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Corporate Law FAQ

Q: In forming a company, what kind of entity should I create?

A: In Florida, corporations, limited liability companies and limited partnerships are the most common forms of entities to form. Each has their own benefits and requirements. One of the main reasons for forming an entity is to avoid personal liability.

Q: What type of document should be prepared between owners of a business?

A: It is strongly recommended that shareholders of a corporation enter into a Shareholders Agreement, members of a limited liability company enter into an Operating Agreement, and Partners in a Limited Partnership enter into a Limited Partnership Agreement. These agreements are very similar to one another, wherein they set forth the rights and obligations of the owners of the business, which may include, but not be limited to, the duties of the owners, the restrictions on decisions and the method for selling ownership interests.

Q: How do I register a business in Florida?

A: It is important to register your business in Florida with the Florida Department of State, Division of Corporations.

Q: What does it mean to pierce the corporate veil?

A: In Florida, owners of a registered legal entity, such as a corporation, limited liability company or limited partnership, are generally not personally responsible for the obligations of the entity. However, if an owner(s) fails to operate its company properly by not keeping corporate formalities, a creditor may seek to pierce the corporate veil, which would mean that they may seek to go after an owner, personally, for the acts of the business. If a Court determines that the corporate veil is pierced, the owner may be personally liable for obligations of the entity.

Employment Law for Business Owners FAQ

Q: Are covenants not to compete enforceable in Florida?

A: Properly drafted covenants not to compete are valid and enforceable in the State of Florida. Florida is generally a pro-business state, wherein the laws often benefit businesses. To be enforceable, it is important that there is a legitimate business interest in enforcing the covenant not to compete, and that the scope of competition, geographic location and time period are deemed reasonable.

Q: What other types of restrictive covenants are there?

A: In addition to covenants not to compete, some of the more common restrictive covenants that a business may have will be to prevent an employee or former owner of a business from soliciting customers of the business, disclosing trade secrets or other confidential proprietary information or soliciting employees from leaving the business. All restrictive covenants should be carefully drafted in order to be enforceable.

Mergers & Acquisitions FAQ

Q: Should the acquisition of the business be a purchase of shares or just assets?

A: A purchaser of a business may prefer to acquire only the assets of a business in an attempt to avoid absorbing the debts and liabilities of the business. Some tax obligations may still transfer to the purchaser of the asset. On the other hand, for that same reason, a seller may prefer to transfer the shares of the business. There are a number of other issues to consider in making this determination and you should consult with an experienced attorney to help you make this decision.

Q: Can an agreement to acquire or sell a business include restrictive covenants?

A: Yes. It is common for a seller of a business to be restricted from competing with the business that it is selling, as well as being restricted in soliciting customers and employees, or disclosing trades secrets or other confidential proprietary information.

Q: Does the deal pass the smell test?

A: Sometimes deals seem too good to be true. Often times, they are. It is important to conduct due diligence not only when you are purchasing a business, but also when you are selling it. As a purchaser, you want to be able to review all necessary documents supporting all material items in the purchase. As a seller, you want to be certain that the buyer has the financial wherewithal to meet its financial obligations of the deal.

Construction Law FAQ

Q: What is a construction lien?

A: A licensed contractor or materialman who provides services or materials for the benefit of a property has a right to record a Claim of Lien on the subject property in order to secure payment due for the services and materials provided. A Claim of Lien must be recorded in the County where the property is located within 90 days after the last services and materials are provided. A lawsuit to enforce the lien must be filed within one year of the date the lien was recorded. The time requirements for recording a lien and filing suit on a lien are strictly enforced and failure to comply with these obligations will result in the inability to enforce the lien.

Q: What is a Notice to Owner?

A: A Notice to Owner is a document furnished by a subcontractor or materialman who is not in contract with the owner of the property. The Notice to Owner must be sent to the owner of the property within 45 days of the date the subcontractor first started working or the materialman first provided materials to the property. The purpose of the Notice to Owner is to provide notice that someone other than the contractor is providing services and materials to the property for which payment will be expected.

