Due diligence is critical in commercial real estate transactions
Because the concept of buyer beware applies to commercial real estate purchases in Florida, due diligence is crucial and rests on the shoulders of the buyer.
The Law Office of David Steinfeld guides both buyers and sellers in structuring certain aspects of commercial real estate transactions. Depending on the property, due diligence may include reviews of rent rolls and the operation of a business or businesses on the property or it may focus more on the condition of the property itself.
Who should I use for due diligence
Helping the purchaser bring together a qualified team of professionals, such as accountants and property inspectors, is a value that the Law Office of David Steinfeld can bring to the proverbial team in addition to reviewing purchase and sale agreements.
Florida law requires that real estate sales occur under written contracts, but unlike residential transactions that largely now use form documents approved by the Florida Board of Realtors known as FarBar contracts, such standard contracts are rare in commercial transactions.
Thus, having an expert business litigator like David Steinfeld who has experience litigating breaches of commercial real estate contracts is of great benefit to parties that intend to buy or sell commercial real estate in Florida.
Disclosure obligations for residential vs. commercial property
In 1985, the Florida Supreme Court decided in the case of Johnson vs. Davis that "buyer beware" does not apply to residential transactions. The ruling was that sellers must disclose known material facts that are unobservable to a buyer. So in Florida, from that time forward there has been a distinct difference in the manner in which residential and commercial real estate transactions are handled.
The seller's disclosure requirement is included in all standard FarBar real estate contracts. In addition, most brokers require sellers to complete a separate disclosure form. This discussed what happens when a seller fails to disclose those defects.
What should you do if you discover a defect after closing
It is important to bear in mind that the only actionable defects are those deemed material. That is those that are a significant percentage of the purchase price. While caselaw has not precisely defined this number, some cases have held that ten percent or more of the purchase price is considered material. But that does not mean that less than ten percent is not material. Whether a defect is material depends on the unique circumstances of the property transaction.
When a buyer believes that a seller has failed to disclose a material defect usually the discovery of the situation occurs shortly after closing. Therefore, it is important to consult with an experienced and expert litigation attorney like David Steinfeld, who has tried these types of cases to verdict before juries and judges to determine the next and best course of action for your unique situation.
While a lawsuit may be one option to resolve the situation, it is not the only option available. Lawsuits in general are expensive and time-consuming, but these types of lawsuits in particular often require a significant number of depositions and, therefore, can become very expensive and very time-consuming. Therefore, it is prudent to carefully examine all of the options available together with David Steinfeld in order to make informed decisions in response to the unfortunate situation.
Should you use a home inspector
Although the seller of a home in Florida is obligated to disclose material defects that they actually know of, sometimes sellers do not make such disclosures either as a result of a lack of knowledge or intentionally. As the saying goes, sometimes the best defense is a good offense, which when translated into residential real estate transactions mitigates in favor of retaining qualified inspectors to thoroughly assess the property.
The Law Office of David Steinfeld has utilized a number of such inspectors as expert witnesses in lawsuits concerning disclosures and can guide and recommend clients to these professionals as part of guiding and assisting either a buyer or seller in such real estate transactions.
What are the key documents use in the purchase and sale of real estate
Florida law requires that all real estate transactions must be evidenced by a writing. So a handshake agreement to buy or sell property is not enforceable in Florida.
Residential property purchases are commonly documented by a standard contract developed jointly by the Florida Bar and the Board of Realtors. It is called the FarBar contract.
Commercial property is unique as compared to residential real estate. There is no standard approved form for such transactions. They are specially crafted by real estate attorneys who practice in the transactional arena.
Real estate services of the Law Office of David Steinfeld
The Law Office of David Steinfeld regularly handles real estate contract disputes and litigation concerning landlords and tenants. But the Firm does not perform closings or provide title insurance. The Firm refers those to local attorneys who do that type of work.
Chapter 83 of Florida’s Statutes is the Landlord-Tenant Act. That defines the obligations applicable to landlords in residential tenancies. However, the obligations of landlords and tenants in commercial rentals is largely governed by the terms of their written lease. The Law Office of David Steinfeld reviews commercial leases to assist and guide businesses in renting space for their operations.
