that the limited liability company is to be a manager-managed company.

The fact that articles of organization are on file with the Department of State is notice that the entity formed in connection with the filing of the articles of organization is a limited liability company formed under the laws of this state and is notice of all other facts set forth in the articles of organization.
OPERATING AGREEMENTS

Operating agreements consist of provisions adopted to regulate the affairs of the company and the conduct of its business, to establish additional duties, and to govern relations among the members, managers, and company. The operating agreement need not be in writing, but any inconsistency between written and oral operating agreements must be resolved in favor of the written agreement. FS § 608.423(1). The members of a limited liability company may enter into an operating agreement before, after, or at the time the articles of organization are filed, and the operating agreement takes effect on the date of the formation of the limited liability company or on any other date provided in the operating agreement. Fla. Stat. § 608.423(1).

Unless the articles of organization or operating agreement vest the power in the manager or managers of the company, the members of a limited liability company have the power to adopt, alter, amend, or repeal the operating agreement of the company. However, any amendment to a written operating agreement must be in writing. FS § 608.423(3).

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