If you are a Florida tenant or landlord, executing a long-term lease is now much less complicated. Florida House Bill 469 (HB 469), which took effect on July 1, 2020, allows both commercial and residential long-term leases to be executed without witnesses, expediting the process for all involved.
Prior to the enactment of the new law, Section 689.01 of the Florida Statutes dictated that the execution of a lease for a term of more than one year required two witnesses per signatory. In effect, this meant that six people (the lessor, the lessee, two witnesses for the lessor, and two for the lessee) were needed to consummate a lease agreement. Landlords and tenants complained for years that the witness requirement was cumbersome; however, it became even more so when Florida started allowing electronic signatures on leases.
The motive behind allowing electronic signatures was to expedite the process of executing a lease agreement. Continuing to require witnesses, however, essentially defeats the purpose of allowing electronic signatures.
The new law has removed the time-consuming witness requirement for long-term leases in Florida. This allows the lessor and lessee to execute the lease agreement quickly and efficiently, potentially allowing for a significantly earlier start date for the lease.
Sellers of commercial-use real property should always consider doing an Internal Revenue Code section 1031 tax-deferred exchange in connection with the sale of their property (unless the seller is “cashing out”). In a 1031 exchange, certain protocols are utilized to allow the sellers of commercial-use real property to avoid—temporarily and possibly permanently—paying capital gains tax on sale of the commercial property (called the “relinquished property” in a 1031 transaction), which is generally in the 20% range.
Technically, the capital gains tax is not wiped out, but instead, delayed. However, they can be delayed indefinitely as long as the 1031 seller keeps the purchased property (“called the replacement property” in a 1031 transaction) or repeats the 1031 exchange protocols each time he/she sells. Also, if the 1031 participant owns the replacement property at the time of his/her death (no matter how many 1031 exchanges took place), the participant’s heirs receive the stepped-up (then-current) tax basis and no capital gains tax is due if the property is immediately sold.
There are many procedural requirements tied to a proper Internal Revenue Code section 1031 tax-deferred exchange but, as explained above, the upside can be quite profitable and the requirements are not particularly burdensome, which makes the 1031 exchange a money-saving tool that all commercial property sellers should at least consider.
The attorneys at Lieser Skaff Alexander have successfully handled numerous 1031 transactions worth millions of dollars and can be trusted to handle and protect your hard-earned dollars.
Since the real estate market crash in late 2008, many people have become landlords who would have otherwise not done so. Beside the normal and expected tasks (collecting rents, doing maintenance, responding to “emergency” complaints, etc.), one of the most important duties that landlords must be aware of is compliance with the federal Fair Housing Act (Title VIII of the Civil Rights Act of 1968, as amended; codified at 42 U.S.C. §§ 3601–3619), particularly that portion dealing with the use of criminal background checks when screening applicants.
In brief, instead of solely utilizing bright-line, inflexible criminal history criterion setting forth who the landlord deems acceptable or unacceptable 1, the landlord must, if rejecting an applicant based upon a prior criminal incident, take into account (1) the nature and severity of the applicant’s prior criminal conduct; (2) the amount of time that has passed since the criminal conduct occurred; and (3) individual mitigating factors such as [i] unusual facts or circumstances surrounding the prior criminal conduct; [ii] the age of the applicant at the time of the prior criminal conduct; [iii] evidence that the applicant has maintained a good tenant history regardless of the prior criminal conduct; and [iv] evidence that the applicant has made rehabilitation efforts since the prior criminal conduct occurred. Landlords may not take into consideration prior arrests of the applicant that do not result in an actual conviction, or use a criminal record as a pretext for unlawful discrimination on other grounds such as race, religion, national origin, etc. Landlords can continue to decline applicants based upon a conviction, without having to consider the above-listed additional factors, for the illegal manufacture of a controlled substance or distribution of a controlled substance. The foregoing crimes are the only exceptions, and please note that the exceptions do not pertain to possession of a controlled substance.
HUD is currently investigating and enforcing the Criminal Background Guidance Document. In order to demonstrate compliance with the Criminal Background Guidance Document in the event of a HUD Fair Housing complaint, an applicant who is rejected because of failing to meet a landlord’s initial criminal background guidelines should be notified of such rejection in writing and, within that written document, the applicant should be offered a meaningful opportunity to address with the landlord the additional factors that must be considered per the Criminal Background Guidance Document. The initially-declined applicant may or may not choose to meet with the landlord to discuss the prior criminal incident(s); nonetheless, the landlord must provide the applicant with the right to do so 2 .
So far, HUD has not set forth specific guidelines of what is and what isn’t an acceptable criminal background; instead, HUD is enforcing the Criminal Background Guidance Document by investigating whether the landlord gave declined applicants a meaningful opportunity to address the additional, personal factors listed in the Criminal Background Guidance Document. Compliance with the Fair Housing Act is highly recommended, as HUD investigations can be lengthy, tedious, and expensive. Further, if found guilty not complying with the Fair Housing act (including but not limited to the Criminal Background Guidance Document) the monetary penalties can be quite severe.
