Florida Real Estate Lawyer Blog

August 14, 2023

Ruling Adds Clarity to Right of First Refusal for CRE Tenants Involving Bulk Sales

A recent ruling by Florida’s Fourth District Court of Appeal brought an added measure of clarity to the application of a right of first refusal (ROFR) for commercial real estate tenants whose spaces are being sold as part of a bulk sale in a condominium setting.

The case stems from the sale of the commercial condominium unit leased to The Blind Monk, which is a wine and tapas bar at the ground level of a nine-story West Palm Beach condominium. The business filed suit in Palm Beach County Circuit Court alleging it was not given the opportunity to consider whether to exercise its right to purchase its space when the space was sold as part of a bulk sale of 139 units in the building.

The lawsuit against the selling landlord and bulk buyer alleged that they ignored the tenant’s ROFR as provided in its lease agreement. It states that in 2016 a realtor representing the landlord notified the tenant’s owner that its unit and others in the building were for sale and inquired whether he would be interested. The owner replied by citing his ROFR and requesting additional information.

About a week later, the realtor advised him that his unit was appraised at $250,000 and the landlord had received an offer, but contrary to the terms of the lease, the specific terms of the offer were not disclosed and the tenant was never given the opportunity to match them.

June 4, 2023

Miami Herald Real Estate Column: “Real Estate Counselor: Ruling Finds Health Club On Hook for Lease Payments During COVID Closure”

by Siegfried Rivera

Siegfried Rivera

The firm’s latest Miami Herald column was authored by managing partner Oscar R. Rivera and appears in today’s edition of the newspaper. The article, which is titled “Real Estate Counselor: Ruling Finds Health Club On Hook for Lease Payments During COVID Closure,” focuses on the government-mandated COVID-19 business closures at the start of the pandemic in 2020. For LA Fitness and its parent company Fitness International, it equated to months of closed facilities that were generating no revenue but requiring monthly lease payments. Oscar’s article reads:

. . . There was a great deal of conjecture about whether the “force majeure” provisions in leases would shield businesses that were required to close due to governmentally issued mandates from their payment obligations under their leases. These clauses typically relieve parties from the performance of some or all contractual obligations, and from the consequences of failing to perform those obligations, where performance is rendered effectively impossible by circumstances beyond their control. Many thought the COVID closure fit the bill for the application of such provisions to a tee, and litigation would surely ensue.

Lawsuits were indeed filed, and one of the first cases over this exact question to reach conclusion by a state appellate court was decided recently in favor of the landlord for an LA Fitness location in Bradenton. The state’s Second District Court of Appeal affirmed the lower court’s summary judgment ruling and found the health club would not be entitled to a refund of its lease payments made during the mandated closure period.

The company made all rent payments required under the lease during the lockdown, which was from March 17 to June 12, 2020, but it eventually filed suit in August 2021 seeking a refund of those payments. It primarily based its claims on the lease’s force majeure clause, arguing that it was excused from paying rent during the closure period, and it also relied upon the common law doctrines of frustration of purpose, impossibility of performance, and impracticability of performance.

May 19, 2023

New Florida Law Restricts Ownership of Real Estate by Individuals, Entities from China and Other Countries of Concern

by Oscar R. Rivera

Oscar R. Rivera

A new Florida law passed under Senate Bill 264, which Governor Ron DeSantis recently signed, enacts several new real estate ownership restrictions on persons or entities from China, Russia, Iran, North Korea, Cuba, Venezuela and Syria. The new law, which is expected to have significant ramifications for the state’s real estate industry, provides for particularly stringent restrictions against most ownership by principals from China.

The new law prohibits governmental entities in Florida from contracting with any of these foreign countries of concern or entering into any contract or agreement granting them economic incentives. It prohibits the ownership of agricultural land and property located near military installations or critical infrastructure by foreign principals from the countries, and most ownership by principals from China will be banned.

The new law exempts agricultural land owned before it goes into effect on July 1, 2023, but it creates a registration requirement for foreign principals who continue to own such parcels. It also mandates that agricultural land buyers must provide an affidavit under penalty of perjury attesting they are not a foreign principal and are in compliance with the law. Violations include civil actions for forfeiture and seizures in cases of clear and present danger to the state, and knowingly violating the statute is a second-degree misdemeanor.

Similarly, principals from the countries of concern will not be allowed to own real property on or within 10 miles of any military installation or critical infrastructure facility in Florida, with exemptions and registrations for properties owned before July 1.

November 24, 2022

Article by Oscar Rivera and John Catalano in Daily Business Review: “Ruling Reminds Fla.’s Courts, Property Owners of Legal Precedents for Removal of Obsolete Restrictive Covenants”

by Siegfried Rivera

Siegfried Rivera

An article authored by the firm’s Oscar R. Rivera and John Catalano is now featured on the homepage and will soon appear in the print edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The article, which is titled “Ruling Reminds Fla.’s Courts, Property Owners of Legal Precedents for Removal of Obsolete Restrictive Covenants,” focuses on the takeaways from a recent decision by Florida’s First District Court of Appeal on the state’s legal procedure for making antiquated restrictive covenants that have been rendered obsolete by modern development go away. Their article reads:

. . . The decision came in mid-October in Gate Venture v. Arthur Chester Skinner. The case stems from a 2007 transaction in which Skinner et al. conveyed to Gateway Professional Campus, LLC approximately 15 acres pursuant to a warranty deed that included restrictions limiting future development solely to professional and medical offices.

