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Articles Posted in Condominium Development

The use of the limited liability company (“LLC”) corporate structure has become very common in the real estate industry. It is the go to structure for the acquisition and development of properties by parties joining together behind a venture.  LLCs are governed by operating agreements among the members. These agreements are akin to the shareholder agreements among the shareholders of closely held corporations, and they govern many aspects of the operations of the venture.  One element in these operating agreements that bears close scrutiny by all of the members is the enforcement mechanisms that they put in place should any members fail to honor their obligations to fund future capital calls.

In truth, many LLC operating agreements contain inadequate payment enforcement provisions, making them potentially problematic and inequitable for the company itself and the members who honor their obligations and make future capital calls on a timely basis.  For example, if a member fails to meet their financial obligations, it is fairly common for these agreements to provide that the other members of the LLC may contribute the missing funds and treat them as a loan to the non-funding member.  Often times, the agreements provide that the loan will then be repaid to the funding members, with interest, once the LLC is in a position to make future distributions to its members, with no further enforcement methodology.

Such arrangements provide an unmerited level of flexibility to the non-funding member, as it enables them to weigh the pros and cons of making their required contributions or taking a loan from their partners to avoid any additional loss risk exposure in the endeavor.

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OscarRivera2014.jpgThe firm’s Oscar R. Rivera wrote an article that appeared today in the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The article, which was titled “Best Practices for Buyouts of Unit Owners at Older Condos,” discusses recent changes in the Florida condominium termination law and important considerations for developers in these property acquisitions. Oscar’s article reads:

A report earlier this week in the Tampa Bay Times about the brisk pace of sales at the new One St. Petersburg luxury condominium illustrated the changes that are taking place in the city’s downtown area. The article reported that buyers at the new development, which at 41 stories will be the tallest building in the city, have reserved 104 of the 253 units since they were introduced a few months ago, totaling more than $106 million in sales.

New condominium developments often face significant challenges from municipalities and neighboring property owners. As the wave of condo development in Florida appears to have no end in sight, developers should be cognizant of potential complaints that may be raised against their proposed towers, and they should be prepared to negotiate to win all of the necessary approvals and overcome the challenges that are presented.

Oscar Rivera 2014.jpgThe firm’s Oscar Rivera contributed a guest column that appeared in today’s edition of the Daily Business Review about the instability in the real estate and insurance industries that will be caused by the failure of the U.S. Senate to reinstate the Terrorism Risk Insurance Act. Our firm congratulates Oscar for drawing attention to this vital legislation and calling on the Congress to make it a priority when it reconvenes in January.

Steve Siegfried 2013 srhl-law.jpgSteven M. Siegfried, our firm’s founding partner, was quoted in an article in the September 24 edition of the Daily Business Review about the impact of a new federal law to eliminate registration requirements for new condominium and timeshare developments under the Interstate Land Sales Full Disclosure Act.

The latest reports from the federal government illustrate that the housing market is back on the rise after two months of decline. The U.S. Commerce Department logged a 15.7 percent increase in July in home construction nationwide, following declines of 4 percent in June and 7.4 percent in May. A summary of all of the findings and statistics in a report from the Associated Press can be found by clicking here, and some of the highlights include:

Michael Hyman srhl-law.jpgFirm shareholder Michael L. Hyman was quoted in an article that appeared on Thursday, June 12, 2014, in The Real Deal (www.therealdeal.com) about the latest court decision in the dispute between two homeowners associations and developer of the Privé condominium towers in Aventura. The decision in Miami-Dade Circuit Court granted a request by the homeowners associations to abate the case until issues raised by the City of Aventura are resolved, effectively delaying for 90 days the hearing that will decide whether the lawsuits filed by the associations to block the development can move forward.

Jeffrey Respler srhl-law.jpgThe firm’s lawsuits alleging major construction defects against the developer, general contractor, architect and engineers behind Miami’s Quantum on the Bay condominium towers were the subject of an article by the Daily Business Review that appeared in the June 16, 2014, edition of the newspaper. The lawsuits allege that the defendants’ work resulted in hundreds of defects, including stucco and HVAC problems as well as inadequate drainage that has led to severe flooding in the community’s fitness center and loading dock.