POHL NEWS

The Closer

2012-01-05T14:22:00.000-08:00

Winter Park Home Magazine - Issue 4 - 2011

At a real estate closing, the closing agent has multiple responsibilities, and must rely upon the cooperation of the parties to complete his duties. He or she must determine that all title commitment requirements have been satisfied, that all documents are properly executed, that all parties have provided appropriate identification, and that funds provided for the closing have cleared – all of which must be resolved prior to disbursing proceeds and recording the documents. This Article addresses the documentation and funds that are to be supplied by the parties prior to or at the time of closing.

The first task of the closing agent (the “Closer”) is to confirm that the appropriate parties are present. Sometimes the Closer will personally know one or more of the parties. Absent personal knowledge, the Closer, both in his or her capacity as a notary public and as the closing agent, must obtain acceptable forms of photographic identification from the parties. By Florida law acceptable forms of identification include, but are not limited to, a valid Florida or other U.S. state issued driver’s license, an identification card issued by an authorized public agency, a passport issued by the Department of State of the United States, or a passport issued by a foreign government (if duly stamped by the United States Bureau of Citizenship and Immigration Services). The originals of these forms of identification must be provided to the Closer, who will copy the identification for the file.

Oftentimes, individuals are under the mistaken belief that any form of picture identification is sufficient. A Costco card, an office I.D. card, and other similar forms of identification, although frequently presented as identification, clearly are not sufficient under Florida law, with the result that the closing will be either delayed, or canceled. The original must be presented to the Closer for inspection prior to the completion of closing. Faxing or scanning a copy of a passport or driver’s license to the Closer, or promising to return with the identification, is not sufficient. If, for example, a “Seller” attends a closing and executes a deed, is provided with the proceeds check, and promises to return in an hour with his driver’s license, then the Closer clearly has exposed himself to significant liability.

Unfortunately there are too many examples of fraud that have been successfully perpetrated for failure to obtain sufficient proof of identification. A classic example is the situation where a husband, the only party in title, owns homestead property. The estranged wife refuses to appear (or is oblivious to the fact that the property is being sold), and the husband makes arrangements for a friend to appear in her place, and insists that the person is his wife. The Closer must be alert, and obtain and scrutinize the form of identification.

Any original document in the possession of a party that is to be used in conjunction with the closing should be delivered to the Closer in advance. These might include, for example, an unrecorded corrective deed or a private satisfaction of a mortgage. Often a party “offers” to help by obtaining and delivering one of these documents to the Closer at the closing table. The Closer then has the affirmative duty not only to confirm that the document was properly executed, but also to determine that there is no evidence of fraud. The Closer will typically require that he or she be provided with a copy of the signer’s driver’s license, and in certain situations will independently contact both the signer and/or the notary who executed the acknowledgement section. It is far superior for the Closer to contact the necessary parties and prepare and coordinate the execution of any corrective deed or satisfaction of mortgage. Alternatively, the Closer should review the document before closing, in order that any issues be addressed to everyone’s satisfaction.
This is also true of a party’s reliance on a Power of Attorney (the “POA”). If a Closer is unaware of the existence of a POA until the actual closing, there is a risk that the document will be rejected because it was not properly executed, or because the parameters of authority set forth in the POA are not adequate for the particular transaction. Additionally, lenders have their own guidelines relative to the use of a POA by a borrower. By providing the POA in advance, the Closer can not only determine its adequacy and legal sufficiency, but the Closer can also confirm whether the Lender will approve its use.

The ideal method of providing funds at closing, and the procedure used by the author’s law firm, is the wire transfer. Although it may be possible for a buyer to provide a cashier’s check well in advance of closing, there are legitimate concerns that these checks will not clear on time. For that reason, wired funds should be coordinated with and delivered to the Closer’s office immediately prior to or at the time of closing in order to avoid any unnecessary delays.

Historically many Closers have accepted cashier’s checks and disbursed prior to clearance of funds. Cashier’s checks however are not “good” funds at the time the check is delivered to the Closer. The check must first be deposited into the Closer’s account, and the check processed through the banking system and confirmed as collected (“cleared”) funds, before those funds are deemed sufficient. Closers who disburse prior to funds being cleared run the risk of those checks being returned marked “insufficient funds”. There are also many recent examples of banking institutions that cannot timely honor their “cashier’s check” due to subsequent takeover by the FDIC, and also an increasing number of fraudulent checks being provided to a Closer.

Until such time as all funds have been confirmed as cleared, the closing is not completed, and no funds should be disbursed. Title underwriters also mandate that all funds be cleared prior to disbursing at a closing. The Florida Bar rules similarly mandate that a law firm cannot disburse until receipted funds have cleared the law firm’s trust account.

Visit our website for more information on this subject.

This Article is not a substitute for hiring an independent attorney
to review the impact that closing documents may have on real property.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank’s legal practice has concentrated on complex real estate, tax and corporate transactions throughout Central Florida. Frank has been involved in the Central Florida community for more than thirty years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980.

Private Restrictions on Property

2011-08-26T12:53:00.000-07:00

Winter Park Home Magazine- Issue 3 - 2011

In the previous issue, we discussed the scope and impact of restrictions imposed by a Developer on subdivided/platted land. These platted restrictions are generally entitled Covenants, Conditions, Restrictions and Easements (“Covenants”). These Covenants impose limitations on homeowners within the subdivision regarding the use and maintenance of the property. The Covenants typically establish a homeowners association (the “HOA”) to maintain the common areas, and empower the HOA to charge assessments to the individual lot owners to cover the HOA’s necessary expenses. Individual property owners also have the right to impose restrictions on land.

Typically, those restrictions are created when the owner conveys land to a purchaser and the deed recites the specific restrictions to be imposed. As long as the restrictions do not violate local governmental, state, or federal law, they can be enforced by the seller and any other party authorized to enforce the restrictions as set forth in the deed.

Whenever restrictions are imposed on land by a seller, the purchaser acquires the land subject to those restrictions and is bound by the terms recited in the deed. For example, if Mr. Jones conveyed Greenacre to Mr. Smith and recited in the vesting deed that Greenacre is subject to a minimum 35-foot front lot line building set back, then Mr. Smith could be sued if he were to construct a house 20 feet from the front property line. As a result, Mr. Smith could be compelled to tear down the new home or move it back an additional 15 feet. If the restrictions are designated to run with the land and are not limited solely to the use of the land by Mr. Smith, then subsequent purchasers of Greenacre would also be subject to the same building setback limitations. Therefore, it’s important to scrutinize any restrictions that impact land that is being purchased.

A companion question relates to enforceability. Let’s use the building setback example to address that issue. If the vesting deed delineating the restriction is silent on enforceability, then arguably only Mr. Jones could bring an action to enforce any setback violation. If the vesting deed provides that the neighbors on either side of the property can enforce this setback violation, then those neighbors could be entitled to enforce the restriction. This might occur when abutting owners of land who are not part of a platted subdivision wish to create a common scheme of a minimum setback.

Limitations imposed on land frequently consist of privately retained easements. For example, Mr. Jones owns a large tract of land with public road frontage along the south property line. He splits the tract in two, creating two separate tracts and plans to sell the south tract. His north tract will be landlocked unless he has the right to cross over a portion of the south tract to access the public road. In preparing the deed for the south tract, Mr. Jones needs to ensure that it includes a well-drafted reservation of an ingress-egress easement across the land of the south tract owner. The deed should recite that the easement is reserved not only for the benefit of Mr. Jones, but also for all subsequent owners of the north tract, include the exact location of the easement, and recite the rights and obligations of both owners relative to the easement area. If Mr. Jones intends to retain exclusive use of the easement area, the reservation of easement must recite the exclusive nature of the easement. If Mr. Jones wishes to erect a fence along the border of the easement area, the easement reservation should recite this right to construct a fence. If the easement area is to be used by both owners, then the easement reservation should recite the respective responsibilities of the parties to maintain the easement area.

A purchaser should always protect his investment by determining all matters that impact the property he is purchasing, and obtain title insurance to protect his investment.

Consider the following example. Dave Sellers owns a vacant parcel on the beach. He offers to sell the land at a reduced price to his friend, Joe Purchaser. To cut costs, Mr. Purchaser does a computer search for the public records in the county where the property is situated, and determines that there are no liens on the property. The sale is completed and Mr. Purchaser constructs a three-story house. After the certificate of occupancy has been issued by the County, Mr. Purchaser receives a certified letter from his neighbor to the West (Mr. Abut), advising him that there is a restriction on the land owned by Mr. Purchaser. The restriction was placed by a prior owner of Mr. Purchaser’s land, restricting the height of any homes on the land to two stories. In addition, the restrictions provided that Mr. Abut, and his successors in interest, have the right to enforce this building height limitation, and to collect attorney’s fees if a lawsuit is filed to enforce this provision. Mr. Purchaser now needs to retain legal counsel to address the issues presented – at considerably greater expense than the cost of a title insurance policy. This example illustrates why it is always advisable to acquire a title insurance policy, even when purchasing from a neighbor or friend.

Private restrictions and easements should only be drafted by a qualified real estate attorney. All relevant terms should be defined in the recorded instrument. A purchaser is well served by thoroughly understanding his rights and obligations before the sale is completed and should, therefore, seek guidance from his real estate attorney.

Visit our website for more information on this subject.

This Article is not a substitute for hiring an independent attorney
to prepare and review your real estate contract.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank’s legal practice has concentrated on complex real estate, tax and corporate transactions throughout Central Florida. Frank has been involved in the Central Florida community for more than thirty years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980.

Comparing and Maximizing Performance Bond and Commercial General Liability Protections

2011-06-02T12:08:00.000-07:00

Architects/Engineers Professional NetworkOften when acting as the prime on a construction project, the design professional is asked to review, comment or even craft insurance and bonding specifications for the project. With an increasing number of general contractors and subcontractors experiencing financial difficulties due to the poor economy over the last couple of years, it becomes increasingly important for owners to protect themselves as much as possible through commercial general liability (CGL) policies and performance bonds. This article distinguishes between the nature of liability insurance and suretyship, analyzes the scope of coverage and protections afforded by each – including recent case law that arguably expands CGL coverage - and discusses how owners and general contractors might better protect themselves using these tools. This article also includes a brief description of owner-controlled insurance policies (OCIP) which may be appropriate for large construction projects.

The Nature of Liability Insurance and Performance Bonds Distinguished

A performance bond issued by a Surety is not insurance. Liability insurance is a contract pursuant to which the insurer agrees to indemnify and defend the insured against certain claims for damages, specifically losses covered under the insurance policy, for which the insured is otherwise liable to third parties. If the insurer pays out under the policy, it may not later seek indemnity from the insured. This is not the case with a performance bond. A performance bond is a three-party agreement issued by a Surety who guarantees to an obligee (i.e. the protected party) that the principal (i.e. the entity whose performance the Surety guarantees) will complete the work required under the bonded contract. Also, if the bond incorporates by reference the bonded contract, the Surety may become liable for post-completion damages such as repairs necessitated by latent defects.

While performance bonds are usually obtained by the general contractor for the protection of the owner, general contractors may also require their subcontractors to obtain performance bonds. Owners too may require the general contractor to demand its subcontractors to provide performance bonds. While doing so will increase the contract price, it has the benefit of excluding lower quality and financially struggling subcontractors who cannot obtain such bonding, as well as provide the bond protection.

Unlike liability insurance, if the Surety is required to incur costs to complete the contract or otherwise pay out under the performance bond due to the principal’s default of the underlying contract, the Surety will seek indemnity from the principal. Moreover, as a condition of issuing the performance bond, the Surety likely will have required a general agreement of indemnity from not only the principal, but the individual stakeholders of the principal corporate entity and their wives. Also, the Surety has no duty to defend its principal against claims made against the performance bond.

It is important for the parties protected by the bond to recognize this distinction because it should alert them of the need to have counsel review the performance bond form being used on a project. Given the additional liability exposure to the principal under a performance bond and those individuals who signed a general agreement of indemnity to obtain the bond, the principal has an obvious incentive to propose a bond form that provides as little protection as possible. As discussed below, the protection afforded by a performance bond may differ significantly depending upon the bond form used.

Performance Bond Coverage

Again, a performance bond is a means of guaranteeing the completion of a construction project upon the default of the principal. The Surety is lending its credit to the principal. The amount of protection afforded by a performance bond is the reasonable amount to complete the project in excess of the principal's available contract balance up to the penal sum of the bond

However, the Surety will not be liable to the obligee for all damages arising from the principal's default. Absent certain language in the bond form, there may be several types of contractual damages for which the principal may be contractually liable but that the performance bond will not cover. Unless the bonded contract is expressly incorporated into the performance bond, the Surety may not be liable for the correction of defective work or the performance of contractually required warranty work. Also, in certain jurisdictions, even though a principal is adjudicated liable for actual delay damages resulting from its breach of the contract, the Surety will not be held liable for such damages under the performance bond absent express terms in the bond form stating otherwise. See American Home Assurance Co. v. Larkin General Hospital, Ltd, 593 So. 2d 195 (Fla. 1992). Similarly, a performance bond Surety may not be held liable for lost profits or rents on the project arising from the principal's breach of the bonded project - again, even if the principal is found liable for such damages - absent express terms in the bond form stating otherwise. The scope of the performance bond will be limited to its express terms. However, through the negotiation of the bond form, the terms might be expanded to include these types of contract damages, thus expanding the obligee's protection beyond merely the completion or correction of work.

Commercial General Liability Coverage

As commonly understood, the purpose of CGL insurance is to provide protection for personal injury or for property damage caused by an occurrence, such as the negligent performance of construction work, but not for the replacement and repair of such negligently performed work or the cost to complete unperformed work. For example, if a roofing contractor negligently constructs a roof on a building which results in damage to property located inside the building, then a CGL policy issued to the roofing contractor may cover the damage to the property inside the building but not the cost to replace the roof.

However, CGL policies may include riders and endorsements that limit coverage otherwise provided by a standard policy, such as exclusions for mold or residential construction. Such exclusions could be devastating if they are indeed a potential risk. Design professionals working as the prime on a project should strongly encourage their owner clients to have the controlling CGL policy reviewed before the contract is entered. Most construction contracts merely require that a certificate of insurance be provided to establish proof of insurance. However, the certificate of insurance does not identify the scope of coverage. Only through a review of the insurance policy itself can the scope of coverage be determined.

Recent Expansion of Commercial General Liability Coverage

While a standard CGL policy is not typically understood to cover the cost to repair and replace the insured’s own defective work, a Supreme Court of Florida case holds that such a policy issued to the general contractor may provide coverage for the cost to repair and replace the damage to a completed project caused by a subcontractor’s defective work. U.S. Fire Ins. Co. v. J.S.U.B., 979 So. 2d 32 (Fla. 2007). The court’s analysis of the CGL policy could be argued in other jurisdictions beyond Florida.

In the J.S.U.B. case, a general contractor constructed homes on soils that were not adequately compacted (such compaction being the responsibility of one of the subcontractors), resulting in settlement cracks to the homes, as well as, items placed in or affixed to the homes, such as wallpaper. The insurer argued that workmanship deficiencies that resulted in later damage to the homes constructed by the insured/ general contractor should not be considered the result of an accident and, thus, should not be deemed an “occurrence” which is covered by the insuring agreement. However, the court disagreed and determined that there was coverage for the damaged homes.

In reaching its holding, the court found that settlement damage to the homes caused by improper compaction of the underlying soil was an “occurrence”. As defined in the policy, an “occurrence” is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The court held that when the term “accident” is undefined in a liability policy, as was the case, the term includes not only “accidental events” but also damages or injuries that are neither expected nor intended from the viewpoint of the insured – such as the negligence of its subcontractors. The court also recognized that there is a difference between a claim for the costs of repairing or removing defective work, which is not a claim for “property damage,” and a claim for the costs of repairing damage caused by the defective work, which is a claim for “property damage.” As for the “your work” exclusion, the operating policy included the following exception to that exclusion: “Paragraph (6) of this exclusion [i.e. the “your work” exclusion] does not apply to ‘property damage’ included in the ‘products-completed operations hazard.” The operating policy had products-completed operations hazard coverage.

The more expansive coverage provided by the Florida court’s interpretation of the post-1986 ISO CGL policy arguably overlaps the protections afforded by a performance bond. Given the indemnity obligations of the principal on the bond, it should be expected that principals will likely use this case law to shift liability away from its Surety and towards the CGL carrier when there is damage to the project due to a subcontractor’s deficient work.

It should be noted that the ISO has begun to issue an endorsement that may be included in a CGL policy which arguably eliminates coverage for the the cost to repair and replace the damage to another subcontractor’s work necessitated by the insured’s negligent performance, thus negating the Florida court’s expanded interpretation of the standard post-1986 standard ISO CGL policy. Such an endorsement is not in the owner’s or general contractor’s interest. Accordingly, if an insurer has included this endorsement as a part of the CGL policy, an owner and general contractor would be advised to determine if the endorsement can be stricken and, if so, find out the cost for doing so and perform a cost/risk analysis. Further, the case high-lights the importance of obtaining products-completed operations hazards coverage as part of the CGL policy, i.e. coverage for occurrences that arise after the project is complete.