Real Estate Law FAQ

Q: How can an attorney help in the purchase or sale of a residential property?

A: All real estate transactions must be memorialized in a written contract pursuant to a legal doctrine called the Statute of Frauds. It is important for both buyers and sellers to understand their legal rights and obligations contained within a real estate contract. Failure to comply with a requirement in a real estate contract can result in the deal falling apart and, quite possibly, litigation. Further, as issues arise in a real estate transaction, an attorney can help address and possibly resolve these issues through legal means.

Q: How can an attorney help in the negotiation or review of a lease?

A: Like the purchase and sale of real estate, when leasing a property, it is important for landlords and tenants to understand their legal rights and obligations contained within the lease. This applies to both residential and commercial leases. Typically, leases are prepared by an attorney for the benefit of the party being represented. They can include one-sided provisions for the benefit of the represented party. It is important for the party that receives the lease for review to have a qualified and experienced attorney review the lease for your benefit.

Q: As a homeowner, what are my options to avoid a foreclosure?

A: If you are having a difficult time being able to make your monthly mortgage payment, you have some options to consider. One option is seeking a loan modification, wherein the lender will consider whether to reduce the monthly payment by either reducing the interest rate, extending the term or possibly reducing the principal amount of the loan. There are many government sponsored modification programs that you may fall within. Another alternative would be to attempt to sell your property and, if your property is worth less than you owe, you would want to attempt to sell it as a short sale. There are other options and it is a good idea to consult with an attorney experienced in real estate to help you address and consider all of your options.

Banking Law FAQ

Q: Who has the authority to sign loan documents on behalf of a company?

A: One of the most important considerations for a lender in providing financing to a commercial borrower is to ensure that the appropriate individuals are signing the loan documents on behalf of the borrower. Failure to have the proper individual sign on behalf of a borrower could open a lender to significant exposure. It is important for the lender to obtain updated documentation from the commercial borrower showing who has the authority to bind the borrower to the loan documents. It is a good practice to review the corporate documents filed with the State, a shareholder’s agreement (or operating agreement/partnership agreement), current by-laws and recent tax returns. It is also prudent to have the borrower’s owners and/or directors sign a corporate resolution setting forth who has the authority to sign on behalf of the borrower. This can be extremely tricky and document intensive when there are multiple layers of entities owning a business.

Q: What is a deficiency judgment and when can a lender seek one?

A: If a lender obtains a judgment permitting it to foreclose on real property and the property is not sold for an amount equal to or greater than the amount of the judgment, a lender may seek a deficiency judgment against the borrower/judgment debtor. A deficiency judgment is an unsecured judgment. The amount of the deficiency judgment is equal to the amount of the initial judgment less the value of the property at the time of the sale. A lender/judgment creditor must petition the Court for a deficiency judgment within five years of the date of sale.

Commercial Litigation FAQ

Q: Can a company represent itself in a lawsuit?

A: The simple answer is no, unless it is in small claims court. A legal entity must be represented by counsel. An owner, board member, employee or other company representative may not represent the company in a lawsuit unless they are an attorney and an active member of the state bar organization.

Q: What can be done to avoid a lawsuit?

A: Unfortunately, many times lawsuits are unavoidable. However, in other cases, if both parties are interested in resolving the dispute, a lawsuit can be avoided. An experienced attorney who has superior negotiation and communication skills can be very useful in attempting to reach an amicable settlement with the opposing party. Most commercial disputes arise due to a misunderstanding of the facts or a differing interpretation of a contract. Being able to recognize these differences is the first step in being able to properly articulate your position. Once an attorney understands both sides of the dispute, the attorney can better represent your interests and attempt to negotiate a favorable settlement.

Q: What can I expect the process to be in a lawsuit over a commercial dispute?