Real estate investment LLCs
Real estate is considered a business in Florida. Lawsuits over real estate are even covered in the business litigation board certification exam.
While many people purchase a home in which to live, others buy for investment. This is done in their name or through a business entity, which may involve several investors.
Properly structuring a business for real estate investments is a service that the Law Office of David Steinfeld regularly offers.
Who is the best business lawyer for buy-sell agreements in Florida
For several years, David Steinfeld has edited the Chapter on purchase and sale of businesses in Florida for the Florida Bar in its Small Business Handbook. This is a volume that is used by lawyers throughout the State in understanding how to structure such transactions and even provides sample documents for them to use. Thus, in a manner of speaking, you can say that Board Certified expert business lawyer David Steinfeld literally wrote the book in Florida on how to structure contracts for the purchase and sale of businesses. These are the key concepts to know in buying or selling a business.
What factors impact the purchase and sale of a business
At some point in the lifecycle of a business the option to sell the business or its assets may arise for a variety of reasons. On the other side of that opportunity lies a prospective and motivated buyer interested in obtaining the assets or business itself of the established and going concern. There are a number of factors that impact the decisions on both sides of the potential transaction, but they ordinarily start with some investigation of the opportunity by the buyer, which may or may not need to be guarded by the seller through documents such as non-disclosure agreements.
How do you write-up a buy-sell agreement
Once the parties assess the opportunity and are in a position to frame out the terms of the purchase and sale, then they are ready to document those terms so that everyone involved knows exactly how things will turn out and knows the obligations and responsibilities of all the parties. Structuring purchase and sales of businesses in this manner is naturally done to avoid disputes later that can divert attention from running and growing the business or can drain the monies obtained from the purchase.
This entry will conclude our study of the third of the three basic component parts of a business lawsuit in Florida, which is the final phase that sees the resolution of the dispute.
We have reviewed the pleadings and discovery phases and conducted a deeper dive into those phases. We have also analyzed direct settlements, mediation, and arbitration as mechanisms of resolving business disputes in whole or in part. Now we turn our attention to the most formal method of the trial.
Strict rules apply
Trials are governed by certain rules. As James Bond infamously said to Auric Goldfinger in the 1964 classic that bore his name, “strict rules of (golf) evidence and procedure, Goldfinger.”
It is the function and obligation of your lawyer to know those Rules inside and out and to understand how to properly employ them in the trial. Florida Bar Board Certified business lawyers like David Steinfeld, who even served as past Chair of that Committee at the request of the Florida Bar President, have demonstrated to the Bar that they have sufficient experience in both jury and non-jury trials of business disputes, have passed a very comprehensive exam, and received approval from judges and fellow lawyers to be called experts in business trials.
Parties in the lawsuit can choose a judge or jury and do so early on in phase one. Thus, determining whether the case is appropriate for a judge or a jury is where actual trial experience is of great value to you or your business.
Selecting the jurors, a process called voir dire, is also a critically important skill and can make or break the trial. A trial is like a play that runs one time for a very select audience. Knowing how to organize, manage, and produce that production is the hallmark of an experienced and accomplished attorney and one that you want to represent and stand by you or your business in trial.
Board Certified lawyers are the trial experts
Board Certified business lawyers are the cream of the crop in Florida and are experts in conducting trials, which is where the proverbial rubber meets the road in a business lawsuit. Such experience also permeates the entirety of the lawsuit and guides and structures all pre-trial phases.
To draw a parallel, an educated doctor who has experience with certain operations is better than a doctor who has never performed an operation or has little experience in them, but knows a lot about the body. Unlike doctors, however, not all lawyers are board certified nor are they required to be in order to practice law; only those who have the experience and are deemed worthy by judges and other lawyers can even sit for the exam and not all who do so pass the exam.
In our continuing study of the third or conclusion phase of a Florida business lawsuit we have reviewed the informal methods of resolution consisting of settlement and mediation, and will now examine the more formal methods of arbitration and then the trial.