Additional Insured to a CGL Policy

Owners should be advised to demand that they be named as an “additional insured” on all CGL policies protecting the project. Further, they should ensure that the insurer actually issues the endorsement naming them as an additional insured, as an action against a potentially insolvent subcontractor for breach of contract for failing to obtain the contractually required endorsement may not afford a sufficient remedy. An additional insured can make a direct claim against the policy and sue for a declaratory judgment establishing coverage. Absent being named an additional insured, only the insured can sue the insurer before the insured’s claim is resolved. Additionally, many states allow the prevailing party to recover their attorney’s fees in an action to recover against their own carrier for an insured loss.

Owner-Controlled Insurance Policy

An owner-controlled insurance policy (OCIP), often referred to as a "wrap-up" policy, is a policy obtained by an owner to provide coverage for all of the project participants on very large construction projects or a combination of related projects. Such a policy typically provides commercial general liability insurance for all parties, as well as, workers compensation, employer's liability, personal injury and property coverage. Such policies can also include professional liability and builder's risk coverage. The potential advantage of OCIP is to avoid multi-insurance lawsuits seeking recovery for various claims between the owner, architect, engineer, contractor, subcontractors and suppliers. However, unlike individually obtained policies, OCIP coverage typically expires at the end of the project - before liability exposure of project participants ends. Accordingly, the owner may be advised to require project participants to obtain additional coverage in excess of the wrap-up policy to address that concern. Given the complexities of these wrap-up policies, they should be purchased only after consulting with an experienced insurance broker and legal counsel.

Conclusion

While owners may believe they have protected themselves by requiring CGL insurance and a performance bond for a project, a design professional acting as prime should advise their owner clients to conduct a more thorough review and negotiated modification to the insurance policy and bond form with the help of their legal counsel and insurance broker. Further, owners should be advised of the possible advantages of obtaining an OCIP or “wrap up” policy. Doing so can significantly expand their protections and increase the likelihood of a successful and profitable project.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

HOA Restrictions on Property

2011-05-26T11:32:00.000-07:00

Winter Park Home Magazine - Issue 2 - 2011

Many individuals purchasing real property expect that they have the right to use the land without interference from their neighbors. However, that right is limited both by local governmental regulations and any recorded restrictions imposed on the property. This article addresses private restrictions.

Developers typically place restrictions on large tracts of land that are subdivided into smaller parcels and then formally submitted to the local governing body as a new plat, or subdivision. These Developer restrictions typically incorporate terms that are more extensive than private parcel restrictions. These recorded Covenants, Conditions, Restrictions and Easements (the “Covenants”) impose easements and restrictions on lots in that subdivision. So, any purchaser of a lot acquires that property subject to those conditions. Terms vary and often cover a wide variety of items such as the type of roof shingles that can be installed, to the selection of exterior paint color, location of trash cans, and the right to construct fences and the type of material for a fence. They may also include building setbacks, the location of utility easements on each lot, and even the number of pets that a lot owner may have. Covenants will also occasionally include minimum age requirements for lot owners.

Covenants usually provide for mandatory membership of all lot purchasers in a named Homeowners’ Association (“HOA”), with the obligation to pay annual dues and special assessments, together with the obligation to abide by its Rules and Regulations. Some individuals take the position that they should not be subject to the HOA’s authority and the restrictions on the property. However, purchasers of land in Florida acquire their title subject to those matters which have been previously recorded and which directly impact their property. Therefore, a purchaser is “on notice” of the Covenants, and is obligated to be a member of the HOA, pay assessments, and abide by the restrictions.

HOAs generally are responsible for the care and maintenance of common areas and recreational facilities on the plat. They also oversee each lot owners’ compliance with the restrictive covenants. The HOA will assess each lot owner his proportionate share of these maintenance expenses. Prior to closing, a prospective purchaser should determine the amount of dues each lot owner must pay annually to the HOA. In today’s market, a buyer should also determine whether there are substantial special assessments that will be charged to cover payments by delinquent lot owners, or to pay for expensive repairs to the common areas. A prospective buyer, not wishing to become responsible for paying such fees and assessments is well advised to purchase property elsewhere.

A buyer should also determine if there are any regulations in the Covenants with which he cannot comply. For example, if Andy Anderson intends to rent the property after a closing, he should first confirm that the Covenants and the HOA’s rules and regulations permit non-owner occupied lease agreements, their permitted terms, and whether the HOA must pre-approve the tenant.

Recently, Tom Johnson received a notice from an HOA concerning outstanding dues. Tom told me that he has lived on the property for over five years, that no one has ever contacted him to pay dues, and that he wasn’t even aware that there was any HOA in his subdivision. A review of the original recorded Covenants confirmed that there were no provisions establishing any HOA. Subsequent amendments to the Covenants also failed to identify any HOA. I advised Mr. Johnson that this HOA appears voluntary in nature, and that he could not be required to pay any dues. We subsequently obtained a title search for Mr. Johnson’s property and confirmed that neither Mr. Johnson, nor his predecessors in title, ever consented to the authority of this voluntary HOA.

I frequently receive questions concerning the enforceability of restrictions. For example, if the Covenants provide that a lot owner cannot build a fence along the rear property line, the HOA typically retains the right to enforce these restrictions. The HOA can sue to have the fence taken down; impose a fine on a lot owner who violates this fence restriction; and can record a lien against that owner if the fine is not timely paid. That lien will attach to the real property and, if provided for under the Covenants, can be foreclosed.

Alternatively, if there is no HOA, the Covenants usually provide that any impacted lot owner in the subdivision may enforce the restrictions. Although there may be situations where a neighboring property owner is granted rights to enforce restrictions, generally only those subdivision lot owners who are subject to Covenants have a right to compel compliance with its terms. Certainly a neighbor could contact the city or county government if the actions of a lot owner constituted a public nuisance. But this right is distinct from the right afforded to members of the HOA to enforce its Covenants.

This Article is not a substitute for hiring an independent attorney
to review the impact that restrictions may have on real property.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Power of Attorney II-The Sequel

2011-03-03T13:19:00.000-08:00

Winter Park Home, Volume 9 / Issue 1, 2011

In the previous issue, I covered the use of a Power of Attorney in real estate transactions for those situations in which a party is not available to sign documents at a closing and appoints a third person to sign on his or her behalf. This column continues that discussion, addresses the proper format for the execution of a document by the Attorney-in-fact, and introduces the use of a statutory form of Power of Attorney known as a Durable Power of Attorney.

A Power of Attorney is a written instrument in which one person, known as the “Principal,” delegates authority to another person, known as the “Attorney-in-fact,” to act as an agent of the Principal to sign specific documents on behalf of the Principal. The Attorney-in-fact is only authorized to sign documents in his/her representative capacity, and should never sign the documents in his/her own name. If, for example, Michael Smith gives a Power of Attorney to David Jones to sign a warranty deed on his behalf, then structurally the grantor of the deed is still Michael Smith. The signature block should state “Michael Smith, by David Jones, his Attorney-in-fact,” and David Jones should sign the deed in the same manner as recited in the signature block. If the deed fails to recite that David Jones is signing the deed in his representative capacity as an Attorney-in-fact, then the deed will fail for lack of proper execution. Additionally, the original Power of Attorney must be recorded with the transaction to establish on the public record the authority of the Attorney-in-fact to sign on behalf of his Principal.

Conceptually, the Attorney-in-fact is given full authority to bind the Principal, but only to the extent that the Principal could bind himself and execute those same documents. Since a Principal can sign a deed or a mortgage only if the Principal himself is both alive and competent, then the Attorney-in-fact likewise can only execute those same documents if the Principal is alive and competent. As part of the execution of documents by the Attorney-in-fact (the “AIF”), and under the provisions of Chapter 709 of the Florida Statutes, the AIF must sign an affidavit to verify that to the best of the agent’s knowledge the Principal is still alive and mentally competent. Provided this affidavit is recorded in conjunction with the documents that are signed by the AIF, a good faith purchaser or Lender will be able to rely on the documents executed by the AIF on behalf of his Principal. If the AIF knows that the Principal is alive, but cannot verify that the Principal is competent, then the AIF no longer has authority to sign documents on his Principal’s behalf.

The Durable Power of Attorney created under F.S. 709.08 addresses those situations where the Principal was clearly competent at the time of the execution of the Power of Attorney, but subsequently may no longer be competent, and where there has never been an adjudication of incompetency. This situation frequently occurs when the Principal is appointed as an Attorney-in-fact for an aging or sick relative or spouse. To create a valid Durable Power of Attorney, words identical to, or similar to, the following must be incorporated into the Durable POA: “This Durable Power of Attorney is not affected by a subsequent incapacity of the principal except as provided in F.S. 709.08, Florida Statutes.” These words express the Principal’s intent that the authority conferred on the Principal is exercisable notwithstanding the principal’s subsequent non-adjudicated incapacity. This statute provides that the Power of Attorney may be used by the AIF as long as the Principal has not been adjudicated as incompetent, and as long as no petition or court proceeding has been filed to determine the competency of the Principal. Under these guidelines, the Durable POA may be used even if the Principal clearly is no longer lucid.

The advantage of the Durable Power of Attorney is clear. In relying on the powers recited in a general or specific POA, the Attorney-in-fact may not execute documents if he has any reason to believe that the Principal is now mentally incompetent. The Durable Power of Attorney statute provides that this incompetency standard is not one that needs to be decided by the Principal. The AIF of a Durable POA must only verify that the Principal is alive, that the Principal is not currently adjudicated as mentally incapacitated, and that no proceeding has been initiated to determine the mental capacity of the Principal. The use of the Durable Power of Attorney has become much more commonplace, especially for those individuals assisting elderly and sick parents and spouses in this world of Alzheimer’s and related illnesses. It is, as always, critical that the person granting the Power of Attorney truly trusts the person to whom the authority is granted.

A general or specific Power of Attorney normally must be executed with the same formalities as the document that is to be signed by the Attorney-in-fact. An exception to this rule applies to homestead property. Any POA involving homestead property must be executed with the formalities of a deed, i.e. two witnesses and a formal notarized acknowledgement. Durable Powers of Attorney, on the other hand, must always be executed with the formalities of a deed.

You should always contact your attorney to prepare the appropriate Power of Attorney for a real estate transaction, and to provide the necessary empowerment language and execution formalities, to ensure that the requested Power of Attorney is properly prepared, executed, and utilized for its intended purposes.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER-Dumping timeshare could mar credit

2011-01-17T09:48:00.000-08:00

Orlando Sentinel, January 17, 2011

Question:
We paid cash for an Orlando timeshare 15 years ago, but we can no longer afford its annual maintenance fees. We’re thinking about refusing to pay any more maintenance fees. We’ve been told the timeshare would revert to the parent company, and we could walk away with just a minor blemish on our credit.

Is this our best option?
I.D., Eagleville, PA

Answer:
A Florida timeshare interest owner is personally liable for all assessments during the course of ownership. The timeshare managing entity, or TME, holds a lien over the timeshare that it can foreclose to secure payment of assessments.

The TME has two forecloser options. The first is a traditional foreclosure lawsuit in which a personal claim against you – for assessments as well as for attorney’s fees and costs – could be made. The second is a non-judicial foreclosure in which the TME’s recovery is limited to only the proceeds of any sale.

The TME should prefer the efficiency of the second option, but both are possibilities. Because personal liability exists, your credit could be seriously affected by non-payment. You should contact the TME to discuss voluntarily selling or exchanging your interest in return for a release of personal liability, or seek help from a Florida attorney.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Using A Power of Attorney

2010-11-30T12:05:00.001-08:00

Winter Park Home, Volume 8 / Issue 4, 2010

Occasionally clients tell me that they cannot be present for a real estate closing, and ask if they can sign their documents in advance. Depending on the circumstances, particularly if the individual is the Seller, the closing agent may be able to accommodate this request and have the documents signed prior to the actual closing date. However, there are other situations where this cannot be done. In some situations, a duly prepared and executed real estate Power of Attorney can be used, whereby a second person is authorized to sign on behalf of the individual who cannot be present. In this column, I address the use of Powers of Attorney solely as they relate to the sale, mortgaging, and leasing of real property.

A Power of Attorney is a written instrument in which one person, known as the “Principal,” delegates his authority to another person, known as the “Attorney-in-fact,” to act as an agent of the Principal to sign documents on behalf of the Principal. This Attorney-in fact may execute only those documents that the Principal has authorized his agent to sign on his behalf. Powers of Attorney, or “POAs”, are recognized by chapter 709 of the Florida Statutes, which prescribes the types of POAs and the rules under which they can be used. POAs can be general or specific in nature.

A general Power of Attorney often includes language reciting the authority of the agent to “sell and convey any and all real property owned by me in the State of Florida.” This is generally recognized as sufficient authority for the Attorney-in-fact to sign a Purchase and Sale Agreement for property owned by the Principal at the time the POA was executed, and also to execute a deed and other documents necessary to transfer the property. The language in a POA must be sufficient to describe the acts which the Attorney-in-fact may undertake on the Principal’s behalf. If, in the above example, the POA only recites the authority to sell all real property owned by me, under Florida law this authority is not sufficient for the Attorney-in-fact to execute the deed to convey the real property. Additionally, in the above example, the authority to “sell and convey any and all real property owned by me in the State of Florida” does not include real property that may be subsequently acquired by the Principal. If the Principal intends to include subsequently acquired property, the POA must include this authority.

A Specific Power of Attorney is more detailed. It identifies the real property that is subject of the transaction, the documents that are to be signed on behalf of the Principal, and typically defines the duration of the POA. An example is a POA in which the Attorney-in-fact is authorized to execute a Mortgage, Promissory Note and other related documents for a loan from ABC Bank that does not exceed a specified amount, and which recites that the documents must be signed by no later than a certain date, after which the POA can no longer be used. Ideally, unless the Principal wants to provide blanket authority to his agent, the parameters of the authority should be limited to the particular transaction.

There are also execution formalities for a Power of Attorney. The general rule is that the POA must be executed with the same formalities as the document that is to be signed by the Attorney-in-fact. For example, a deed requires two witnesses and a formal notarial acknowledgement. A POA authorizing an agent to sign a deed on behalf of the Principal must therefore include two witnesses and the acknowledgment. There are, however, exceptions to this rule. Typically mortgages do not have to include witnesses. Florida law, however, provides that a POA used to mortgage homestead property must be executed with the formalities of a deed, i.e. also include two witnesses. Durable Powers of Attorney, which will be discussed in a subsequent article, must also be executed with the formalities of a deed.

There are preliminary issues to address when relying upon a Power of Attorney. If the POA is to be used for a mortgage, the Lender must first be contacted to determine if the Lender will allow its use. A number of Lenders, in fact, uniformly refuse to permit the use of any Power of Attorney. If a Lender authorizes use of a POA, oftentimes the Lender requires use of its own form of POA. In those cases it must also be determined whether the Lender’s POA is sufficient for the contemplated transaction. Lender’s forms are sometimes inconsistent with Florida law, and need to be modified, before a closing agent can rely on its use.

Another question to ask is why the parties want to use a POA. Although there are many good reasons why a person cannot be present at a closing (e.g. out of the country on military duty), a Power of Attorney should never be relied upon solely for the Principal’s convenience. The closing agent should determine the reason why the seller, purchaser, or mortgagor cannot be present for the closing.

Additionally, in today’s marketplace, there is an underlying concern whether the Principal is in fact who he says he is. There are numerous examples of “Sellers” or “Mortgagors” providing POAs – only to later learn that the POA is fraudulent. Even if it is determined that the Seller or Mortgagor is who he says he is, the better practice, which our office always follows, is to also obtain a copy of the Principal’s driver’s license or passport to support the fact that the Principal did in fact sign the POA.

Any individual wishing to create a Power of Attorney should always consult with his attorney to determine the appropriate scope of any grant, and that it is prepared with the appropriate formalities.

In my next column, I will describe the use of a Durable Power of Attorney, and the proper execution of documents by the Attorney-in-fact.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER-Brothers at odds over inherited home

2010-09-20T09:51:00.000-07:00

Orlando Sentinel, September 20, 2010

Question:
My brother and I inherited my mother’s house, and our names are on the deed. I want to move in and live rent-free, but my brother and his son say I should pay rent. Since I am half-owner, does my brother have any legal way to prevent me from moving in?
G.M.
Orlando

Answer:
You each own the house equally as tenants in common, with an equal right to occupy the property. If you and your brother disagree as to the use and possession of the house, and you don’t want to sell the property, your brother has the right to file a partition action with the court to sell the property. As part of that suit he could seek an injunction preventing you from moving into the property.