Since the time of the conveyance, significant development of the surrounding properties and changes to their zoning classifications have taken place, and Skinner et al. no longer owns any adjacent or nearby real estate. This led Gateway to pursue the removal of the restrictions via an agreement with Skinner and its partners, and it provided the original sellers with a site plan and information on its intentions to now develop the property as a multi-family community that would complement, not compete with, the surrounding properties.

Unfortunately for Gateway, its complaint alleges the request was “met with opposition” and could not be accommodated. Among the “opposition,” the representatives of the original sellers indicated they would agree to remove the restrictions in exchange for $6 million.

October 10, 2022

Oscar Rivera Quoted in Sun Sentinel Article on Hurricane Ian Headlined: “Survivors’ Decision: Rebuild or Relocate?”

by Siegfried Rivera

Siegfried Rivera

Oscar R. Rivera, our firm’s managing shareholder, was the first and the penultimate local business leader quoted in the Sun Sentinel‘s article on the repercussions of Hurricane Ian featured on the front page of today’s edition of the newspaper. The article, which is titled “Survivors’ Decision: Rebuild or Relocate?”, focuses on the consequences of the devastating storm for residents and business owners throughout the impacted areas. It reads:

Hurricane Ian gave southwest Floridians plenty of reasons to leave: It killed at least 115 people, crushed countless homes and businesses, turned area waterways into toxic soups and caused at least $50 to $65 billion in damages.

But as residents and business owners assess the devastation and reach for insurance policies that may or may not cover all of their losses, there appears to be an emerging consensus for rebuilding, and not relocating to areas perceived to be less vulnerable to catastrophic storms.

It is a mindset, analysts say, driven by a long-standing affinity for Gulf Coast living, a strong resolve among public and private sector interests, and a growing tolerance of devastating hurricanes as life disruptors.

“We have already been contacted by numerous clients and potential clients,” said Oscar Rivera, managing shareholder of the Siegfried Rivera law firm in Miami, which represents condominium owners, associations and commercial real estate investors. “Everyone we have spoken to is committed to rebuilding.”. . .

April 19, 2022

FinCEN Russia Sanctions Alerts Warn Real Estate, Finance Industries to Exercise Effective Due Diligence

by Oscar R. Rivera

Oscar R. Rivera

The U.S. real estate and banking industries have been put on notice to adjust to the new U.S. sanctions against Russia and Russian entities with two recent alerts from the Financial Crimes Enforcement Network (FinCEN), which is the division of the U.S. Treasury Department that combats money laundering in collaboration with international financial authorities.

The March alerts focused in part on identifying suspicious transactions involving real estate. They note that Russians may seek to evade U.S. sanctions by acquiring or selling significant U.S. commercial and residential real estate assets. FinCEN notes that real estate’s high value and investment potential make it a target for layered transactions aimed at concealing buyers/sellers’ true identities. It warns that sanctioned Russians may attempt to purchase or maintain real estate through shell companies or trusts, or to liquidate real estate owned in countries that have imposed sanctions on them.

The federal agency directs industry members to stay on alert for the purchase, sale, donation or legal ownership transfer of high-value real estate in the name of a foreign legal entity, shell company, or trust; legal entities or arrangements that may have a connection to sanctioned Russian individuals to hide the ultimate beneficiary or the origins or source of the funds; changes to the transaction patterns of a firm located in a country other than the United States, Russia, Belarus and Ukraine, where the new transactions involve convertible virtual currency and Russian-related investments or firms; Russian individuals or entities requesting wire transfers from a non-US (particularly non-Russian) bank to pay for an all-cash purchase; the dilution of equitable interest held in real property by sanctioned Russian individuals, by the addition of, or the transfer of real estate to, an individual not affiliated with the buyer or seller; and the maintenance, purchase or termination of real estate insurance by persons with a known connection to sanctioned Russian individuals.

March 29, 2022

Article by Oscar Rivera in Today’s Daily Business Review: “Potential Pitfalls to Avoid with Restrictive Clauses in Outparcel Sales, Developments for CRE Owners”

by Siegfried Rivera

Siegfried Rivera

Firm managing shareholder Oscar R. Rivera authored an article that is featured in the online edition of today’s Daily Business Review, South Florida’s exclusive business daily and official court newspaper, and will soon be appearing in the “Board of Contributors” page of the print edition. The article, which is titled “Potential Pitfalls to Avoid with Restrictive Clauses in Outparcel Sales, Developments for CRE Owners,” focuses on the growing trend of the carving out of parts of shopping centers and mall parking lots to create “outparcels” for stores, restaurants, and even multi-family apartments. He notes that the growth of online shopping and curbside pickup at major big-box retailers and grocery chains has diminished the need for vast parking fields for in-store shoppers, and property owners are trying to tap into the growing appeal of mixed-use sites that provide a live, work and play experience. Oscar’s article reads:

. . . However, for commercial real estate owners hoping to create and sell an outparcel for further redevelopment, or even acquire an existing outparcel owned by others for their own redevelopment, there is a significant potential hitch that must be addressed prior to closing. This issue requires the utmost care and attention, and is oftentimes overlooked, only to cause potential snags down the line.