 “Base” criminal background guidelines are still acceptable; however, HUD’s Criminal Background Guidance Document comes into play whenever an applicant is rejected for failing to meet the landlord’s base criminal background requirements.
 Please note that the Criminal Background Guidance Document applies only when an applicant is denied based upon one or more prior criminal incidents. It does not affect—and applicants can still be denied for—poor credit, failing to meet minimum income requirements, etc.
As the nation responds to the Coronavirus outbreak, we are all hopeful for the best outcome. During these trying times, however, consider the following:
Communicate: In times of trouble, one of the most important factors is a constant and open line of communication. This is also true for landlords and property management teams. While practicing social distancing to help slow the spread of COVID-19, communication via e-mail, phone and video chatting should be utilized. Have an open line of communication with each tenant. Notify them of continued monitoring of the national and local situations, as well as, ask them to notify you if there is any change in their health or employment status.
Rent: As of this date, there has been no government-mandated abatement of rental payments. However, many Florida jurisdictions have stayed their evictions during this pandemic. Landlords and property managers should continue to monitor the situation to stay up to date with any changes and communicate with tenants accordingly.
Inspections: Cancel all regular onsite inspections until further notice.
Repairs: Tenants should be notified that repair requests are to continue as they always have, however, repairs will be prioritized according to necessity. Obviously, plumbing, electrical and HVAC issues will take priority over others.
As the nation responds to the Coronavirus outbreak, we are all hopeful for the best outcome. As we move forward through these unprecedented times, continue to monitor developing and changing legislation and court orders to ensure that you are not opening yourself up to any sort of liability. As information comes available, continue to communicate with your tenants so all parties have a clear understanding of the nature of these events.
If you have any questions or need guidance regarding your potential exposure and/or responsibilities during this crisis, please contact Lieser Skaff Alexander to speak with one of our Florida landlord/property manager attorneys.
A commercial lease represents a significant commitment for your business. Commercial leases often are not subject to the same consumer protection laws as residential ones, so it is important to understand exactly what you are committing to and to negotiate the best possible terms. Before you sign such an agreement, there are several clauses you need to thoroughly review, understand and negotiate.
The location of your business is important, but so is the limitation on your competition. The commercial lease should guarantee that the landlord will not lease space to a competitive business in the building or on the property. What this means will depend on the nature of your business. For example, some buildings are occupied by medical practices. In this situation, you don’t want a lease that will restrict renting to other physicians, but you do want to be the only practice of your specialty in the building.
Landlords may want a similar agreement that protects their own business. Specifically, the landlord may want a radius clause that prohibits you from opening another store close to the leased property. They want to keep business flowing into their property and not diverted to another location.
Tenants often pay a fee for common area maintenance (CAM), but how that fee is apportioned is important. Tenants want CAM charges based on the percentage of the total space in the building, not the total leased space. When it’s apportioned on the total space, Tenants pay a fee based on your leased square footage. If the CAM fee is apportioned on leased space, you are paying more to cover the unleased units.
Many landlords have a mortgage and if you will be considered a major tenant of the commercial property, you may be required to sign a Subordination, Non-Disclosure and Attornment Agreement (SNDA). This document protects the mortgage holder by stating that their loan is superior to the lease and that you will recognize them as the landlord if there is a default on the mortgage. Make sure that your lease gives you the right to negotiate and execute the SDNA, and have it reviewed by an attorney before signing.
Hire a licensed architect or engineer to assure that the building complies with the Americans with Disability Act (ADA) and environmental regulations, such as air quality. If problems are found, you must notify the landlord who is responsible for correcting these issues, but may want you to share the cost. If you have not completed this review prior to signing the contract, you could be made solely responsible for the expense of bringing your rented space up to regulatory standards, depending on the lease terms.
These are just a few of the critical terms in a commercial lease. LSA represents commercial landlords and tenants. Feel free to contact us about your non-residential lease questions and concerns!
Recently, ABC Action News (WFTS Tampa Bay) reported a story about what can happen when a tenant dies during a residential lease. A Vietnam veteran who had rented a Tampa apartment while receiving treatment at a VA Hospital, died suddenly in the middle of his lease term. His two sisters came from out-of-state to settle his affairs and gather his personal items from inside his apartment. The sisters were understandably dismayed when the landlord refused to allow them to enter their brother’s apartment.
An ABC reporter came to the law offices of Lieser Skaff Alexander to interview attorney, Joe Alexander, to get his opinion on this matter. Below, is Joe’s analysis of the current law governing the landlord’s actions, when the last remaining tenant dies.