In any case, as tenant in common you have no legal obligation under Florida law to pay rent to your brother. The only exceptions would be if you are also collecting rent payments, or if you are otherwise adversely preventing your brother from occupying and using the property.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

The Right of Possession

2010-08-30T11:08:00.000-07:00

Winter Park Home, Volume 8 / Issue 3, 2010

There are three principal ways in which individuals acquire ownership in real property–as tenants by the entireties, as joint tenants with rights of survivorship, or as tenants in common.

Tenants by the entireties is limited to ownership by a husband and wife, and provides for an equal right of possession, and for automatic transfer of all interest in the property to the surviving spouse upon the death of the other spouse. Judgments against one spouse do not attach to property owned as tenants by the entireties. Also, neither spouse under a tenancy by the entireties can convey the property without the joinder (formal agreement) of the other spouse. A husband and wife can acquire property as tenants in common–but the vesting deed must include and document this contrary intention. Due to the insulation offered from judgment creditors, as well as the survivorship feature, acquiring property as tenants by the entirety is almost always the recommend form of ownership for a married couple. If divorced, their interest automatically transfers to a tenancy in common.

Joint Tenants with rights of survivorship–To acquire property as joint tenants, the vesting deed must recite their ownership as “joint tenants with full rights of survivorship.” Each joint tenant has an equal ownership interest in the property, and an equal right to occupy and use the property. Each joint tenant may also subsequently convey his/her individual interest to a third party. Provided no action has been taken to terminate the joint tenancy, when one owner dies his/her ownership interest automatically transfers to the other owner, and no probate is required for the deceased’s estate. For example, if John and Jake purchase property as joint tenants with full right of survivorship, and Jake dies, John takes the whole. However, if Jake previously conveyed his interest to Mary, the joint tenancy is severed, and John and Mary own the property as tenants in common. If John and Mary now wish to create a joint tenancy between themselves, a new properly executed deed from John and Mary to themselves, with the recitation “as joint tenants with full rights of survivorship,” must be recorded in the public records.

Tenants in common is the most widely used form of individuals’ concurrent ownership of real property. Whenever two or more individuals (other than husband and wife) purchase real property, and no contrary intention is stated, each acquires an equal ownership interest in the property as tenants in common, with equal rights to occupy and use the property. Typically these individuals are related, or may be friendly business associates. When one of the tenants dies, his/her estate must be probated to determine the owners of the deceased’s interest in the real property - i.e. there is no survivorship feature.

Problems may arise when one of the joint tenants or tenants in common moves out and wants to sell the property, and the other does not. Although each tenant/owner legally may separately convey his or her interest in the real property to another person, there are certain practical considerations. First, of course, the selling owner must find someone who is willing to own the property with the other tenant(s) in common. Second, even if the selling owner finds someone who wants to purchase his interest, they must address whether there are any mortgages on the property that contain a due on transfer clause. This provides that the lender must approve a transfer of any interest in the real property. Without that approval, the lender may declare the mortgage in default, and the property may be foreclosed.

The following example illustrates the due on transfer application. John and Jake currently have a mortgage on their house. The mortgage contains a due on transfer clause. If Jake were to convey his interest to his sister Mary without first obtaining the lender’s consent, the lender has the legal right to immediately foreclose on the house. The lender’s consent to the transfer, of course, would not by itself release Jake from his continuing obligations under the promissory note and the mortgage.

What are the rights of the tenants in common when one owner resides on the property, and the other owner lives elsewhere? For example, Peter and Steve, two college fraternity brothers, bought a home in Winter Park ten years ago. Peter continues to work locally and lives in the house by himself, while Steve recently moved out of the house to take a job in Miami. Due to the downturn in the market, neither wants to sell the house at this time, and Peter does not want to buy out Steve’s interest in the house. Is Peter obligated to pay Steve rent for his half interest in the property? Florida law clearly says no, provided Peter isn’t adversely preventing Steve from occupying the home, and Peter is not collecting rent payments on the property.

What recourse, does any out of possession tenant have if he wants the property to be sold, and the co-tenant refuses? Generally, a tenant in common has the absolute right to bring a court action to partition the property and sell it for its fair market value. The owners would then split the proceeds, after all costs and credits, if any, have been applied. In this example, Steve may choose to wait until the market values improve and, if Peter then refuses to sell, bring a partition action in the Orange County Circuit Court.

Any decision to purchase real property with another individual should be carefully considered by each of the parties, together with a determination of the best form of ownership. Each purchaser should consult with his/her attorney to determine whether the form of tenancy is consistent with each of their individual goals.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Don’t Pay Twice for Remodeling Jobs

2010-06-01T10:09:00.000-07:00

Winter Park Home, Volume 8/ Issue 2, 2010

Clients frequently ask how they can protect themselves when they enter contracts for home improvements projects. The question often arises after they’ve seen a news story or heard from neighbors who have already become victims of situations in which property owners have had to pay material suppliers after the owner has already paid the contractor the full contract price for the completed project, including the cost of materials. They, in effect, have had to pay for the materials twice. When appropriate, I typically advise these clients that they should be protected if they file a Notice of Commencement and follow the guidelines provided by Chapter 713 of the Florida statutes, commonly referred to as the construction lien law.

Here is an example. Michael Jones hires Joe Roofer to put a new roof on his home. Joe is well established in the community, obtains a building permit, and has Mr. Jones execute a Notice of Commencement. The Notice of Commencement is then recorded in the public records, and a certified copy of the Notice is posted on the property. The job is completed three weeks later. No one has provided a written notice to Mr. Jones that they are supplying materials or work for the project. Joe Roofer signs a contractor’s final payment affidavit, together with an executed waiver and release of lien, reciting that everyone has been paid in full. Under these circumstances, Mr. Jones will not have to worry about paying any material supplier or subcontractor a second time. Florida law will protect the owner from paying more than the agreed upon contract price.

Now, consider a second scenario in which the facts are identical to the first example, EXCEPT this time Supply LLC provides a written notice to Mr. Jones (Notice to Owner) that it is supplying shingles for the new roof. Under these circumstances, when the work has been completed, Mr. Jones has an additional responsibility. In addition to obtaining the roofing contractor’s final payment affidavit, waiver and release of lien, the owner must ALSO obtain an executed waiver and release of lien from Supply LLC.

Florida’s construction lien law provides that, once a property owner has received a Notice to Owner pursuant to a recorded Notice of Commencement, that property owner has an affirmative obligation to confirm that the party giving the notice has been paid in full. In our example, if Mr. Jones fails to obtain this proof of payment from Supply LLC and pays the balance of the contract price to Joe Roofer, Mr. Jones will assume the risk of paying for the shingles a second time, if Supply LLC has not been paid. This is true even if Joe Roofer provides a final payment affidavit, waiver and release of lien, stating that everyone has been paid in full.

If Supply LLC did NOT provide Mr. Jones with a Notice to Owner pursuant to the recorded Notice of Commencement, the company effectively waived its rights to sue Mr. Jones for the cost of the shingles, in the event that Joe Roofer fails to pay for them.

Florida construction lien law is designed to protect the property owner, while also defining the rights and duties of contractors, subcontractors, material suppliers, and laborers. To obtain the benefits of a recorded Notice of Commencement, the cost of the improvements must first exceed a $2,500 threshold. In addition, the property owner, and any potential lienors providing a Notice to Owner, must use the forms provided by the Florida statutes for the Notice of Commencement, the Notice to Owner, the contractor’s final payment affidavit, the waiver and release of lien.

Once the Notice of Commencement has been recorded, a certified copy must be posted on the property. That certified copy must include the name of the property owner and the general contractor, along with their contact information. If a Notice of Commencement is not filed, then the property owner cannot rely on the statutory authority provided by the construction lien law. The recording and posting of the Notice of Commencement triggers the obligation of subcontractors and material suppliers to provide a formal Notice to Owner to protect their lien rights. If they fail to provide that notice, they will effectively waive their rights to sue the owner upon completion of the project.

If a Notice of Commencement is not recorded, the owner is not legally authorized to rely on the contractor’s final affidavit and lien waiver, creating a situation in which there may be hidden parties who subsequently sue to collect for their contributions to the project. There would be no sense of finality.

With a properly filed Notice of Commencement, once the improvements have been completed the owner must follow one of two procedures. First, if there are no Notices to Owner, he may rely on the contractor’s final payment affidavit and the executed waiver and release of lien. Second, if there are Notices to Owner, in addition to obtaining the final contractor’s affidavit and lien waiver, the owner must also obtain a written release and lien waiver from each party that has provided a Notice to Owner. As long as the owner complies with these guidelines (assuming that the owner does not have knowledge that any of the information provided is fraudulent), the property owner will not run the risk of paying a subcontractor or materials supplier a second time.

Construction lien law is complex, and this article is not intended to provide a complete analysis of the provisions of the Notice to Owner and its application. This article is designed to provide a basic understanding of the purpose of recording a Notice of Commencement, and the use of the statutory Notice to Owner. Property owners should consult with their real estate attorneys before undertaking a substantive home improvement project to review the home improvement contract and assist in the preparation and/or review of the Notice of Commencement and all construction lien law related documents.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER-Can 1st Owner Reclaim Adopted Pet?

2010-05-03T10:41:00.000-07:00

Orlando Sentinel, May 3rd, 2010

Question:
Several months ago my family adopted a dog from a reputable animal-rescue group that got the dog from a county pound.

We love the dog and already consider him part of our family, but we also realize the dog’s original owner may be looking for him and could track him down. If that happens, would the original owner have a legal claim?
C.R.
Casselberry

Answer:
Pets, although our beloved companions, are considered personal property under Florida law. A “true” owner generally has rights to “lost” property superior to those of a “finder,” and may therefore potentially assert ownership of an adopted pet.

Although there appears to be no published Florida precedent resolving this particular issue, a Vermont court has considered other factors (such as the adopter’s efforts to locate the true owner, and how long the adopter has cared for the pet) in allowing the adopter to keep the adopted pet.

Although not binding in Florida, the Vermont case may be persuasive authority in your favor. Additionally, local ordinances may authorize animal-control agencies to make pets available for adoption, if the agency’s efforts to find the true owner are unsuccessful. Local pet-adoption ordinances (and how long you have had your adopted pet) may therefore potentially help defeat an original owner’s claim.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Integrated Project Delivery: Changing the Insurance Landscape

2010-03-28T06:49:00.000-07:00

Architects/Engineers Professional Network

With more project owners demanding the use of Building Information Modeling (BIM), project delivery is necessarily carried out through greater contributions of design input by the general contractor and the major trade subcontractors. The design professionals are no longer the sole authors of the project design. This collaborative project delivery method has been called integrated project delivery (IPD). The contribution of design input from each of the various project players using IPD is a significant break from the traditional division of responsibility recognized in the standard design-bid-build project delivery method. Players who never participated in the project design now face potential risk of professional liability. Additionally, the new, cutting-edge technologies being used for BIM expand the types of risks born by the design professional if there are errors and omissions within the computer modeling system or the improper management of the computerized data.

What is BIM?
BIM involves computerized design software tools that help create a model that reflects all of the building components' geometric and functional qualities. The general contractor and trade subcontractors provide product-specific information for building components and that data is inputted into the model, including performance specifications, connection details and cost data. However, the model is more than a mere representation of the design in a three-dimensional computer graphic. Embedded within the design programs are rules that define each of the components' relation to the other components. The model is dynamic. If there is a change to one component, then the computer program would automatically and immediately revise the design to accommodate the ripple effect caused by the change. During the pre-construction phase, the project team can input different design options to facilitate value engineering and budgetary decisions, material estimation, and even long-term maintenance costs of the facility. In theory, assuming that the information provided by the various project players is accurate and the rules embedded in the model are correct, BIM should reduce errors and omissions, resulting in an aggregate reduction in professional liability and errors & omissions claims. Additionally, it should reduce the demand for change orders during the project, as the design should have fewer ambiguities and inconsistencies. Yet, if the assumptions embedded in the computerized model prove false, then the result would be a costly problem that all concerned should hope is covered by insurance.

Increasing Industry Acceptance:
IPD using BIM technology is becoming more prevalent with many predicting that it will become standard. In 2003, the U.S. General Services Administration's (GSA) Public Building Service set a goal to require BIM on FY06 projects and beyond in support of improving design quality and construction delivery. One reason for the use of BIM was a lack of GSA staffing to review design documents and to ensure conformance to building standards. Additionally, GSA was concerned with anticipated sustainability goals for federal buildings with respect to energy efficiency and long-term maintenance costs. GSA sought to rely upon the new BIM software tools to provide solutions to these problems. Since that time, GSA has employed BIM successfully on numerous projects. The GSA is not the only project owner to use IPD using BIM technology. General Motors has constructed at least six projects using this delivery method. Also, the United States Coast Guard and the United States Army Corp or Engineers has implemented BIM software in its recent projects. The expected industry trend is that this delivery method will not be reserved only for complex projects, but rather will start being used for simpler projects on a wider scale.

Evolving Contractual Relationships:
The construction industry is only beginning to catch up with the contractual liability issues that arise from the non-traditional roles played by the various project participants. For example, there has been the 2008 release of the ConsensusDOCS 300 Series for use on IPD projects using BIM technology. Also, the American Institute of Architects (AIA) has developed IPD Agreements AIA C196-2008 Standard Form of Agreement between Single Purpose Entity and Owner for Integrated Project Delivery and AIA C197-2008 Standard Form of Agreement between Single Purpose Entity and Non-Owner Member for Integrated Project Delivery. The AIA contractual agreements incorporate a separate Exhibit (AIA Document E202 – 2008) that might also be used with their other, more traditional contract documents on IPD projects using BIM technologies. The new AIA documents allow the parties to define the standard of care for BIM, as such would be difficult to define given the short history of this technology. They also attempt to allocate responsibility for managing the computer model, e.g. data storage, transferring model files, granting and withholding access to model files, validating completeness and usability of files, among other things. Also, the Exhibit provides a chart listing standard building components that is to be filled out by identifying who will author each listed element of the model design. These contractual means of defining the standard of care and allocating responsibility may impact a design professionals' liability for professional negligence.

Professional Liability Concerns for General Contractors and Trade Subcontractors:
The collaboration of general contractors and trade subcontractors in the design on IPD projects may result in liability exposure arising from errors in each parties' contribution that result in defects in the project design. Accordingly, these parties must approach the IPD similarly to a design-build project and obtain professional liability coverage and errors & omissions insurance. Moreover, the general contractor must recognize that it would face contractual liability to the owner for the errors contributed solely by its subcontractors – errors which could be very difficult to detect by the general contractor. Thus, the general contractor would be well advised to demand in its subcontracts that those subcontractors who contribute to the project design obtain coverage. Yet, the specific type of coverage that expressly contemplates the allocation of responsibility and risk inherent in IPD may not yet be on the market.

Expanded Liability Concerns for Design Professionals:
The consensus seems to be that IPD using BIM technology will result in an overall reduction in design errors. Yet, to the technophobe, an over-reliance on computer models with decreasing human over-sight could also spell disaster. What responsibility should the design professional have for errors in the data inputted by the various parties? What if there are errors in the rules embedded in the model or the internal mechanisms for transferring data or any other number of possible computer glitches? The contract with the company creating the modeling software likely limits liability for such errors to an amount far less than the damage that could be created by the error. The design professional must consider insuring that gap. To address these questions and issues, the design professional should discuss the potential IPD exposures with their broker and to what extent they are insured for same.

IPD not only requires additional contributions to design from the contractor, but may also involve greater involvement by the design professionals on the construction side. Design professionals may find themselves more active in the development in the means and methods of construction given the overall integrated approach on these types of projects. "Means and methods" are often excluded in professional liability policies. This raises the question of whether the design professional should purchase general liability insurance to cover damages resulting from negligent construction practices.

Conclusion:
IPD using BIM technology is changing the relationships between the various players on such construction projects. As a result, the standard construction contracts and their allocation of responsibility and risk may no longer be equitable or reflect reality. Accordingly, before participating in this type of project, all parties should consult with their attorney to review their contracts to address these issues. In addition to the need for revised construction contracts for these types of projects, all parties are strongly advised to meet with their insurance brokers and discuss the new risks arising from this project delivery method.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Let the Preparer Beware

2010-03-01T10:08:00.000-08:00

Winter Park Home, Volume 8/ Issue 1, 2010

Legal document forms that are widely available on line, at office supply stores, and other similar sources may seem like a great money-saving option, but they can create serious problems when improperly prepared or used incorrectly. When clients call asking if they can prepare a deed, contract, or other real estate document, using one or more of these legal forms, I always caution them regarding the pitfalls. While simply filling in the blanks of these documents may appear self-evident and easy to do, there is no guarantee that individuals will prepare them correctly, execute them properly, or select the appropriate document for their particular purpose.
Let’s take a look at some of the problems that can result when deed are prepared by individuals other than a qualified real property attorney. The do-it-yourself results often create situations in which significantly more money may need to be spent later to fix a problem that could have been avoided by initially retaining a qualified real estate attorney to prepare the document correctly the first time.