The application of a property’s current restrictive covenants with existing tenants in outparcel deals can become a challenge depending on the nature of the plans for the new or redeveloped site. CRE owners can never lose sight of the fact that the new store/restaurant category or other planned use for a newly created outparcel being marketed and sold to a third party should not run afoul of the restrictive use clauses contained in the lease agreements with their property’s existing tenants. Otherwise, they can expose themselves to serious legal liability if the new enterprise planned for the outparcel is in a category that is a protected exclusive for any of the current tenant(s) at the property or a prohibited use that is forbidden by existing leases.

Therefore, always in close consultation with experienced CRE attorneys, owners need to address any such restricted uses that may be in play with all the parties prior to finalizing any transaction. The most efficient and effective way to do so would be to make the outparcel buyer aware of all the existing exclusives and restricted uses, and then negotiate their inclusion in the sales contract as an exhibit and as a covenant running with the parcel being purchased. The latter causes these exclusives and restricted uses to be a title burden that runs with the land and binds not only the current owner, but also all future owners and tenants on the outparcel.

February 13, 2022

Firm’s Latest Miami Herald Real Estate Counselor Column: “Condo Terminations Take Hold as an Exit Strategy for Owners at Aging Towers”

by Siegfried Rivera

Siegfried Rivera

The latest edition of the firm’s exclusive Real Estate Counselor column in the Miami Herald appeared in today’s Neighbors section and was authored by managing shareholder Oscar R. Rivera. Titled “Condo Terminations Take Hold as an Exit Strategy for Owners at Aging Towers,” the article focuses on the legal termination of older condominium communities and buyout of all the unit owners to make way for new construction. Oscar writes that the owners of units in aging condo communities near the water are receiving more offers from industry-leading developers than ever before, and some of these offers are coming just as the 40- and 50-year recertifications for their towers come due. His article reads:

. . . The costs for repairs, even at the 40-year mark, can be too much for many unit owners to afford. Some associations’ financial reserves are woefully inadequate, or even nonexistent, so they would need to impose significant special assessments to pay for major repairs.

In such cases, offers that are sometimes two to three times over market value for each unit can become a very appealing exit strategy for owners, and Florida has a legal mechanism for such condominium terminations that has proven to be effective. Terminations led to the development of the Armani/Casa tower in Sunny Isles Beach and the Una Residences now under construction in the Brickell area.

For developers, the math is even simpler than that of the unit owners. Once the value of the land for redevelopment becomes greater than that of the combined property values of all the existing units in a community, a condominium termination presents a fruitful opportunity.

February 7, 2022

Firm Assists Seller in Sale of Office Towers in West Palm Beach for $29.25 Million

by Siegfried Rivera

Siegfried Rivera

The firm’s real estate practice group assisted client Forum Capital LLC, an affiliate of Triarch Capital Group, in the sale of two office buildings located in West Palm Beach. The buildings, totaling 185,650 square feet, sold for $29.25 million to commercial real estate firm David Associates, marking a 30 percent gain since the Forum office towers last sold for $22.5 million in 2017.

We are proud to have assisted our client with the sale of 1655 and 1675 Palm Beach Lakes Blvd. (pictured below). The transaction was covered recently by the South Florida Business Journal. Click here to read the complete report in the business weekly’s website (registration required).

January 25, 2022

Oscar Rivera Featured in “Leading the Way” Q&A Column Reserved for Legal Leaders in Today’s Daily Business Review

by Siegfried Rivera

Siegfried Rivera

Managing shareholder Oscar R. Rivera was proud to be selected by the editors of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper, for the publication’s weekly “Leading the Way” column featuring extensive Q&A interviews with South Florida legal leaders. Now closing in on his fourth decade with the firm, Oscar discusses in today’s article the changes that the firm and the entire legal profession have experienced during the pandemic, and how we have successfully contended with all of the challenges and continued growing. The article reads:

. . . While Rivera has worked on some of Miami’s most visible developments since joining the firm in 1984 — including representing the developer of 200,000-square-foot Mary Brickell Village — he hasn’t encountered every legal issue his clients face.

Putting heads together to solve new problems was easier before COVID, Rivera said. So was getting to know law clerks’ personalities and training young lawyers. And even if the pandemic were eradicated tomorrow, Rivera knows that many lawyers and staff, including those at his own firm, don’t want to come back every day.

At the end of 2021, firm founder Steven Siegfried stepped down from his role as co-managing partner, leaving Rivera to lead the evolution of Siegfried Rivera in an eventual post-COVID world.