Must Be Authorized
The landlord’s decision may seem unsympathetic to the situation, but the landlord had no other choice, according to Florida law. Despite both sisters being named as healthcare surrogates and being listed as emergency contacts on the lease, none of these designations properly authorized them to enter the apartment. Upon the death of a tenant, Florida law prohibits a landlord from removing personal property from a rental unit, unless certain circumstances exist.
In addition, a landlord is not authorized to allow access to the rental unit for anyone who is (1) not legally named on the lease, or (2) does not have a probate court order naming him or her as personal representative of the deceased tenant’s estate.
60 Days Must Pass
In this instance, Florida law prevents a landlord from recovering possession of the rental unit except when the last remaining tenant dies, personal property remains on the premises, rent is unpaid, at least 60 days have passed after a tenant’s death, and the landlord has not been notified in writing of a probate estate or the name of a personal representative appointed by the Court. Only after recovery of the rental unit, may the landlord begin the process of removing the personal property of the tenant. The removal and disposal of personal property of the tenant is then governed by Chapter 715 of the Florida Statutes, and could add at least another 15 days to the process. The process under Chapter 715 requires the landlord to send written notification of the existence of the personal belonging to any interested parties and store the property until the statutory time period is over. However, the landlord can avoid the requirements of Chapter 715, if the lease agreement contains the following clause:
BY SIGNING THIS RENTAL AGREEMENT, THE TENANT AGREES THAT UPON SURRENDER, ABANDONMENT, OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING TENANT, AS PROVIDED BY CHAPTER 83, FLORIDA STATUTES, THE LANDLORD SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE TENANT’S PERSONAL PROPERTY.
In the absence of the highlighted language, the landlord cannot dispose of the property, until the landlord has recovered possession of the rental unit and has completed the requirements of Chapter 715.
Penalty for Violating Law
The law also has a penalty provision for violations. Specifically, a landlord who fails to follow proper procedure is liable to the tenant’s estate for actual and consequential damages or 3 months’ rent, whichever is greater, plus costs and attorney’s fees.
Can you Bypass the Law?
Generally, a residential landlord cannot avoid statutory duties through provisions of a lease. However, the lease and other documents can be drafted in a way to shorten the time that the personal property must remain. For example, a Florida will can save valuable time in the appointment of a personal representative by the Court. Also, including the above-quoted language in the lease will allow the landlord to release the personal belongings upon recovering possession of the rental unit (instead of then having to send notices to all interested parties). Those two things should save a substantial amount of time.
In this instance, the landlord and the survivors have a common interest in releasing the personal belongings, as soon as possible. While the statute cannot be totally avoided, proper planning can speed the process along. Landlords should consult a Florida attorney to ensure the lease contains language to allow for release of the personal belongings upon recovery of possession. Also, because landlords do not deal with tenant deaths on a regular basis, we suggest that when a tenant dies, the landlord contact a landlord-tenant attorney for guidance. Florida law doesn’t apply to some federally governed housing programs, and obtaining legal advice is always recommended to avoid a costly mistake. From the tenant’s perspective, proper estate planning will likely shorten the time that the personal belongings remain in the rental unit. To ensure the proper drafting and execution of estate planning documents, the tenant should also contact a Florida attorney.
Kicking strangers out of your home may be harder than you think. Just ask the Army Soldier whose Pasco County, Florida home was invaded by a couple of squatters while he was away serving his country. Two complete strangers moved into the Soldier’s home, changed the locks and refused to leave. If that wasn’t distressing enough, the Pasco County sheriff’s office told the Soldier that police could not do anything to remove the squatters.
Before his deployment to Afghanistan two years ago, the Soldier asked a friend to keep an eye on his home. The friend enlisted the help of one of the squatters to renovate the home while the Soldier was gone. Two months after the work was completed, the friend discovered the squatters living in the home, much to her surprise.
The squatters claimed that the Soldier’s friend agreed to allow them to live in the home rent-free in exchange for performing the renovation. Although the friend denied that such an agreement existed, the squatters’ claim was enough to place the matter outside of police intervention. In other words, the case was now a civil matter.
A quiet title action is a lawsuit in which the plaintiff asks the court to declare that the plaintiff has sole legal title to a piece of property. In the lawsuit, the plaintiff should name any person or entity that might possibly have an ownership claim to the property as a defendant. Here are some common reasons for bringing a quiet title action:
1. Tax Deeds and Title Insurance
Florida title insurance companies will not insure title to land that a buyer purchased in a tax sale until the deed to the land has been on record for least four years. To shorten this time frame, however, the buyer can bring a quiet title action to settle all potential claims of ownership to the property. If the defendants are all previous title owners of record and all previous mortgagees of the property, the buyer can purchase title insurance and have marketable title as soon as the court awards judgment in favor of the buyer in the quiet title action.