David Jones, for example, agreed to sell property to his friends, Pete and Bessy Smith. To avoid costs, the parties agreed that Mr. Jones would prepare the deed and coordinate the execution and recording of the deed. The deed was properly notarized, but there was only one witness on the deed. Ten months after the deed was recorded a $50,000.00 federal tax lien was recorded in the public records against Mr. Jones. Two months later Mr. and Mrs. Smith decided they wanted to obtain a mortgage on the property, and were told by the title underwriter who would be insuring the mortgage that they (or Mr. Jones, who has left town) would first have to pay off this tax lien.

Mr. Smith called me for advice. I had to advise him that Florida law requires two witnesses for each grantor on a deed for it to be legally valid and enforceable. The federal tax lien against Mr. Jones, although recorded 10 months after the recording of the deed, does in fact attach to the Smith property. I further explain that, due to the lack of two witnesses on the deed, under Florida law this deed did not effectively transfer the property to the Smiths, which means Mr. Jones still retains an interest in the property. That property interest can be attached by federal tax liens and other judgment creditors of Mr. Jones.

If the deed had been recorded for more than five (5) years, and no liens had been filed against Mr. Jones during that time period, the lack of sufficient witnesses would be resolved by a curative Florida statute. However, for the first five years, any defect in the deed caused by lack of sufficient witnesses would prevent the buyer from having clear title to the property.

Consider the case of John Johnson. John owns a home. He and his wife, Mary, reside on the property. John wants to avoid probating his home after his death, and also wants to provide for his wife and two of his four adult children. John, as sole owner and grantor, conveys the property to himself, his wife, and his two children, all as joint tenants with rights of survivorship. Mary dies first and John’s death occurs later. The two children, as survivors under the joint tenancy provisions of the deed, sign a contract to sell the property. Under the terms of the contract, the Sellers obtain a title search of the property. The title commitment reflects that the property is now owned by the heirs of John Johnson – and not by the two children under the survivorship terms of the deed. The title commitment further provides that John’s estate must be probated to determine the current owners of the property. What went wrong? Homestead! Florida law provides that a husband can convey solely owned homestead property to himself and his wife. A transfer of any interest in homestead property to anyone other than the spouse is subject to the joinder requirement. In other words, since John’s wife didn’t execute the deed, the transfer to the two children is void, defeating the intent of the grantor.

Legal description errors often occur in home-made deeds. The test of the sufficiency of a legal description is whether a surveyor, by applying rules of surveying, can locate the property based solely on the legal description set forth in the deed. Let’s assume, for example, there are 10 Blocks in a subdivision, and that there is a Lot 5 in each of these Blocks. A grantor who owns Lot 5 of Block 1 mistakenly conveys Lot 5 in Block 9. This conveyance is obviously defective on its face. Often, the Grantor (or even the Grantee) will attempt to correct the legal description by re-recording the deed, after first striking through the defective portion of the legal description (Block 9), and inserting the correct legal description (Block 1). This “corrective deed” is not valid, since the deed, to be effective under Florida law, would have to be re-signed by the Grantor, re-witnessed, and re-notarized. In addition, the correction would have to be initialed.

Once a document has been recorded, the legal description cannot be unilaterally changed and re-recorded, unless it is re-executed with the above formalities. Alternatively, a new deed is needed. Otherwise, a quiet title action may be necessary to determine the ownership of the property. A new deed, prepared by an experienced real estate practitioner, would have avoided the effort and expense in curing this problem at a later date.

These are only a few examples of the many problems that can be created by a person who is not fully versed in Florida real estate law. In each of these examples, the Grantor would have saved considerable time and money if he had consulted with an experienced real estate attorney who understood the ramifications of Florida law in the preparation and execution of deeds.
Deeds and contracts are technical legal documents. They need to be accurately prepared, properly executed, witnessed, and notarized. Although non-professionals are not required by law to retain an experienced real estate attorney when preparing documents for their own personal use, these same individuals need to be aware that problems could result by incorrectly preparing or executing a document. Let the preparer beware!

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ASK A LAWYER-Reader's Protection Homestead is Safe

2009-12-28T11:04:00.000-08:00

Orlando Sentinel, December 28, 2009

Question:
My wife and I have a second home that we rent out, but owning two homes is proving to be too much for us financially. If we default on the mortgage for the second home, and the lender obtains a deficiency judgment against us, can the lender collect the judgment by foreclosing upon our primary residence?

R.C.
Orlando

Answer:
If the lender on the second home obtains a deficiency judgment against you, the lender cannot collect upon that judgment by foreclosing or otherwise forcing a sale of your primary residence if that residence is your protected homestead property.

In Florida, protected homestead property is the property upon which a Florida resident's primary residence is located. It does not matter how much the property is worth, but there is a size limitation. Protected homestead property is limited in size to a half acre if it is located within city limits and 160 acres if it is located in an unincorporated area.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Bidding at the Courthouse Steps

2009-12-01T09:54:00.000-08:00

Winter Park Home, Volume 7/ Issue 4, 2009

Due to the number of active foreclosures in today’s marketplace, I frequently receive calls from individuals looking to get a “deal” at the courthouse steps. The callers are asking for advice on how to determine the various pitfalls that can occur when bidding for a property.

I always recommend that the client have our office obtain a complete title search on the property to confirm that there are no problems in the back chain of title, and to provide a review of the foreclosure file. I determine whether all necessary parties to the suit have been named and properly served, and whether there are any superior mortgages or liens that would not be eliminated by the foreclosure. In addition, I also explain that being the successful bidder at a foreclosure sale does not guarantee the bidder has clear title to the property. For that reason, I always recommend that the client obtain a title insurance policy to ensure that he or she is acquiring title to the property free of any significant issues.

The bidder first needs to be certain that there are no issues that predate the recording of the mortgage that is being foreclosed. For example: In 1980, John X and Mary Y purchased property as joint tenants with right of survivorship. Mary Y sold the property to Phil Byer in 1994, and signed an affidavit that John X died in a motorcycle accident in California, without producing an actual death certificate. Phil Byer then executes a mortgage in favor of a Lender. In 2009, the Lender forecloses on the mortgage, and Jack Jones is the successful bidder at the foreclosure sale. Every interest subsequent to the recording of the original mortgage is properly foreclosed. Jack Jones goes to sell the property, and then John X shows up and declares that he is the rightful owner of a one-half interest in the property. Obviously if Jack Jones had obtained title insurance when he bought the property, he would have recourse under his title insurance policy. Now, it is too late - Jack will have to deal with the fact that he only owns a half interest in the property.

There are many examples of defective foreclosures, the consequences of which could have been avoided if the prospective bidder had obtained the necessary title work and foreclosure analysis in advance. Even if the foreclosure is done correctly, there may also be hidden expenses that a bidder at a foreclosure sale can incur. For example, real property taxes are never eliminated by foreclosure. And many city and county code enforcement liens have the same rights of priority as property tax liens, and are not eliminated by foreclosure.

A prospective bidder also needs to be aware of the rights of homeowners associations (HOAs) and condominium owners associations (COAs) in relation to platted land and condominium developed land. The consequences of not knowing the status of outstanding association dues, which may not be apparent from a review of the foreclosure file or from the title search, can be financially significant.

A purchaser of a lot in a platted subdivision in which there is an HOA is liable for all prior unpaid assessments up to the time of purchase, unless paid for by the seller. If Jack Jones in the example above is the successful bidder and the prior owner has not paid dues for the last five (5) years, then Jack Jones will be automatically responsible for all outstanding HOA dues. This is true even if the Lender named the HOA in the foreclosure action. If the amount of outstanding dues is significant, Jack might be better off not bidding at the sale. He could then attempt to purchase the property from the Lender, who under a standard purchase contract would pay all outstanding dues up to the time of closing.

There is one scenario in which Florida law does limit the amount that the association may recover in a foreclosure action. This occurs only if the foreclosing Lender holds a first mortgage, the Lender joins the HOA in the foreclosure action, and the Lender purchases the property at the foreclosure sale. In this one scenario only, the maximum amount of HOA dues that will be owed is the lesser of one percent of the original mortgage debt, OR the amount of the HOA dues that became due and are outstanding 12 months prior to the issuance of the Certificate of Title. Only the first mortgage holder gets the benefit of this reduction– any other purchaser at the foreclosure sale will be responsible for paying all outstanding HOA dues.

The condominium statutes are similar to the HOA provisions, except that the first mortgage holder/bidder that names the association will be responsible for the lesser of 6 months of outstanding dues obligations prior to the issuance of the Certificate of Title (vs. 12 months for the HOA), or one percent of the original mortgage debt.

In addition to the pitfalls listed in this article, there are numerous other traps which could surprise the unprepared bidder at a foreclosure sale. Prospective bidders at a foreclosure sale should always consult with an attorney to obtain a title insurance commitment and an analysis of the foreclosure action before completing a “purchase” of real property at the courthouse steps.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER - Tenant Died, So Who Gets Security Deposit?

2009-08-24T07:49:00.000-07:00

Orlando Sentinel, August 24, 2009

Question:
I own a mobile home in Florida and rent it for $435 per month, with a $500 security deposit. My latest tenant passed away before the 1-year lease expired.

Do I remit the security deposit to the tenant’s rental broker, his family, or do I wait for instructions from the probate court? And if I am unable to re-let this unit before the next month’s rent is due, can I deduct one month’s rent from the security deposit?
D.H.
Clermont

Answer:
Presuming there are no provisions in your lease that specifically address these issues, you should notify and deal only with the duly appointed personal representative of the tenant’s estate.

Before you make any claim for the deposit, you will need to give the personal representative notice of your intent to make a claim against the deposit in accordance with the applicable landlord-tenant statute. Additionally you will have to file a timely statement of claim in the estate, notifying the personal representative of what you contend you are owed.

There are rather short deadlines for filing a claim in an estate, so you should not delay. A probate attorney can assist you with this process.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

SURPRISE! A Hidden Federal Lien

2009-08-01T09:25:00.000-07:00

Winter Park Home, Volume 7 / Issue 3, 2009

There is a significant hidden federal tax lien that may attach to real property conveyed by a foreign Seller. It may not turn up in a search of the public records and, ultimately, impose an obligation on the Buyer to pay a portion of the Seller’s income tax obligation.

Congress passed the Foreign Investment in Real Property Tax Act (“FIRPTA”) in 1980. This law was enacted to enable the federal government to prevent foreign sellers from escaping the income taxes on transfers of real property situated in the United States. Foreign nationals were routinely collecting proceeds from a sale, and not reporting the income/profit generated by the sale of that property. Under FIRPTA, the Seller is obligated to pay 10% of the gross sales price to the Internal Revenue Service, unless the Seller can provide proof that either no taxes or a lesser amount is owed on the transfer. The Act further provides that if the 10% is not paid, or otherwise satisfactorily addressed by the seller, a lien for 10% of the sales price automatically attaches to the real property. As a result, a Buyer could be obligated to pay the IRS 10% of the gross sales price of the property.

Consider the following example. Patrick Irish, a citizen of Ireland, owns real property in Florida. Mr. Irish and Joe Buyer enter into a Purchase and Sale Agreement for a purchase price of $1,000,000. Mr. Buyer obtains a title search on the property, and determines that there are no recorded liens against the Seller. In an attempt to save closing costs, Mr. Irish and Mr. Buyer dispense with obtaining a title insurance policy, and independently prepare the Warranty Deed and conduct a closing without the services of legal counsel or a title insurance underwriter.

The format and execution of the deed conform with Florida law. The deed is recorded, and all documentary stamps and real estate property taxes are paid. Six months later, Joe Buyer receives a letter from the Internal Revenue Service assessing him $100,000 for the transfer from the Seller. Mr. Buyer of course now seeks legal counsel and asks “What is this letter about?” Due to FIRPTA, Mr. Buyer learns that he may now have to pay the IRS $100,000.

In a typical real estate closing, the Seller signs an Owner’s Affidavit that establishes, among other things, whether or not the Seller is a foreign individual as defined under FIRPTA. When the Seller is a foreign individual (which includes foreign corporations and other legal entities), it is standard practice for the closing agent to complete and submit the relevant FIRPTA forms, along with 10% of the gross sales price, to the IRS’ FIRPTA Unit–all within 20 days of closing.

The 10% tax must be submitted even if the settlement statement reflects that the Seller did not receive any money from the closing. If there are insufficient funds, the Seller must come “out of pocket” to pay this 10% obligation, or the closing cannot be completed. The Seller may reduce or eliminate that payment obligation by timely filing a withholding certificate with the IRS, which establishes that no taxes, or a reduced amount of taxes, are owed. Of course, none of this was done by Mr. Irish and, as a result, Joe now owes the IRS $100,000, or must otherwise justify to the IRS why that money is not owed. Joe can seek reimbursement from the Seller. Unfortunately, the outcome of that request is very predictable.

There currently exists one exemption under FIRPTA pertaining to the payment of this 10% obligation by the foreign Seller. This exemption applies when the gross sales price is under $300,000; the property is residential in use; and, the Buyer signs an affidavit stating that he (and his relatives) will live on the premises more than half of the number of days that the property is occupied by anyone for residential purposes during each of the two years following the purchase. Periods of time when the property is vacant are excluded from this calculation. In other words, you can’t rent or “loan” the property to non-family members for more than half the time the property is occupied during a given year.

Sometimes these affidavits are executed in a spirit of cooperation with the Seller, without the underlying requisite intent to reside on the property for the stated time periods. If the affidavit is proven to be fraudulent, the tax obligation will attach to the real property, together with any penalties for fraud. The Buyer will then be obligated to pay taxes he or she may not otherwise have been obligated to pay if he or she had not signed the affidavit. If there is any question as to the validity of the statements in this Buyer’s affidavit, the Buyer clearly should not execute the document.

In addition to the typical arms-length sale of property by a foreign Seller, there are other events which may trigger the application of this FIRPTA obligation.

For example, a foreign corporation may decide to distribute real property to one of its shareholders. Technically, no money is paid. However, the IRS may treat this as a taxable transfer. If 10% of the gross property value is not paid to the FIRPTA unit, the shareholder/transferee may not only be obligated to pay the transfer tax for the property conveyed from the corporation, but that same shareholder (if a foreign citizen) may also have to pay taxes a second time, when selling the property at a later date.

Whenever real property is being transferred to you by a foreign individual or entity, it’s wise to protect your financial interests by consulting with an attorney or CPA before proceeding with the conveyance. You should ascertain through legal counsel that the FIRPTA rules have been satisfied and that this potential hidden lien will not attach to the property being purchased.

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AS A LONGTIME SUBSCRIBER, WHAT DO YOU GET OUT OF READING OBJ?

2009-06-26T06:39:00.000-07:00

Orlando Business Journal - June 26-July 2, 2009

"I get plugged into what matters most - it's all about our community. Nearly every OBJ article will bring to mind a friend, a client, a family member or a business associate. These are the folks who matter most to us, and the OBJ is where we find out about the things that affect them the most."

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

FENCE ENCROACHMENTS

2009-05-01T08:16:00.000-07:00

Winter Park Home, Volume 7/Issue 2, 2009

John J. owns a lot in a platted subdivision, and called me concerning his neighbor’s recently constructed fence. The fence encroaches the length of the Easterly side of John’s property by approximately one foot. He overheard his neighbor joking to some friends that he would eventually own this strip by adverse possession. John asked me if his neighbor was right – that he would lose ownership of this one-foot strip of land over time if he did not take any affirmative steps to challenge his neighbor.

I first asked whether he or any of his predecessors in title ever gave his neighbor permission, either verbally or in writing, to build a fence on his property. John gave me a copy of his title insurance policy which confirmed, as of the date he purchased his property, that there were no recorded grants of easements in favor of his neighbor. He also confirmed that he has never given his neighbor permission to construct a fence on any portion of his land. I then explained that Florida law requires any transfer of an interest in real property, including a grant of an easement to construct a fence, be in writing and recorded in the public records in order to be enforceable. Additionally I explained that even if he gave verbal permission to his neighbor, that permission could be subsequently withdrawn.

He will not lose his property to his neighbor by adverse possession. Adverse possession claims fall into two categories – those “under color of title,” and those “without color of title.” In each category the person claiming adverse possession must physically occupy the property, to the exclusion of all others, for a minimum period of seven years. This possession must be open and notorious, without the consent of the record title owner. The adverse possessor will typically construct a wall or fence to establish the boundaries.

“Color of title” means that the adverse party bases his/her claim upon a recorded document in the claimant’s chain of title. A title search of John’s property revealed that there are no recorded instruments to support a claim under this category. The second option – “without color of title” – does not require proof of interest based upon a recorded document, but does include additional requirements, including proof that the “adverse claimant” has paid taxes on the property for seven consecutive years. The claimant must file a return with the Property Appraiser within one year of taking possession, and pay taxes on the land for seven consecutive years. Since the property appraiser’s records reflect that John is the only person paying taxes on his land, there is no valid basis for his neighbor to claim adverse possession “without color of title” over a portion of John’s property.