Arbitration can exist as an independent option where parties agree in a contract to resolve certain disputes in arbitration instead of in court. But it can also be used within a lawsuit and can be binding or non-binding and can be by agreement or ordered by the Judge, but a Judge may only order the non-binding variety.
A decision entered in a binding arbitration is final, subject to review, while one rendered in non-binding arbitration is not and rests somewhere between the informality of mediation and the formality of a trial because a party can reject the decision and take their case to trial.
Logic leads one to the inquiry of what benefit arbitration provides if the case can still go to a trial, but the arbitration can act as a dress rehearsal for trial evidence and can show one party that they may not have a chance at trial.
Depending on the circumstances of any dispute, whether arbitration is useful or beneficial is a decision for you to make with you lawyer. Naturally, having an attorney who has a depth of experience and knowledge with arbitrations in and outside of lawsuits like David Steinfeld is highly beneficial to the analysis that your team should undertake in deciding this option.
Settlements and mediation
In our examination of the three basic component parts of a business lawsuit in Florida we have analyzed the pleadings phase and the discovery phases. Now proceed to the third phase, which is the conclusion or resolutions of the dispute in some form or another.
How can a lawsuit end
To review, some of the ways that a lawsuit can conclude are direct settlement, settlement through mediation, or procedural methods like summary judgment. Those can actually occur in the first two phases of the lawsuit. But a trial either in front of a judge or a jury occurs primarily in this third phase. There are the unique situations where a case can be split in half or bifurcated and part of it tried earlier before additional discovery might be conducted or variants of trials like summary trials employed, but generally the trial occurs in the third and final phase.
As to direct settlement, nothing prevents a party in a lawsuit from settling their dispute or from suggesting a settlement to the other side at any time. Business lawsuits are fundamentally business disputes and are thus capable of being resolved by business people in a business-like fashion. Sometimes, however, it takes one side or the other some time to come to that realization or they do not get to that point and the dispute is decided by a judge or jury. But, whether or when to suggest a settlement is a tactical decision that should be made in concert with your attorney as there are implications to the overall dispute. Likewise, certain provisions should be addressed and accommodated in any settlement agreement, which is where having an experienced attorney representing you becomes of tremendous benefit.
Mediation is a private meeting between the parties either by their agreement or by court order with a mediator they choose. Florida was the pioneer in this area of alternative dispute resolution in the early 1990's and now has some very accomplished and skilled mediators. Mediation can actually occur as many times as the parties desire by their agreement, but it usually must occur at least one time before a judge will allow a case to proceed to trial. You and your lawyer should perform due diligence on any mediator that will assist you in solving the dispute to be sure you choose the right person for the job. Through the scores of mediations in which David Steinfeld has represented client, he has worked with many seasoned mediators and can guide you or your business in selecting appropriate mediators for your situation.
Discovery methods other than depositions
In Lawsuits explained Part 4 we started looking at the second or discovery phase of a business lawsuit in Florida as part of our examination of the three basic phases of a business lawsuit. As part of that we looked at depositions as one method for parties to use to question another party or a third-party outside of the lawsuit to obtain or clarify information and documents.
Interrogatories, Document Requests, and Admissions
Some of the other mechanisms available to parties in a lawsuit are interrogatories, requests to produce documents, and requests for information. When and which of these discovery methods to use is largely the judgment call of your attorney, but he or she should at least explain the options to you and the plan for using them in the overall discovery program.
Interrogatories are limited in number and ask the other side in a lawsuit to answer questions under oath, similar to what happens in a deposition, but they are not the same kind of questions.
Requests to produce ask for documents or categories of documents relevant to the lawsuit and likewise have certain limitations and restrictions placed upon them.
Requests for admissions ask the other side to admit or deny specific facts or validate documents to save time by not having to do so later.
Motions to Compel
When these requests go beyond what is allowed or they are perceived to do so, they are often met with motions filed by the recipient to which the requesting party can reply. This is commonly called motion practice and the disputes in this phase are either resolved by and between the lawyers or by the Judge in a hearing. Sometimes these issues can grow quite complex and involve unique issues touching on trade secrets, confidential business information, and electronic materials.
