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Articles Posted in Real Estate Law

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.

fincen-logo-300x200The 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.

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ORivera2014Firm 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.

out-parcel-300x166The 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. dbr-logo-300x57The 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.

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ORivera2014The 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.

Herald-ORivera-print-clip-2-13-22-300x300In 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.

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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).

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Oscar-Rivera-2015-hi-res-200x300Managing 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.

dbr-logo-300x57At 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.

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Florida’s governor recently signed a new bill into law, House Bill 337, limiting a local government’s ability to impose impact fees on builders and developers embarking on new residential and commercial construction projects. The law, which took effect immediately and whose limits will be applied retroactively for increases in impact fees made since January 1, 2021, aims to prevent counties from hiking up costs associated with new builds.

An impact fee is a one-time fee assessed by local governments to developers and builders to offset a new development’s impact on existing infrastructure. The rationale behind the assessment is to essentially charge a tax on new construction to defray its costs on existing vital services such as schools, parks, roads and emergency services. Think: An increase in residents and users equals more of a burden on existing infrastructure.

Onestpeterendering-300x168Unfortunately, for years developers have complained that the impact fees collected by local governments are not actually used by the municipalities for remediating the impact the new growth has on the infrastructure at all. Oftentimes, developers argue that instead of investing the impact fee funds on improvements to the existing infrastructure affected by a new project, the impact fee funds are diverted to areas not remotely impacted by the new construction and are actually squandered away on other pet projects of local governments.

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In a world where ride services such as Uber and Lyft have become widespread, and electric cars are becoming extremely popular, many are asking themselves what that means for parking lots going into the future. In the past, office and retail tenants relied on serious negotiations and a series of analyses to figure out acceptable parking ratios for their stores and offices. But can we expect the same parking concerns from commercial real estate tenants in the future, or will their focus shift to other interests such as charging stations and drop-off/pick-up zones?

Parking ratios are generally established by local zoning codes. The parking ratio is a statistic commonly used to determine the number of parking spaces available for use by each commercial tenant. The total parking spaces available are divided by the property’s entire gross leasable area, with the ratio most commonly expressed per every 1,000 sq. ft. of property.

prking-300x225Most retail stores require four spaces per 1,000 sq. ft., while restaurants are typically allocated more parking spaces for every 1,000 sq. ft. These numbers can vary depending on the property type.

Besides ensuring that the correct number of parking spots are assigned, big box stores like Marshalls, Old Navy, Best Buy, and grocery stores such as Publix, serving as anchor stores, also require specific parking fields in front of their stores and demand certain parking ratio minimums. It is not uncommon for these tenants to designate protected parking areas, prohibiting landlords from ever changing, rearranging or reassigning their parking spaces, and to maintain architectural control over their parking areas.

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JCatalanoSRHL2ORivera2014Firm shareholders Oscar R. Rivera and John Catalano successfully concluded work recently on a $79 million purchase by client Bar Invest Residential 4 LLC, a Bar Invest Group division.

The transaction involved the purchase of an apartment complex known as The Landings at Pembroke Lakes, a large community located in Pembroke Pines, Florida (pictured below).  The multifamily residential rental complex houses 358 units, as well as a clubhouse with resort-style amenities.  REIT counsel at Greenberg Traurig assisted our team in the acquisition of this project, and our client obtained financing through BankUnited.

Our firm congratulates and salutes Oscar, John and their support staff for all of the hard work they put forth in completing this transaction for our client.

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ORivera2014Firm shareholders Oscar R. Rivera and John Catalano represented our clients, PM Edgartown, LLC and PM Vineyard Haven, LLC in two separate sale transactions. The first transaction involved Prime Marina Vineyard Haven’s sale, a property located on Martha’s Vineyard.  Prime Vineyard Haven has the largest set of seasonal private docks and slips available on the vineyard.  It also houses a large on-site indoor and outdoor storage facility, as well as other amenities that are made available to its members.

Additionally, our team represented their sister company, PM Edgartown, LLC, on the sale of Edgartown Marine. Edgartown Marine is also located on Martha’s Vineyard and offers a full set of storage, launch, and haul services. The transactions involved the sale of all of the assets and dockage agreements of both operating marinas.

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“America’s business leaders, freed from the office, looked around the country, taking note of its coronavirus lockdowns, taxes and rabble rousers. And many said as if in unison: Miami!”

That’s how a major article on the cover of the Technology section of the Jan. 29 edition of The New York Times begins. It goes on to note that several finance and technology titans as well as Silicon Valley venture capitalists are relocating to Miami, where Mayor Francis X. Suarez has rolled out the red carpet.

The article reads:

“Dozens of big names have arrived. There was a tech contingent: Keith Rabois, a PayPal co-founder and investor, and his husband. Then their friend Peter Thiel, the tech investor and prominent conservative. Jon Oringer, founder of the stock-photography provider Shutterstock, and the media mogul Bryan Goldberg. Steven Galanis, the head of the celebrity-video product Cameo, is here. Elon Musk is talking about building car tunnels under Miami.

nyt-300x193“There are also hedge funds and private equity funds. Paul Singer’s Elliott Management is moving its headquarters to the Miami area, as is Carl Icahn’s firm, Icahn Enterprises. Others are opening major Miami offices: Kenneth Griffin’s Citadel as well as Blackstone Group. Goldman Sachs is weighing moving parts of its operation to Miami.”

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