John then asked whether his neighbor could establish an easement right to use this same strip of land. The answer is a qualified yes, and only over a twenty year period - his neighbor would also have to judicially establish that his possession is actual, continuous, and uninterrupted for twenty consecutive years, and that possession is without the owner’s express or implied permission. The right to use the land must also be exercised under some claim of right, inconsistent with the rights of the owner.

Florida courts have consistently ruled in favor of the fee property owner and rarely in favor of the claimant in these matters, and have held that the use of another’s land is presumed to be with the owner’s permission. The burden of proof is on the claimant to prove that such use or possession is adverse to the owner. The owner does not have to show that the claimant’s use was permissive. The claimant is given the burden of presenting competent evidence to rebut the presumption of permissive use.

I advised John that he has the right to ask his neighbor to move the fence to the property line, and that if his neighbor refuses he can move the fence himself (since it is on his property). John admits he is happy with the quality of the fence, has a good rapport with his neighbor, and only wanted to know his legal rights. He also told me that he will tell his neighbor that for now he is OK with the location of the fence, and that he will ask that it be moved back to the property line the next time it needs to be repaired or replaced. John also assured me that if his neighbor does not comply with his directions that he will contact me again to address the matter more formally.

As true as the expression “good fences make good neighbors” may be, fence encroachments can create significant friction between neighbors. Relocation of an encroaching fence, or a properly drawn fence line agreement can settle issues that may otherwise be unresolved for many years. In these situations, each neighbor should retain their own legal counsel to address the issues and available solutions.

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ASK A LAWYER - Where There's A Will, Here There's A Won't

2009-04-20T10:19:00.000-07:00

Orlando Sentinel, April 20, 2009

Question:
My mother, who was living in New York, passed away about two years ago. She made my sister executor of her will.

My sister has refused to share the contents of the will with my brother and me, and we don’t know what lawyer prepared it. What can we do to obtain a copy of my mother’s will?

D.C.
Orlando

Answer:
Each state has its own laws regarding wills, which means you will need to contact a New York lawyer for more advice.

However, if this were a Florida resident’s will, the person possessing the original will has a legal obligation to deposit it with the local clerk of court within 10 days of learning that the maker of the will has died. The will is then a public record that can be viewed by any interested party.

If a person holding a Florida will refuses, or otherwise fails to file the will with the appropriate clerk of court, you can file a petition with the probate court to compel the filing of the will. The person who refused to file the will may be forced to pay the petitioner’s attorney’s fees and costs if the court finds “no just or reasonable cause” to excuse that person’s failure to deposit the will.

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Local Owner Speaks Out

2009-04-10T05:55:00.000-07:00

Orlando Business Journal, April 10, 2009

Local owner speaks out on whether his business will benefit from Obama's stimulus plan:

"Ultimately, the stimulus package should filter down to Main Street and create activity so the legal business as a whole benefits. I don't think we have seen the increase happen yet, but it appears we're heading in the right direction"

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

SHORT SALES

2009-02-23T07:44:00.000-08:00

Winter Park Home, Volume 7 / Issue 1, 2009

Short sales reflect the current downturn in real estate valuations - they are real estate closings in which there are insufficient sales proceeds to pay off the outstanding liens and closing costs of the seller. They typically occur because the outstanding balance due on a mortgage is greater than the current market value of the property. The buyer typically will be told in advance that the seller has contacted or will contact the lender in an attempt to have the lender accept less money than the outstanding mortgage balance.

There are three primary options that a seller needs to consider when presented with a contract offer which will result in a short sale. First, he/she can take a loss on the sale of the property and pay the difference from other funds. Although this represents an economic loss, this approach will not impact the seller’s credit rating, and the seller will not have to deal with the fallout of a lowered credit rating or potential bankruptcy proceeding.

The second option is for the seller to ask the lender to accept less than the amount currently owed. The lender may agree to cooperate with the seller’s request, if the partial payoff is likely to be preferable to the alternative – i.e. the costs involved in a foreclosure action, the associated costs in holding the property, and the reality that the amount realized by the lender when selling the property after a foreclosure (especially in today’s market) may be less than the offered partial payment. However, most lenders will not even consider this request unless the seller is already significantly behind in his payments – generally a minimum of three monthly payments.

Prior to entering into any short sale agreement, the lender will require additional proof from the seller relating to the seller’s overall financial position and the current value of the property, together with other requirements. Lenders will not readily grant permission to accept less money than owed, so the documentation provided by the seller will be carefully scrutinized. If, for example, the lender determines that the information provided on the original loan application was “inaccurate,” the seller could also expose himself to charges of mortgage fraud. Before requesting a short sale agreement, the seller must carefully consider all potential ramifications of this action. Our law firm always recommends that the lawyer meet with the client to review his or her options, consider the tax consequences of the sale, and the impact on the seller’s credit rating before proceeding with a short sale.

If a seller is able to obtain permission from the lender for a short sale, he/she still needs to address the tax consequences of the transaction. The lender will either forgive the additional indebtedness, or require the seller to execute an additional promissory note for the amount that is not paid off at the closing. In other words, the debt does not merely disappear. A forgiveness of debt will most likely result in an additional tax obligation to the seller – the IRS will treat this forgiveness as additional income. The only exception to this rule is if the property in question that is being considered for a short sale is a seller’s primary residence. The tax laws currently provide that the debt forgiven by a lender during the sale of a debtor’s primary residence is exempt from being treated as taxable income (up to $2 million of forgiven debt is eligible for the taxable exclusion, and $1 million if married and filing separately). A new promissory note, on the other hand, does not relieve the seller of the existing financial obligation, and the seller can still be sued for non-performance under its terms.

Both the contract seller and the contract purchaser need to be aware that the process of obtaining an approval by a lender for a “short” payoff is a difficult and time consuming process. This article is only intended to outline some of the issues, and is not intended to fully explain all the steps and hurdles that may occur. Each party needs to obtain his or her own experienced real estate counsel to fully understand the ramifications of the short sale contract. The seller needs to thoroughly understand each of his/her options.

When our firm represents a buyer in this situation, we not only initially advise our client of the steps that are involved prior to closing, but we also recommend that our firm, as buyer’s counsel, hold the escrow deposit. A Short Sale Addendum to Purchase and Sale Contract should always be included as part of the contract under these circumstances, which provides that the contract is contingent upon: 1) each of seller’s lien holders approving the purchase price and the terms of the contract and HUD-1 Settlement, and confirmation that these lien holders will satisfy or release the liens for the reduced payoff amounts; 2) timely notice by the Seller that the lien holders have approved these terms; and 3) acknowledgment by the buyer that the lenders/lien holders are not obligated to approve the contract. The buyer of course must not be related to the seller, and the contract must be a good faith – arms length transaction.

The third option, of course, is for the seller to stop making payments altogether, and to allow the property to be foreclosed. This will have a significant impact on the owner’s credit rating, and may prevent the owner from obtaining financing to purchase other property for years to come. It is noteworthy that borrowers often file bankruptcy to halt the foreclosure process. This is a stalling tactic only, and most likely will not prevent the foreclosure from ultimately being completed.

Short sales represent significant hurdles for a seller, and a recognition by a buyer that the seller will not be obligated to complete the transaction in the event that the seller is unable to obtain the necessary consents from the outstanding mortgage and lien holders. Both the buyer and the seller should retain their own legal counsel to represent them through this potential closing quagmire, and to realize that there are many potential issues involved for both the buyer and the seller.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER - Executors Are Due Reasonable Commission

2008-12-29T08:42:00.000-08:00

Orlando Sentinel, December29, 2008

Question: I am single and have no children. I currently have a trusted friend as executor of my estate, but she is close to my age, as are my siblings.

How do I find a good candidate to appoint as my estate executor? I want to ensure that whoever is appointed is compensated but cannot drain my estate.
J.J.
Orlando

FRANK POHL
Pohl & Short, P.A.

Answer:
In Florida, executors are known as personal representatives. In addition to family members and financial institutions such as banks, good candidates for personal representatives are often found among financial professionals such as accountants and financial planners.

Under Florida law, personal representatives are entitled to a reasonable commission. The commission is presumed reasonable by a court if it is not more than 3 percent of the first million dollars of the estate, with that percentage gradually decreasing as the estate value increases.

In addition, a personal representative is entitled to compensation that a court determines reasonable for so called “extraordinary services,” such as selling property or conduction litigation. Personal representatives, however can agree to limit their compensation to amounts below what a court would otherwise award them, and you can seek such an agreement.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

WHO GETS THE DEPOSIT?

2008-12-01T08:24:00.000-08:00

Winter Park Home, Volume 6 / Issue 4, 2008

In today’s real estate marketplace, many purchasers are reconsidering their offers, deciding to terminate their contracts, and seeking a return of their escrow deposit. These situations not only require a determination concerning the rights of the parties to enforce the contract provisions, but also often result in disputes over who is entitled to receive the earnest money deposit. Consider the following examples.

In August, 2007 David J. executed a contract to purchase a home for $500,000, and gave the Escrow Agent (the Seller’s attorney) a $25,000 earnest money deposit. The closing is scheduled for January of 2009. A recent appraisal reflects that the home is currently worth $375,000, not $500,000, and Mr. J. is looking for a reason to back out of the contract. The contract does not provide that that the house must appraise for the purchase price, there are no financing contingencies, and the property is being purchased “As-Is.” Mr. J. is not represented by an attorney.

In a second example, Mary Smith executes a contract to purchase a condominium unit, and gives the realtor a $10,000 deposit. There is no financing contingency, and Mary is unable to put together sufficient financing or cash to complete the purchase of the property. Mary requests a two-month extension of the closing date and the Seller, anxious to sell the condominium unit, agrees to the extension. Five days before the second closing date, Mary requests an additional contract extension. The Seller decides that this is a no-win situation. He refuses to sign an additional extension; advises Mary that he is ready, willing, and able to complete the closing; and, attends the closing at the scheduled time. Mary does not come to the closing. The Seller now requests a forfeiture of the entire $10,000 deposit.

Each of these examples requires an analysis and application of the deposit/escrow provisions of the contract. Clearly, both the Seller and the Buyer should consult with an attorney to determine their rights to the escrow deposit and their obligations under the contract. The Escrow Agent--the person or entity holding the escrow deposit--is generally authorized to disburse the escrow funds in accordance with the terms and conditions of the contract. In each of these examples, the disbursement of the escrow funds appears straightforward. The Escrow Agent typically will request that the Seller and the Buyer execute a release of deposit and termination of the Contract, and, once it is signed, will disburse the funds. If the parties cooperate, disbursement is made quickly. Often, one of the parties refuses to cooperate. This places the escrow agent in a position of being sued if the escrowed funds are incorrectly disbursed.

Standard Q of the FAR/BAR Contract for Sale and Purchase describes the proper disbursement of the escrow deposit. If there is no closing, the Escrow Agent must determine who is entitled to the deposit. To avoid being sued for improper payment, the Escrow Agent generally will have the parties sign a release and waiver establishing how the money is to be disbursed. If the parties don’t cooperate, the Escrow Agent can hold the deposit longer, while the Seller and the Buyer negotiate the proper payment. The Agent can also choose to file a lawsuit, known as an interpleader, in which the deposit is placed under the control of the court. The Seller and Buyer would then litigate ownership of the deposit. The court will take any filing fees and the Escrow Agent’s legal fees directly from the deposit, reducing the amount immediately available to the winning party. Although the court may ultimately award these fees to the winning party, there is no guaranty that the prevailing party will be able to collect the fee money from the other side.

Additional rules govern a real estate broker acting as an Escrow Agent, since brokers are governed by Chapter 475 of the Florida Statutes. A broker, in addition to filing an interpleader action, can also make a request to the Florida Real Estate Commission for a formal escrow disbursement order. Of course, each of these steps will delay final disbursement of the escrow deposit.

This analysis describes only part of the picture. In each of the examples, the Seller “appears” to be entitled to receive the escrow deposit. If the money is to be disbursed to the Seller, the Escrow Agent must also determine if the Seller signed a listing agreement, which typically provides that the real estate broker is entitled to a portion (typically 50%) of the surrendered deposit.

Once again, the Escrow Agent must disburse in accordance with the terms of all contracts. If there is any question as to the appropriate amount to disburse to the Seller and the Realtor, the Escrow Agent is well advised to obtain written authorization from each of the parties.

Initially, each of the Sellers in the examples I’ve described appears to be entitled to recover all or part of the escrow deposits. However, parties can be creative and many arguments can be made and questions raised that can present the Escrow Agent with genuine issues which can make determining who is to receive the deposit difficult. Before disbursing any escrow funds, the Agent should demand receipt of the properly executed releases in order to avoid potential wrongful disbursement suits.

Whenever there is any question about the proper disbursement of an escrow deposit, the Seller and the Buyer should each consult with his/her own real estate attorney. All contracts revolve around specific facts and the contractual obligations of the parties. An experienced real estate attorney can often examine a contract and determine that his client, who is otherwise ready to sign a release in favor of the other party, actually has a valid legal position justifying either a return or forfeiture of the deposit.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER - Trouble Pours Out The Downspout

2008-11-17T11:03:00.001-08:00

Orlando Sentinel, November 17, 2008

Question:
My next-door neighbors installed gutters on their house, with two downspouts that discharge water heavily on our property every time it rains.

There has been soil erosion on their deeply sloped property that continues to get worse. We have talked to the owners about the problem to no avail. They now have moved out, and their property is rented.

I am concerned that the erosion and flooding will eventually cause damage to my property and to the foundation of my house. What legal recourse do I have?
C.H.
Orlando

FRANK POHL
Pohl & Short, P.A.

Answer:
Both you and your neighbor enjoy certain rights of land ownership. Rain runoff from your neighbor’s higher ground is entitled to its natural flow onto and from his land. Florida law does not permit your neighbor, however, to direct the water flow onto your property if it results in damage to your house and land.

Florida law also recognizes your “reasonable” right to protect your property from this excess water from these downspouts. Subject to any zoning or subdivision limitations, you could construct a fence or wall to slow down or divert the water flow, as long as the fence or wall doesn’t cause the water to pool and flood your neighbor’s property.

The Florida courts apply a reasonableness standard in interpreting these cases.

At this point, you might get some help, or at least advice, from your local government department that handles drainage issues. (In Orange County, for example, it’s the Roads and Drainage Department.) If that doesn’t work, you may need a lawyer to file a legal action to have the excess water discharge directed away from your property, and to determine if you can sue for specific damages.

Visit our website for more information on this subject.

ASK A LAWYER - Report Dogs’ Aggressive Behavior Now

2008-10-15T11:46:00.000-07:00

Orlando Sentinel, October 13, 2008

Question:We live on a lake with lots of ducks and three sandhill cranes.

My dad, who is 78, feeds them. My neighbor, who lives a quarter-mile down the road, turns his two dogs loose two or three times a day, and they often come into my yard and several times have tried to bite me.

Do I have the right to kill them on my property if they are endangering my dad or me?
R.K
Oveido

FRANK POHL
Pohl & Short, P.A.

Answer:Based upon the fact these dogs have repeatedly come onto your property and tried to bite you, you should immediately contact the nearest animal-control authority and report these dogs as dangerous.

Under Florida law, the animal-control authority has an obligation to investigate any report that a dog is dangerous. Florida law also provides that any animal that is the subject of a dangerous-dog investigation – if not immediately impounded with the animal-control authority – must be safely confined by the owner in a securely fenced or enclosed area pending the outcome of the investigation.

If there is no animal-control authority in your area, the county sheriff shall act in its place.

In the interim, if these dogs were to attack you unprovoked on your own property, you could protect yourself in any reasonable manner.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER - Is Tenant Liable For Sewer Lines

2008-08-04T11:30:00.000-07:00

Orlando Sentinel, August 4, 2008

Question: In the seven years since moving into our manufactured home, my wife and I have had problems with our sewer line. According to the park’s plans, the line was supposed to follow the lot’s borders, but ours goes 52 feet into our neighbors’ lot.

Tree roots have repeatedly caused the line to clog, and the roots are in my neighbor’s yard. We rent the land on which our home sits, and our lot agreement says nothing about ownership of the sewer line. Nevertheless, the park’s owners say I’m responsible for the repairs. Are they right?

R.M.
Port Orange

FRANK POHL
Pohl & Short, P.A.

Answer:Generally speaking, the tenant of a manufactured home is responsible for the costs to maintain and repair its sewer lines. You can check to make sure by contacting the Division of Land Sales, Condominiums and Mobile Homes, in Florida’s Department of Professional Regulation, which oversees mobile-home parks in Florida. There should also be information about who’s responsible for the sewer lines in your park’s rules and regulations, which should be posted.