A: It is important to know that no two cases are alike and there are many variable considerations that affect the process of a lawsuit. That being said, generally speaking, most lawsuits follow a similar path. After the lawsuit is filed, the defendant(s) must file a response. If the case is not dismissed or stayed, the defendant(s) will be required to file a response. The bulk of the time is then spent on the discovery phase, wherein documents may be requested, written answers to question and depositions may be taken. Along the way, it is common for disputes to arise during the discovery phase, which result in Motions being filed. At some point, a party may file a Motion for Summary Judgment, wherein a party is seeking to have the Court grant a judgment without the need to go to trial. If the case survives a motion for summary judgment, eventually, it will go to trial. At any point during a case, the parties may elect to settle the dispute either through negotiation of their counsel, through mediation or otherwise. To get a better understanding of the process for the lawsuit you are involved in, it is recommended that you discuss this with your attorney at the outset of the case.

Contracts FAQ

Q: Should I have an attorney review my contract?

A: You are not legally obligated to have an attorney review your contract. However, you need to consider that most commercial contracts are prepared by attorneys for the benefit of their client. A commercial contract is enforceable and you will be held to the obligations set forth therein even if you do not fully understand the extent of your obligations at the time you sign it. Most commercial contracts contain many legal terms and conditions that lay persons may have a difficult time interpreting or understanding. If you are presented with a commercial contract, unless you have a sound understanding of legal concepts and terms, it would be a good idea to consult with an attorney and have them review the contract to explain its contents and your rights and obligations set forth therein.

Q: Should I have an attorney prepare my contract?

A: Upon reaching a verbal understanding of a deal with another party, it is a good idea to prepare a written contract to memorialize the agreement. Preparing a valid and enforceable written agreement is an art form and should not be lightly considered. A skilled contract attorney has experience in preparing a contract that is both enforceable and crafted for the benefit of his or her client. It is much more likely that a poorly written agreement will result in a dispute than one that is properly tailored, as most disputes between parties over the interpretation of a contract is due to the language in the contract.

Q: Is an oral contract enforceable?

A: Oral agreements are enforceable for certain transactions, while they are unenforceable for others. The Statute of Frauds provides that certain transaction must be in writing, such as real estate transactions or promises to pay the debts of another. One thing to consider is that, while some oral agreements are valid, they are more difficult to enforce if a dispute arose between the parties to the oral agreement. Often times, a court is left with a classic “he said/she said” situation, which is never a position you want to put the Court in when deciding a case.

Mediation FAQ

Q: What are the benefits of mediation?

A: Once a dispute arises, if the parties are unable to resolve the dispute, it is a good idea to attempt to resolve the matter in mediation. A mediation is presided over by a third party neutral, called a mediator, who will attempt to facilitate a resolution between the parties. Settlement during a mediation is completely voluntary. One of the benefits associated with mediation is that each party has the ability to control the outcome of the case rather than leaving it to a judge or jury. Another benefit is that the costs associated with resolving the case in mediation prior to a lawsuit being filed will typically save each party a significant amount of attorney’s fees. Likewise, settling a case in mediation during a lawsuit will save the parties from paying the attorney’s fees associated with taking a case to trial.

Q: What is alternative dispute resolution and why should it be considered?

A: Alternative Dispute Resolution (ADR) consists of alternatives to lawsuits, which are typically in the form of mediation or arbitration. Many commercial contracts provide arbitration provisions, which provide that instead of filing a lawsuit, the parties agree to arbitrate the dispute. If properly drafted, Courts will uphold Arbitration provisions within commercial contracts. The benefit to arbitration is that, from start to end, it typically will take much less time than a lawsuit and is typically less costly from an attorney fee standpoint. The detriment is that the parties will be responsible to pay an arbitrator based on an hourly rate and there are typically no appellate rights to an arbitrator’s ruling. Arbitration is not for every type of dispute and, unless provided for by law or contract, may not be an available alternative to a lawsuit unless agreed to by all parties.



*The material provided in the Answers to the Frequently Asked Questions (FAQs) represents general legal information. The information provide should not be relied upon exclusively and is not a substitute for obtaining sound legal advice from a licensed attorney.

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