Discovery of Digital Data
In the past several years, the discovery of electronic materials has occupied an increasingly important role in the discovery phase largely as a consequence of how businesses and people store and use information. Few businesses have a file cabinet with paper files nowadays; most have sophisticated cloud-based IT solutions that have become inexpensive and multiply the ability of the business to generate profit. This area of discovery of electronically stored information has aptly become known as e-discovery and is one of the newest and hottest topics in the legal industry.
In order to maintain pace with both its business clients and this evolving area of the law, the Law Office of David Steinfeld has embraced technology in the service it provides and David Steinfeld has taught numerous continuing education classes to Judges and to hundreds of lawyers on e-discovery.
He also created a website that evaluated the software from vendors used in e-discovery to better aid law firms across the country in selecting the right software and to provide a more cost effective and better service to clients.
Mr. Steinfeld is regularly called upon by the Florida Bar and the Palm Beach County Bar as well as other groups to speak on e-discovery and maintains special relationships with e-discovery software companies that allow the Law Office of David Steinfeld to obtain preferred pricing to benefit its clients.
How do depositions work
In Lawsuits explained Part 3 we looked at the three basic phases of a business lawsuit in Florida. We are now starting to examine them in further detail.
The second phase is the discovery phase in which the parties try to verify what they think they know and learn information of which they were unaware. They do this with the other party or parties in the lawsuit and with parties outside the lawsuit known as third-parties.
The Rules of Procedure that govern civil lawsuits in Florida provide the parties with ways to obtain documents and information in their discovery efforts and, along with past cases or precedent that have interpreted those Rules, place certain limits on those.
Those options include depositions, which are essentially question and answer sessions under oath conducted by a lawyer and recorded by a stenographer also called a court reporter that the party taking the deposition hires and pays. Unlike some of the other discovery options available, a party can use a deposition to obtain or clarify information and to even obtain documents from another party in the lawsuit or from a third-party.
Depositions can also be videotaped in addition to the court reporter and like the court reporter, the party taking the deposition hires and pays for that in most cases. Depositions are coordinated between the parties unless a Judge orders them and prescribes the time and location for them.
Ordinarily however, because lawyers are required to conduct themselves in a professional manner, this is all coordinated very easily between the parties without the need or expense of involving the Judge.
The website of the Law Office of David Steinfeld contains articles on discovery and depositions and what to do and what not to do in them, but the best preparation is a frank and direct discussion with your counsel before the deposition. There are also some examples on YouTube now of depositions that have gone horribly wrong that make for interesting viewing.
What to expect from your lawyer
In Lawsuits explained Part 2 we looked at the three basic phases of a business lawsuit in Florida. Now we will break them down further in this and the next two entries.
The first phase is the pleadings phase where the parties file documents with the Court to tell each other what their claims are and whether those are accepted or rejected and what defenses exist.
Some of these documents are the complaint, which starts the lawsuit, an answer and defenses, counterclaims, third-party claims, and cross claims. Starts to sound complex and we haven’t even discussed motions like motions to dismiss or for judgment on the pleadings.
The complexity and timing of these procedural mechanisms is codified in Florida’s Civil Procedure Rules and, along with the Rules of Evidence, is what you should expect your lawyer to know and understand as it is his or her tradecraft.
But, as a party to and participant in a business lawsuit, you are in integral part of the matter and a key player on the team. So, your lawyer should educate you on the options available in this phase and keep you informed and involved in this early process of your lawsuit.
That is precisely how the Law Office of David Steinfeld treats its clients because the lawyer and the client are, in fact, a team to which the lawyer brings experience with and an expertise in the law, including the procedures, and the client brings the experience and familiarity of the facts and an intimate business knowledge of the other party with whom the client had had business dealings that led to the dispute at the core of the lawsuit.
The Palm Beach Business Lawyer Blog
Board Certified expert in Florida business law, David Steinfeld has almost 25 years legal experience.