Bottom line: You cannot dig up your neighbors’ property without their consent. If you cannot obtain their cooperation, and the park owners refuse to cooperate, you may wish to bring this matter to the attention of the Division of Land Sales, and also to your local Health Department.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

CONTRACTS 101 - WARRANTY vs. QUITCLAIM DEEDS

2008-07-01T09:31:00.000-07:00

Winter Park Home, Volume 6 / Issue 3, 2008

Clients often ask me to prepare a deed outside of a purchase and sale transaction, which typically consists of a transfer from one or two individuals to another individual or legal entity. The context varies from that of a gift, to that of a transfer by a shareholder to his privately owned corporation. The client often requests that the deed be in the format of a quitclaim deed, even though, as explained below, a warranty deed may be more appropriate. This article points out some of the differences and benefits of these two types of deeds, while detailing the parameters of the Special Warranty Deed that is also used in conveying real estate in Florida.
The three primary forms of deeds used in Florida are the Warranty Deed, the Special Warranty Deed, and the Quitclaim Deed. The Warranty Deed and Special Warranty Deed provide substantive covenants of ownership, while the Quitclaim Deed provides no covenants of ownership, and only conveys the interests that the Grantor (the person conveying the property) has in the property. The Grantee (the person to whom the property is being deeded) of a Quitclaim Deed will generally have no recourse against the Grantor, when confronted with any challenges as to the ownership of the property.

A Warranty Deed includes six covenants, or warranties, by which the Grantor is bound. The first three covenants are known as “present covenants,” and the second three are referred to as “future covenants.”

Present Covenants consist of “seisin” (warranty that the Grantor is the legal owner of the property and has the right to possess the property), covenant of the owner’s right to convey, and the covenant against encumbrances (i.e. that there are no liens or encumbrances that attach to the property). The present covenants can only be enforced by the immediate Grantee. For example, if Andrew conveys land to Bruce by Warranty Deed, and Bruce subsequently conveys the same land to Charlie by Warranty Deed, then Charlie can sue Bruce under these present warranties, but Charlie cannot directly sue Andrew.

Future Covenants consist of quiet enjoyment (a promise that the Grantee’s possession will not be disturbed due to a prior existing title defect), warranty (promise by the Grantor to protect the Grantee from any loss caused by the pre-existing title defect), and further assurances (agreement by Grantor to execute additional documents if needed). In many respects, the three future covenants are more important, since they represent a continuing obligation of the Grantor to take curative action if subsequent grantees or purchasers are confronted by defects in the chain if title that existed at the time the Grantor conveyed the property to the Grantee. In the example noted in the preceding paragraph, Charlie can sue Andrew for any violation of the future covenants.

A Special Warranty Deed differs from the general Warranty Deed because it only covenants against defects in title that are specifically caused by the Grantor. It does not warrant against any problems that predate the time the Grantor acquired title to the property. This deed is frequently used by those acting in a fiduciary capacity (e.g. Personal Representatives, Guardians, and Bankruptcy Trustees), and by Lenders who are in title after a mortgage foreclosure action.

A Quitclaim Deed does not include any assurances of ownership–it only provides that that if the Grantor owns the property, then the Grantor is transferring his ownership interest in the property to the Grantee. Since the Grantee has no recourse against the granting party, these deeds are potential red flags that the Grantor may not own the property. Since Quitclaim Deeds do not provide a warranty of ownership, they are useful in title clearing actions, where an owner years back in the chain of title is hesitant to provide any warranty coverage; in divorces, where the court specifically directs that a Quitclaim Deed be provided by one spouse to the other; and, in situations where the Grantor is unclear as to his/her ownership of the property. In this light, a title insurance policy obtained by a purchaser provides a comfort level that any prior quitclaim deeds in the chain of title will not adversely impact the ownership of the purchaser.

Why, therefore, do I recommend the use of a Warranty Deed instead of a Quitclaim Deed, in situations where there is no consideration being paid? Think of the identity of the Grantee. If the Grantor’s goal is to protect the interests of the Grantee, then a Warranty Deed should be used. Here is an example. Fred Thomas, a single man, is the sole owner of property and has an owners’ policy of title insurance. Fred decides that he wants to convey an interest in the property to his daughter Mary, so he directs that Mary’s name be added to the title, to create a joint tenancy with right of survivorship.

A couple of years later, Fred dies. Mary becomes the sole owner of the property. She is subsequently notified that a missing heir back in the chain of title failed to convey his proportional interest in the property.

If Fred conveyed the property to Mary by Quitclaim Deed, Mary would have no recourse either against Fred’s title insurance policy or against Fred’s estate and his predecessors in interest (i.e. Mary has no one to sue for coverage). If Fred used a Warranty Deed, Mary will be able to take steps to cure the title, either under Fred’s title insurance policy or through Fred’s warranties of title.

For the reasons stated above, I generally recommend the use of a Warranty Deed in these transfers. An individual should always consult an attorney before executing any deed that transfers an interest in real property to another individual or entity–not only to determine the appropriate format of the deed, but to also determine if there are any other consequences that will result from the execution and recording of that deed.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

ASK A LAWYER - A Land's Ownership Determines Your Action

2008-06-09T11:21:00.000-07:00

Orlando Sentinel, June 9, 2008

Question: For 35 years I have placed trash bags, lawn clippings, etc., at the edge of my driveway apron on the public right-of-way behind my home for collection. It's a small area between two driveways. Regular household garbage in a rolling bin also is placed on the right-of-way. My neighbor does not want me to use this area and has planted shrubs all the way to the curb. He says it's his property, and he maintains it. He's only in Florida for a few months. When he leaves to return to his home up north, my husband and I maintain it. He is making our lives miserable. He has called code enforcement and the police, and they have explained to him that he must share the right-of-way. City code states bags, etc., must be placed at the curb for pickup but doesn't state a specific location. What is our legal recourse?

S.M.
Orlando

FRANK POHL
Pohl & Short, P.A.

Answer: You must determine if the shrubs are located wholly within the boundaries of your neighbor's property. If they are, and your neighbor has never given you permission to cross his/her land, then you would have no legal basis to object to the shrub placement. Because land ownership includes the land and the air space above the land, you would have the right to trim any portion of the shrubs extending onto and over your land, but not the portion situated within your neighbor's boundaries. To the extent the shrubs extend into the public right of way, the city or county could remove those shrubs. Note that Florida law requires any transfer of an interest in real property, including grants of easements, be evidenced by a written document recorded in the public records -- verbal permission alone could be withdrawn at any time. A title search of your property and your neighbor's property would reflect whether there are any recorded easements or restrictions which would prohibit the construction of a fence or the placing of shrubs at the front or back of either property, and also whether there is a homeowners association that could enforce any violations of recorded restrictions. Municipal and county codes regulate collection of waste and recyclables. The Orlando Municipal Code, for example, provides that trash is to be placed on the curbside at designated times. Although this city code does not recite this, logically the "curbside" is the curb that abuts the owner's property, and not the neighboring property. Recommendations: If the ownership of the land in question is at issue, obtain a survey of the property to determine your borders. Obtain a title search for your property and your neighbor's property if you wish to pursue other avenues of enforcement.

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OBJ - What Types of Business Cases Does Your Firm See Most Often

2008-06-01T11:38:00.000-07:00

ORLANDO BUSINESS JOURNAL'S BOOK OF LAW - 2008
Frank Pohl,
Pohl & Short, P.A.

What types of Business Cases Does Your Firm See Most Often?

“In these economic times, we have seen a significant increase in breach of contract disputes of all types and in litigation concerning real property.

“Construction claims, intellectual property disputes, homeowner association matters, shareholder/partnership breakups and probate litigation have all multiplied. Why? The easy answer is to say that entities and individuals are fighting over money.

“However, we hear over and over again: ‘We were doing business and something went wrong. We were buying or selling property and circumstances changed and something went wrong. Something went wrong with my grandmother’s will, or something went wrong and I got sued.’

‘These are times of ‘something went wrong,’ and our law firm is there to help.”

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

CONTRACTS 101 - WHO PAYS FOR THE REPAIRS?

2008-04-01T08:33:00.000-07:00

Winter Park Home, Volume 6 / Issue 2, 2008

Real estate transactions don’t have a required format. Although, residential real estate contracts typically include provisions that address the physical condition of the property. Not only does Florida law require that the Seller disclose any inherent problems with the property, but the contract should also provide the Buyer with ample opportunity to inspect the property for termite damage and the overall condition of the home.

Consider this scenario: David Smith recently paid cash for a house and was given the keys at closing. Upon entering the house, David discovered that the front door light switch was broken and that a number of the light fixtures didn’t work. Later he learned that the a/c unit was defective and had to be replaced. The Seller, an old acquaintance, had mover somewhere up north. David remembers him saying that there were some minor cosmetic problems, but that everything else was in good working order.

This type of situation, fortunately, rarely occurs today. Banks and mortgage companies typically require both home and termite inspections. The FAR/BAR contract and other attorney prepared contracts also typically include provisions for home and termite inspections. In the example above, the cash only contract was prepared by the Seller, never reviewed by an attorney, and the Buyer relied solely upon the good faith of the Seller.

Unless the house is being razed for new construction, purchasers should always be concerned with the physical condition of the house. Most residential real estate contracts include a time period during which the Buyer may inspect the property to determine whether any repairs are necessary, and whether there is any termite damage, while also defining the maximum amount of money that the Seller will be obligated to pay for any repairs. If the Buyer gives timely notice, the Seller will be obligated to pay for those repairs but only up to the maximum amount stated on the contract.

A Buyer should always obtain professional home and termite (a/k/a wood destroying organisms) inspections, and never rely solely upon the representations of a Seller. Contracts generally provide that the Seller is not obligated to make any repairs that exceed the Maximum Repair Costs that have been agreed to. If the Seller chooses to make, and does in fact complete, the repairs in excess of the agreed amount (other than for termite damage), then the Buyer must proceed with the contract. If the Seller refuses to pay those excess costs, the Buyer will have two options to proceed with the closing (and be responsible for those additional costs), or to terminate the contract and receive a return of the deposit.

Sam Seller, for example, agrees to pay for repairs up to $15,000. Bob Buyer determines through inspections that the roof ($12,500) and a/c system ($6,500) must be replaced. Sam refuses to pay for any repairs in excess of $15,000. Bob must, therefore, elect to either terminate the contract, or to proceed with the closing and be responsible for the additional $4,000 to complete the repairs. However, termite damage is generally treated differently. Under the standard FAR/BAR contract, the Buyer has the absolute right (but not the obligation) to terminate the contract if the termite repair and treatment costs exceed the maximum amount stated in the contract, even if the Seller agrees to pay for those excess costs.

For example, if Sam knows in advance that there is $20,000 worth of termite damage but insists that he will not pay for more than the agreed to $5,000 amount, Sam essentially provides Bob with an automatic right to cancel the contract. Bob, of course, must give timely notice of his election, or he will waive his right to terminate the contract based on these excess expenses.

In place of establishing a formula for repairs, parties often utilize the “As Is” Contract for Sale and Purchase, which provides that the Sales Price is absolute, and that the Seller will not be obligated to pay for any repairs to the property. “As Is” terms generally include a specific time period during which the Buyer may inspect the property (the “Due Diligence Period”). During this due diligence period, the Buyer must elect to either proceed with the purchase or opt to terminate the contract and obtain an automatic return of the Escrow deposit. The Seller has no obligation to make any repairs or to reduce the purchase price, while the Buyer has the right to terminate the contract for any reason during the Due Diligence Period. As always, timely notice must be given to the other party.

Although “As Is” contracts provide that the Seller is not obligated to lower the purchase price of the property for repairs, it is not a device by which the Seller can hide problems. Under the Florida Supreme Court decision of Johnson v. Davis, the Seller must always disclose to the Buyer any known defects with residential property. If a house is being sold during a dry season, for example, and the Seller knows that during heavy rains water comes onto the back porch and seeps into the back bedroom, the Seller has an affirmative obligation to disclose this fact to the Buyer. The Seller can later be sued for damages and/or rescission of contract if he fails to disclose this information.

The caveat of “Let the Buyer Beware” does not apply to the sale of residential real property in Florida. Variations of these undisclosed fact scenarios are the subject of many lawsuits. Consider the following scenarios. The neighbor’s bright backyard lights consistently shine into the back room of the house. The Seller knows that tennis courts in an adjacent field are scheduled to have lights installed three months after the closing. The Seller is moving due to frequent vandalism in the neighborhood. In each case, the Seller should consult with legal counsel to determine if it is appropriate to disclose a potentially relevant issue.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

CONTRACTS 101 - THE SEQUEL

2008-01-01T19:15:00.000-08:00

Winter Park Home, Volume 6 / Issue 1, 2008

Real estate transactions don’t have a required format, even though that perception is often implied due to the extensive use of the standard Florida Association of Realtors and Florida Bar Association (FAR/BAR) approved Contract for Sale and Purchase of real estate. This standardized Contract allows all parties accustomed to residential sales to rely on a set uniform Standards, which define different terms within the Contract. These terms are generally accepted and understood by real estate attorneys and Realtors. More complex transactions may require additional terminology, which is usually added by formal Amendments to the Contract.

However, there are many other contract formats that are used in the marketplace. So, both the Buyer and Seller are well advised to seek competent legal advice to assure that each party understands his/her respective rights and obligations, prior to signing any contractual obligation.

FAR/BAR Contracts include provisions that stipulate whether the Seller or Buyer is to provide and pay for a title insurance commitment and an owner’s title insurance policy, The commitment, together with a copy of all the exceptions to title, must be submitted to the Buyer for review. In Central Florida, the Seller typically pays these charges and provides the title work. However, contract terms are always negotiable. In some parts of Florida, custom and practice calls for the Buyer to pay these costs.

The Contract also stipulates the number of days prior to closing that the commitment must be provided. More importantly, it also establishes a precisely defined time period for examining the title and notifying the Seller in writing of any deficiencies or objections to title. This review period typically begins on the day the Buyer receives the title commitment. The number of days specified in the Contract is legally binding, and the Buyer is bound by these time limits.

To give you a sense of how serious the time limits on this review can be, consider this tragic tale of David Johnson. Mr. Johnson places a $50,000 deposit on a $500,000 home purchase. Imagine David’s response when he learns that the Seller demands forfeiture of the $50,000 deposit, solely because neither he nor his attorney raised a legitimate objection to title in a timely manner. He missed the deadline, so David cannot subsequently raise the title objection as a basis for terminating the Contract and obtaining a refund of his deposit. Mr. Johnson may not be real, but the financial consequences of missing a Contract deadline can result in very real monetary losses.

If the Buyer does make a timely objection to title, the Seller must cure the defects within the time period stated (typically 30 days). Should the Seller fail to resolve the issues within the time specified, the Buyer may terminate the Contract and reclaim his/her deposit.

Most Buyers don’t have sufficient cash reserves to purchase property outright. They usually need financial assistance in the form of a mortgage loan. Real estate contracts typically include a financing provision. This provision stipulates acceptable financing terms and a time period within which the Buyer will apply for a loan commitment from an institutional lender or private party. As with other contract provisions, timing is critical. The Buyer has placed an earnest money deposit at risk. He or she must apply for the loan approval within the time period defined under this provision, and notify the Seller if that loan approval cannot be obtained within the specified time period (typically 30 days).

The Buyer must use reasonable diligence to obtain the loan approval. For example, if our Mr. Johnson is buying property for $500,000, places a $50,000 deposit with the escrow agent, and is to obtain financing for the remaining $450,000, he must make a good faith effort to obtain that financing. Let’s assume David subsequently decides he no longer wants to purchase the property and wants to use the financing contingency as a mechanism to retrieve his $50,000 deposit. If he improperly prepares the application forms and otherwise delays the paperwork so that he cannot obtain the loan approval within the permitted time period, he risks losing the entire deposit to the Seller for failure to use reasonable diligence in obtaining the loan approval. Alternatively, if David legitimately does not qualify for the loan under the parameters set forth in the Contract, he may be entitled to terminate the Contract and obtain a refund of his deposit.

Contracts also establish the date of closing at which the parties are to complete the transaction. By establishing a closing date, and other specific dates within the Contract, the parties, including any lender, are provided with deadlines for satisfying all preconditions of the Contract. These dates provide time certain periods that enable the Buyer and Seller to hold the other party accountable for failure to comply with the obligations set forth in the Contract. Let’s assume, for example, that Mr. Johnson has decided it would by more convenient to close the sale two weeks later than the date specified in the Contract but the Seller refuses to extend the closing date. If Mr. Johnson then fails to appear at the closing, his $50,000 deposit may be forfeited to the Seller. If the language in the Contract permits, the Seller may also alternatively bring an action in equity to enforce Seller’s rights under the Contract (i.e. make the Buyer purchase the property under all of its terms and conditions).

A Real Estate Purchase and Sale Agreement, or Contract, is the primary tool used to acquire real property, and defines all relevant terms by which the Seller agrees to transfer the property, and by which the Buyer agrees to be governed.

I’ve run out of space before running out of important things you should know about real estate contracts, so I’ll continue this discussion of basic contract strategy in the next issue.

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CONTRACTS 101

2007-10-01T07:46:00.000-07:00

Winter Park Home, Volume 5 / Issue 4, 2007

Except for transfers by gift or inheritance, a Real Estate Purchase and Sale Agreement, or Contract, is the primary tool used to acquire real property. The Contract defines the purchase price, deposit amount, costs, and all relevant terms by which the Seller agrees to transfer the property, and by which the Buyer agrees to be governed. Under Florida law, these Contracts must be in writing to be enforceable. This article highlights certain salient provisions of these Contracts.

Once the Seller and Buyer have agreed in principle to the sale, the terms must be reduced to a written document. First–the identity of the Seller must be confirmed. The individual selling the property is often not the record owner. Unless that person holds a power of attorney from the Seller, or is an authorized representative of the legal entity selling the property, a prospective purchaser should only deal with the record title holder. A review of the property appraiser’s records and the vesting deed into the Seller usually provides the necessary information. Failure to include the identity and signature of all record owners may make the contract unenforceable–costing the Buyer both time and expense.

If Mike Johnson and Mary Johnson own property as husband and wife and only Mike signs the contract, the agreement is non-binding since the property is owned as tenants by the entirety. If Mike and Mary are brother and sister, each owns one-half of the property, and only Mike signs the Contract, then the sale of Mary’s interest is not enforceable. Furthermore, if Mike, the sole owner of homestead property, is married to Mary, and only Mike signs the Contract, the agreement is unenforceable since the homestead laws require Mary’s joinder on the Contract and on the vesting deed. All those having an ownership interest in the property must sign the Contract. Although the Contract can be amended later to include additional owners, there is never a guarantee that these individuals will cooperate.

Probated estates also create Seller identification issues. If Michael Jones is the sole owner of homestead property and dies leaving a will, the personal representative may not have the authority to sign a Contract on behalf of the estate. As discussed in previous articles, an analysis of the decedent’s will and probate proceedings must then be undertaken to determine who has authority to sell the property.

In representing a prospective Buyer, the identity of each individual or entity purchasing the property should be confirmed. This becomes especially critical in the event that the Contract is not assignable. (Standard Contract forms include a provision whereby the Buyer will either be permitted or denied the right to assign the contract to another party.)

Each Contract must also include a description of the property to be purchased. Street addresses are helpful, but should not be relied upon as the sole method of identifying the property. The physical description found in the vesting deed into the Seller should be inserted into the Contract. When legal descriptions are abbreviated–typically for space considerations–mistakes often occur. Lot 1 of XYZ Subdivision is straightforward and easy to identify. Metes and bounds descriptions, however, can be very lengthy and difficult to reflect in the limited confines of a standard form contract, and are best reflected as an Exhibit. New legal descriptions, which add land or less out land from that shown in the most recent deed into the Seller, should always be provided by a surveyor. The new legal description can then be inserted into the Contract before it is signed. A complete legal description is therefore a critical element of the Contract. Imagine sitting at a closing table in which the Contract and the title commitment did not include an intended additional 20-foot strip. In reviewing the survey you discover that an extension of the house sits on 20 feet of land not shown on the Contract. That closing will (of course) come to a sudden stop.

Paramount in any sale is the purchase price. It is a business, not a legal, calculation, and each party should independently determine its accuracy. The parties can obtain an appraisal, examine the property appraiser’s records to determine sales history, or otherwise confirm the value of the property. In those situations where lender financing is included in the Contract, the lender typically requires the property appraisal. In a cash transaction, however, if the Buyer is unsure as to the value of the property, his attorney can add a provision that the appraised value of the property must be equal to, or greater than, the purchase price.

The parties then need to determine the amount of the deposit to be held in Escrow. The general standard of five to ten percent of the purchase price, like all contract terms, is negotiable. Occasionally a Seller indicates that a deposit is not necessary since it is a friendly transaction. The monetary deposit is the consideration necessary to make the contract legally binding. Not surprisingly, in many of these friendly situations the closing does not take place, and the parties vigorously dispute the ownership of the deposit money.

Real Estate Contracts are technical instruments which require specific attention to detail. Although Contracts are sometimes prepared by the Seller, typically they are prepared by the Buyer’s agent. Conceptually, the Buyer makes a written Offer to the Seller by delivering the signed Contract Offer to the Seller, while submitting the deposit to a neutral party (the Escrow Agent).

The Offer provides the last date on which the Seller can accept the Offer by signing and returning an executed copy of the Contract to the Buyer. If the Seller does not sign and deliver to the Buyer the signed Contract by the date shown in the Contract, the Offer is automatically withdrawn and considered void. If the Seller signs the Offer, but only after inserting additional terms by which the Seller is willing to be bound, the Buyer is not obligated to sign the Counteroffer. The Buyer will then have the time period shown in the Contract to determine whether the Buyer wishes to proceed under those revised terms. Critical to the concept of Offer and Acceptance is time – those periods shown in the Contract during which the other party can accept or reject the offer or counteroffer. These dates are legally binding, and the failure to respond within the stated time periods effectively withdraws the offer or counteroffer.

This discussion of basic contract strategy will continue in the next issue.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

NICE HOME…HOW DO I GET TO IT?

2007-07-01T10:33:00.000-07:00

Winter Park Home, Volume 5 / Issue 3, 2007

One key element of land ownership often taken for granted is the ability to access the property through the public road system. Imagine buying a house as an investment, and finding out later that it does not have legal access. Imagine owning a lot situated on a road with nine other lots and later discovering that the only road, which provides the only access to a county road, is privately owned by one individual who never granted legal permission to the lot owners to use that strip of land.

I have always recommended that the Buyer obtain a title insurance policy when purchasing real property in Florida. One key component of every title policy issued since June of 1986 is a representation in the policy jacket that there is legal access to the property. (Policies prior to June 1986 did not include this language, and current policies do not insure access when there is a specific stated exception in that policy for a lack of legal access).

What is meant by legal access? It’s the right to travel from your land to a public road, without anyone being able to prevent your movement to and from that road. This does not necessarily mean that the property is situated on a public road – merely that you have the right to get to that road. Buyers sometimes mistakenly assume that a private road abutting a lot automatically entitles the lot owner to use that road. To established legal access, the property owner must have a clearly defined legal right to use a private roadway, or an ingress-egress easement, to connect to a public road.

For example, Jerry Jones owns a parcel of land that abuts Center Street (a public road) along the south edge of the parcel. That road is the only legal access to the property. Jerry then sells the northern half of the parcel to Michael Johnson, but he does not provide language in the warranty deed that permits Johnson to cross over the southern half of the parcel to access Center Street. Johnson didn’t obtain a title insurance policy when he purchased the property. Had he done so, e the policy would have addressed the access issue prior to settlement. Now, his property is landlocked and he must seek legal assistance. I advise him that Mr. Jones clearly should have granted him an easement across a portion of the southerly half to provide access to Center Street.

Fortunately, Florida law provides a way to obtain that access. Known as a common law way of necessity, the law enables Johnson to file suit against Jones to judicially establish the location and dimensions of the necessary easement. Unfortunately, it’s a process that will cost Johnson additional time and money. Before resorting to that option, we asked Jones to grant an easement across his property to permit access. Realizing that he had an obligation to provide the access, Jones allowed me to prepare an appropriate Grant of Easement for his signature. The easement provided Johnson with the right to use a 25 ft wide strip of land along the western side of Jones’ property to access the road. The easement was then recorded, placing the world on notice as to its provisions, and the problem was resolved.

Public roads, as defined by the Florida statutes, are those “roads which are open and available for use by the public and dedicated to the public use, according to law or by prescription.” They consist of the state highway system, the state park road system, the county road system, and the city street system. Much of the state highway system, although physically bordering privately owned property, may not be accessed directly by the abutting property owner. For example, land owners bordering Interstate 4 or the Greenway may be prohibited by law from directly accessing those roads except for state-mandated locations. These limited or controlled access roads do not provide the quality of practical access necessary to utilize these public highways, and other sources of access must be determined.

In Central Florida the most common form of legal access is created through platted subdivisions. Most plats now include dedication language clearly stipulating that the roadways situated within the subdivision are for public use. Since 1971, Florida Statute Sec. 177.081 (2) provides that “all streets, alleys, easements, rights-of-way, and public areas shown on such plat, unless otherwise stated” are deemed to have been dedicated to the public for those uses and purposes once the plat has been formally accepted or approved by the governing body and properly recorded. These subdivision roads then typically connect to other public roads.

Some plats, however, provide that the streets in the subdivision are private and are to be owned by the homeowners association. This concept of private ownership is readily apparent in gated communities, where the rights of access are limited by the governing board of the homeowners association. The homeowners association must then maintain the platted roads, without assistance from the city or county, and pay any tax bills associated with that private ownership.

Land surveys should always depict the location of the nearest public roadway. It is incumbent on the title company and the closing agent to review the public record to determine that there is, indeed, legal access. They also need to review the survey to ascertain the location of that legal access, and ensure that nothing is blocking normal use of that access.

The definition of legal access doesn’t address the quality of access-only that the right exists. For instance, if property is acquired with a 25-foot wide ingress-egress easement but the easement is littered with trees and boulders, there will still be legal, if not practical, access. A prospective property owner should always consult with a real estate attorney before the closing to resolve any question concerning the validity of the legal access. It is always easier, less expensive, and faster to address all issues before, rather than after, the closing has taken place.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

WMFE Sponsor Profile

2007-06-01T06:39:00.000-07:00

How long have you been a sponsor with WMFE?
We started as a sponsor with WMFE back in the early 1990s in order to let the public know that we had a new idea: a business boutique law firm.

Why did you initially decide to sponsor on-air programming with WMFE? How do you feel about that decision?
WMFE attracts the same listeners that our law firm attracts as clients. We are looking for that client with specialized legal needs and are looking to build our future with local businesses that recognize us as a part of their community.

In what ways do you feel WMFE sponsorship is a good way to reach your target audiences in the Central Florida area?
In the early 1990s, when forming the foundations of a new law firm, there were many decisions that needed to be made. One of them was “As a new and small law firm, how do we attract the quality clients that our firm was equipped to handle?” We knew that we wanted to create a novel approach…a boutique law practice. One of our first hurdles was to discover how we could target small to midsize businesses that are dealing with complex legal problems and want more personalized service than large law firms offer. As a small commercial firm offering sophisticated legal services, we feel that WMFE’s business philosophies promote a sense of community that encompasses the types of member that we embrace as clients.

How do you feel sponsorship with WMFE has added value to your business?
The benefits that we derive from WMFE sponsorship are recognition of being part of that very special community or “family” of professionals, a family that extends beyond our co-workers to our clients and the community in which we practice.

What would you tell other businesses thinking about using WMFE as a marketing vehicle?
Very often, people who we have met for the first time can quote our WMFE spot: “Pohl & Short, P.A., the business boutique law firm.”

When that happens, you can’t say that sponsorship of WMFE public broadcasting is ineffective or that people aren’t paying attention. Is there anything else you would like to add?
When meeting other members of the Central Florida community, the staff of our firm love hearing, “Thank you for supporting WMFE.”

Visit our website for more information on this subject.

THE UNEXPECTED HEIR

2007-04-01T11:25:00.000-07:00

Winter Park Home, Volume 5 / Issue 2, 2007

I met recently with a client for whom our law firm had previously prepared a will. Jeremy, who owns a home and two investment properties, told me he had remarried, and asked that we revise his will to provide for his new wife, Emily. Fortunately he had remembered our firm’s earlier advice that certain events, including remarriage, can impact the provisions of an existing will. He and I discussed what he hoped to achieve in revising his will. Our firm then prepared a codicil (amendment) to his will, adding the new provisions. He signed the codicil in front of the requisite witnesses and notary public.

Jeremy is now confident that he has made all the appropriate provisions for his new family, and will contact me again if certain events should occur in his life, or if he otherwise wishes to change any of the dispositions in his will.

A will, with certain limitations, can be amended whenever the intentions of the Testator change. (The Testator or Testatrix is the person making/signing the will.) Amendments can be in the form of a new will (automatically revoking any prior existing will) or by codicil to a will. Once finalized, certain events – such as birth of a child, adoption of a child, divorce, and subsequent marriage – can trigger changes to the dispositions made in that will. Under Florida law, these triggering events do not by definition revoke the existing will. Instead, they impact the manner in which certain or all of the assets of the Testator’s estate are distributed.

If Jeremy had not amended his existing will, and Emily outlived Jeremy, then Emily would be entitled to inherit Jeremy’s property under the provisions of the Florida intestacy statutes (i.e. as if Jeremy had no will), potentially defeating Jeremy’s intentions at the time of his death. For example, Jeremy had previously devised one of his investment properties to his church. If he had not amended his will after he remarried, the church most likely would be unable to enforce that bequest.

As I explain in my earlier column, (“Should Will Be Done–Issue 1, 2007”) Emily would inherit Jeremy’s entire estate if there are no lineal descendants, or a substantial portion of his estate if there are lineal descendants. Jeremy wisely opted to define his goals by amending his will, rather than relying on the provisions of the Florida intestacy statutes. (Under Florida law, these intestacy provisions might not apply if Jeremy had already provided for Emily in his will, or if his will had clearly disclosed an intention not to make provision for Emily.) These statutes are technical and subject to interpretation. You should always consult with a qualified estate attorney to determine that these issues have been properly addressed. Planning, as always, is critical.

A similar result may occur in the event of a subsequent birth or adoption of a child, by which the after-born or adopted child would be entitled to inherit his/her proportionate share under the intestacy statutes. Although the statutes provide a different formula for a child born or adopted after the creation of the will (pretermitted) than for the subsequent spouse, the failure of the Testator to provide for either may have an unintended impact. However, including certain language in a will may preclude imposing the provisions of the pretermitted child statute. For example, if a Testator’s will states that the omission was intentional, these provisions do not apply. Also, if the Testator had one or more children at the time the will was executed, and devised substantially all of the assets to the other parent of those children, and that other parent not only survived the Testator but is also entitled to take under the will, then these pretermitted child provisions don’t apply. Once again, proper planning and draftsmanship are essential.

Dissolution of marriage is a triggering event that not only can impact the current ownership of real property, but can also impact certain provisions of a will. Whenever property is owned by two individuals as husband and wife–tenants by the entirety, and they subsequently divorce, the form of tenancy automatically shifts from tenancy by the entireties, with its survivorship features, to tenants in common. As tenants in common, they usually will each own a one-half interest outright, with no survivorship rights.

Divorce may void any provisions made in a will for the other (ex-) spouse, unless the will or the divorce decree expressly provides otherwise. Jeremy, for example, was first married to Marilyn. They never had any children, and prior to his divorce Jeremy drafted a will leaving everything to Marilyn. Jeremy’s will never provided for the possibility of divorce, and the divorce decree never addressed ownership of any of Jeremy’s real property or the provisions of Jeremy’s or Marilyn’s wills. Once the divorce decree was entered, Marilyn was effectively eliminated as a beneficiary under Jeremy’s will. Jeremy then had his attorney prepare a new will, devising his assets to his local church and to other beneficiaries.

Two additional events impact and alter provisions of a will. The first relates to the intentional killing of the Testator. Popularly referred to as the Slayer statute, this provides that any person who unlawfully or intentionally kills or participates in procuring the death of an individual cannot be an heir of that individual – whether as a beneficiary under the deceased’s will or under the Florida intestacy statutes. The second event is the simultaneous death of both the Testator and the beneficiary under a will. It is also governed by Florida law, which provides that “unless a contrary intention appears in the governing instrument,” the property shall be distributed under the prescribed statutory formula. These issues can and should be addressed by competent legal counsel to assure that an individual’s wishes concerning his/her real and personal property, at death, are followed, and are not frustrated by these “unexpected” heirs.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

The Importance of Due Diligence

2007-01-01T12:57:00.000-08:00

Park Avenue Business Forum, 1st Edition, 2007

When making a large purchase, such as a home or a car, it is important to find out as much as you can about the item you are purchasing. The same is true when purchasing a business, notably when the purchase will be structured as a stock acquisition. Unlike an asset acquisition, where a purchaser may choose which business liabilities, if any, he is willing to assume, a purchaser in a stock acquisition generally inherits all of the liabilities of the purchased business. Therefore, completing a thorough legal “due diligence” review to uncover such liabilities is an essential part of the acquisition process.

Legal “due diligence” is the process by which the business’ records (as well as public filings pertaining to the business, such as trademark registrations or lien filings) are systematically examined by the potential purchaser or the purchaser’s legal representatives. Documents examined may include the business’ promissory notes and other loan documents, leases, organizational documents (e.g., articles of incorporation, bylaws, and shareholders agreements if the business is a corporation), or documents pertaining to previous or pending litigation or regulatory enforcement proceedings.

The records examined and the scope of review will vary depending on the type of business that will be acquired. For example, if the business is engaged in manufacturing, emphasis may be placed on examining the business’ warranty obligations and previous or pending product liability claims. If the business provides services, particular attention should be given to the business’ employee and independent contractor agreements. Also, if a business needs a particular license to operate, the due diligence review would uncover whether such license is in good standing or if any adverse action has been taken against the license holder.

Another important function of the due diligence review is to uncover whether the sale and purchase of the business itself will constitute a default under an existing contract. For example, sale of a business may trigger the default provisions of a loan, which could allow the lender to accelerate all payments due under the loan or repossess property that collateralizes the loan. If the repossessed property is a key piece of equipment needed for the operation of the business, the purchaser may find himself in a precarious position.

A thorough legal due diligence review of a prospective business protects the would-be purchaser by affording him or (her) the opportunity to assess the business’ liabilities before closing the sale, instead of having to confront the liabilities after closing. Armed with such information, the purchaser may be able to negotiate a more favorable purchase price or sale terms or could simply “walk away” from the deal.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

SHOULD WILL BE DONE?

2007-01-01T07:40:00.000-08:00

Winter Park Home, Volume 5 / Issue 1, 2007

Jennie is a single parent with a 17-year old daughter, and a homeowner with limited additional assets. She also asks the classic question: "do I really need a will?" The answer, under the circumstances, is an unequivocal "it depends."

In many ways, wills are difficult and frustrating. There are many hard decisions to be made in distributing an estate, and people generally prefer to put off those decisions because they inherently address the finite nature of our existence.

Interestingly, a will cannot transfer Jennie's primary asset, her home, as long as her daughter is under the age of 18. The Florida Constitution provides that homestead property cannot be transferred by a will (devised) if the deceased has any minor children. As a result, her homestead property would be transferred under the intestacy statutes. Once her child turns 18 Jennie can devise her homestead to anyone she chooses. I advise Jennie that non-homestead real property and personal property can be devised at any time to anyone she chooses, but without a will all of her property will pass under the Florida intestacy statutes.

Under the intestacy statutes (an intestate estate is one in which the deceased is treated as having died without a will), her daughter will inherit all of Jennie's estate. If Jennie never prepares a will, never remarries, and never has another child, her entire estate will automatically pass to her daughter. Jennie's estate, of course, will have to be probated to legally establish this ownership of the real property.

Should Jennie have a will? If Jennie doesn't care what happens to her estate if her daughter dies first, the answer is no. However, if Jennie considers further scenarios, a will would be necessary.

When preparing a will, an attorney can help the client think of those alternative scenarios. For example, what if Jennie and her daughter died together in a car accident, and a probate court determined that her daughter died first? If Jennie had a will it would be effective to devise her home and remaining assets to anyone she designated.

Alternatively, with no will, all her property would be inherited by those designated under the intestacy statutes. In the absence of a will, the State of Florida intestacy statutes provide that the deceased's property will pass automatically to certain heirs of the deceased, in the specific order presented under the statutes (see note 1 at the end of this column). That may be an acceptable solution under many circumstances, but what if Jennie was estranged from her and wouldn’t want them to inherit her property? Without a will and with her daughter preceding her in death, Jennie’s parents would inherit everything.

In addition to prohibiting the devising of the homestead as long as her child is a minor, the Florida Constitution also includes one other limitation on devises of homestead. If Jennie remarries and her child turns 18, the only person she can leave the homestead property to is her spouse.

The intestacy statutes define the order by which heirs claim an interest in an estate when there is no surviving spouse. These same statutes also include provisions for a surviving spouse. If the homestead has not been validly devised to her spouse, he automatically receives a life estate in the homestead, while Jennie's daughter receives the remainder interest. Additionally, her spouse would be entitled to receive a substantial share of Jennie’s remaining estate, and her daughter would receive the balance (See note 2 at the end of this column).

Back to Jennie's initial question, "do I really need a will?" I told her that it depends on her goals. If she remains single, has no more children, and wants all her property to go to her daughter, then I can advise Jennie that, once probated, the homestead and all her remaining possessions, will ultimately go to her daughter even if there is no will.

I also ask Jennie if this is her only goal, and suggested that a will would enable her to state her preference for legal guardianship (both of the person and of the property) of her daughter, who is still a minor. A will would also allow her to designate alternate beneficiaries in the event that her daughter dies first.

Finally, I advise Jennie that the decision to create a will is hers alone. She should recognize that a will is the only tool she has to control how her assets will be distributed after her death and to nominate a guardian for her daughter.

Subject to the homestead limitations described above, wills provide an excellent opportunity to plan for your loved ones’ welfare, make charitable contributions, create trusts for your grandchildren, and designate preferences for a legal guardian. Failing to provide by a will is a lost opportunity, so it is highly recommended that you consult with your attorney and plan accordingly. Competent legal counsel can also provide advice concerning the impact of a subsequent marriage, children born after the execution of the will, prenuptial and postnuptial agreements, and generally assist in any estate plan.

Note 1: ORDER IF NO SURVIVING SPOUSE: Lineal descendants; deceased's father and mother; deceased's brothers and sisters; deceased's paternal and maternal kindred; kindred of the last spouse of the decedent; if applicable, a formula for related Holocaust victims; and finally, the State of Florida.

Note 2: SURVIVING SPOUSE RECEIVES: the entire estate (if no lineal descendants of the deceased); first $60,000.00 plus one-half the balance of the estate (if lineal descendants of the deceased are also the descendants of the surviving spouse); one-half of the estate (if any one or more of deceased's lineal descendants are not descendants of the surviving spouse).)

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

OBJ - Readers' Choice Awards

2006-12-15T19:05:00.000-08:00

READERS' CHOICE AWARDS
Establishments without equal
Locals' favorite places to work, live and play
Orlando Business Journal - December 15, 2006
by Bob Mervine
Staff Writer

More than ever before, our readers' favorites in this year's battle of the brands reflects a broader, more eclectic preference in the 79 different categories that make up the Readers' Choice Awards.

We also got the largest number of nominations ever -- again evidence of Central Florida's varied tastes and interest in spotlighting their personal favorites.
Professional services

Pohl & Short, founded by Frank Pohl, describes itself as a "business boutique law firm in Winter Park" and an "alternative to the large commercial law firms." They get the nod from our readers as the Best Small Law Firm.

New rules:
As the size and complexity of the annual Readers' Choice Awards changes, Orlando Business Journal has revised its rules concerning the number of categories in which individuals or companies can be recognized.

In the past, winners were based solely on the total number of votes. However, this year's winners are limited to just one category per person or company.
For those getting the most votes in more than one category, the editors chose the most appropriate category in which to receive recognition, based on a variety of criteria.

THERE’S OIL IN MY BACKYARD. I'M RICH...MAYBE

2006-11-01T11:52:00.000-08:00

Winter Park Home, Volume 4 / Issue 4, 2006

We all have dreams of finding natural wealth in our own back yard, just as Jed Clampett did. Of course the likelihood of your striking oil in Central Florida is as probable as finding three feet of snow on your lawn.

What you may find, though, is a letter in your mailbox from an individual who owned your property 40 years ago, informing you that he not only owns the mineral rights below the surface of your land, but also, that he has the rights to dig on your land for those minerals (called rights of entry). This letter may go further on to state that for a mere $800 he will release those rights of entry in your favor. Impossible? The Orlando Sentinel reported a similar incident recently in its Central Florida Edition, but for property in Palm Beach County. Could it happen here? Let’s look at some facts:

Ownership of land consists of surface rights (to build on or to use the surface of the land) and mineral rights (the rights in the minerals that lie beneath the surface of the land, which includes the right to dig for those minerals, unless otherwise released). Both the surface rights and the mineral rights are automatically transferred when property is conveyed, unless a contrary intention is stated in a deed reserving those mineral rights.

Historically, the State of Florida reserved these mineral rights, including the right of entry, in many of its land transfers to private citizens. Often referred to as “Murphy Deeds,” these conveyances recited the State’s reservation of rights to “a one-half interest in any minerals taken from the subsurface area, together with the right of entry.” Ultimately Section 270.11 of the Florida Statutes was passed in 1986, effectively releasing the State’s right of entry for mineral reservations for any “contiguous tract of less than 20 acres in the aggregate under the same ownership.” Most Florida residence owners, and many commercial property owners, therefore do not have to be concerned with this right of entry for a State of Florida reserved mineral interest.

Interestingly, however, even though the State has granted the automatic release of the right of entry by this statute, it will rarely release the rights to any royalties in the underlying minerals.

Private rights of entry-where a private individual or business entity retains a percentage interest in the mineral rights, together with a right of entry, are more problematical. In Lake and Volusia Counties, for example, many properties are subject to these reservations, and the Lake County public records are laden with releases for specific tracts of land.

Should you be concerned? It depends on where you live in Florida. In Orange and Seminole counties, these private mineral reservations are unusual; in Lake and Volusia counties, they are more prevalent. In Northwest and Southwest Florida, these mineral reservations are commonplace.

If you receive a letter requesting money to release the right of entry, the first thing you should do is look at your title insurance policy and determine if there is an exception for mineral reservations on Schedule B. If there is none, you should contact your underwriter at the number provided on the jacket of the policy for guidance. If you fail to contact your underwriter you might effectively waive any rights to make a claim under your policy. Even if there is an exception for these mineral reservations, your concerns probably should be minimal. In developed residential areas the owners of these mineral reservations are generally not interested in actually mining the land, but rather in generating income from these releases. Additionally, permits would need to be obtained from various governmental authorities not only to dig for the minerals, but also, realistically, to uproot property owners from their homes.

Clearly, you should NOT pay anyone for a release without first determining whether or not the claim is legitimate and the release benefits both you as the current property owner, and all future owners of the property. If the matter isn’t resolved by your title insurance policy and your underwriter, you should consult with an attorney to determine your rights.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

WATER, WATER EVERYWHERE – IS ANY OF IT MINE?

2006-09-01T08:47:00.000-07:00

Winter Park Home, Volume 4 / Issue 5, 2006

The Florida peninsula is bordered on the East by the Atlantic and on the West and South by the Gulf. Together with its rivers, and approximately 30,000 lakes, Florida truly is a land where there is “water, water everywhere.” People frequently ask me who owns these different bodies of water, whether the general public has an unlimited right to use them for recreational purposes, how to access them, and the rights of the landowners abutting them.

While dry land can be bought and sold, bodies of water and the land beneath them are treated differently. When Florida became a state in 1845, it acquired ownership of all land lying beneath non-tidally influenced (i.e. fresh) navigable water bodies. Fresh water lakes were presumed to have been navigable if the original government survey for the state depicted (“meandered”) the shorelines of these lakes. Unfortunately, although many of the lakes in Florida are navigable, only 190 of the approximately 30,000 lakes were meandered. In addition, no list has been compiled to define additional navigable vs. non-navigable bodies of water. This has created considerable difficulty in determining the ownership of land lying beneath the water’s surface in Florida’s fresh water bodies.

Unless the State of Florida has conveyed the underlying land to the private property owner, title companies generally will not insure any portion of the submerged land. This is true even when the lake has dried up or the property has been platted by a developer. This analysis also applies to rivers, which are treated as navigable and subject to the same considerations as lakes.

Consider the rights of a private landowner who I’ll refer to as Joe Johnson. Joe and his wife recently purchased a house on Lake Maitland, which is a non-meandered lake. Every weekend, a couple of fishermen anchor their boat about twenty yards from Joe’s shoreline and spend much of the day fishing. Joe finds them annoying and doesn’t want people anchored and fishing near his property. A survey of Joe’s property was done in conjunction with his purchase of the property and he was given a copy. The survey depicts his lot as extending more than 20 yards into the lake from the shoreline. So, he gave me a call seeking advice on whether he could legally force fishermen to move their floating weekend retreat to somewhere beyond his property lines.

I remind Joe of our prior discussions regarding the language exceptions in the title policy. Title insurance policies generally will NOT insure the land below the ordinary high water line of lakes and rivers - even if the property has been deeded by the State of Florida - because of the overriding rights of the public to use the water above the land. These rights - to swim, boat, and fish in the waters of the lake - are called “riparian and littoral rights.” I also reminded Joe that there were two specific exceptions in his title policy that address both of these issues, and which exceptions are automatically contained in all title insurance policies for land situated on navigable water bodies. The first - “This policy does not insure beyond the ordinary high water line of Lake Maitland” - means that the title insurance company will not protect or enforce any of Joe’s ownership rights to use any portion of the land extending into the waterway. The second is that “riparian or littoral rights are not insured.” This means that the title policy does not guarantee Joe’s individual rights to fish, swim, or boat in the lake’s waters – even though he and his family, as well as other members of the general public, enjoy these recreational activities. It also is an acknowledgment that other members of the public may have the right to use these same waters adjacent to Joe’s property. In other words, as long as the fishermen are not harassing Joe, or intentionally blocking his way, there isn’t much he can do.

Although the results may not seem fair to Joe, it is the “public welfare” character of these waterways that controls. Furthermore, the rights to use these waters extend beyond other lot owners adjacent to the waterway to include the general public. As long as members of the general public use a public access route to reach the body of water, are entitled to enjoy these same waters at their leisure.

Public access routes may vary, but are typically provided through public parks maintained by a city or county government. The public is required to abide by the rules and regulations imposed by the governmental authority (e.g. speed limits, opening and closing times), and generally must respect the private character of the properties along the waterways. Access rights may also be through private grants of easement (usually given to present and all future owners of the benefited parcel). Subdivisions abutting waterways typically contain language on the plat granting all lot owners access to the waterway. Specific access locations are also normally depicted on the plat.

Many lakefront properties have boat docks that extend beyond the ordinary high water line and into the lake’s waters. For the reasons recited above, title insurance policies typically will not insure these dock areas. Permits must be granted by local governmental authorities to build or repair the boat docks (or to remove weeds, high grass, etc.). Failure to obtain these permits may result in fines and court orders to remove the improvements at considerable cost to the property owner.

Most of the land lying beneath the lakes and rivers throughout Florida is vested in the State of Florida, for the benefit of the general public. Even if the state has conveyed the land lying beneath the water to private individuals, the general public legally accessing those navigable waters will usually have the same rights to the use of the waters.

I advise Joe that, although he has every right to the exclusive use of the land lying above the ordinary high water line of his property, his usage of the waterway is not exclusive. It is shared by other members of the public who have obtained legal access to those same waters.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

YE OLDE FLORIDA HOMESTEAD - PART II

2006-07-01T07:43:00.000-07:00

Winter Park Home, July / August 2006

Everybody loves to save money. Surprisingly, the Florida constitution and statutes provide an excellent opportunity to own your home and save property taxes at the same time.

As discussed in the Real Estate Law column that appeared in the May/June issue, Florida homestead laws evolved to protect the family unit. In that column, we focused on the joinder / alienation provisions of the law. This column will cover the other two key aspects of the homestead statutes--protection from creditors and real property tax reductions.

In order for property to be characterized as homestead, the property owner must intend to use the property as his/her principal residence and physically reside on the property. Furthermore, homestead property is limited in size (but not in dollar amount) to one-half of an acre within the city’s limits, and up to 160 acres outside city limits, all of which must be contiguous.

The Homestead Exemption
To qualify for the homestead exemption, you must first own and reside on the property as of January 1st of the year in which you apply, and submit a formal application to the County Property Appraiser by February 28th of that calendar year. This application requires that you state under oath, that you are in fact residing on and will continue to reside on that property as your principal residence. Typically, if the deed is dated and notarized prior to January 1st, but not recorded until shortly after the 1st, the appraiser will treat the property as being owned by January 1st. Once the property owner has completed the filing process, the homeowner enjoys certain tax advantages and protections from creditors.

Tax Advantages
The homeowner receives an automatic $25,000 reduction in the assessor’s valuation of the property, thereby creating a reduction in the amount of the annual property taxes for the homestead property. In addition, once the property is characterized as homestead, the County cannot reappraise and increase the valuation of the property, for assessment purposes, more than 3 percent in any given year. Only homestead property enjoys this limitation.

Many people don’t realize that it is also possible for a husband and wife to have two separate homesteads. For example, Michael Jones separately owns and resides in a home located in Seminole County. Mary, his wife, also separately owns and resides in a home in Orange County. Each is entitled to file a separate homestead exemption. There are also many scenarios in which one or more unrelated people own property, but only one of them qualifies for the homestead exemption. If Michael Jones and Sam Smith jointly own property and only Michael resides on the property, Michael can claim the homestead exemption, but the 3 percent appraisal exemption will only apply to Michael’s share. The other half owned by Sam, isn’t exempt and is subject to taxation at the full valuation rate. This is true even if the County or the municipality allows the full $25,000 reduction in tax valuation of the property.

Protection from Creditors
The third important aspect of homestead law is the protection from creditors. This is the subject of constantly evolving law. According to the homestead laws, if you purchase property and immediately make it your homestead, the Florida Constitution provides that judgment creditors cannot take your property. Furthermore, any judgment lien against you cannot attach to your homestead property, nor to the proceeds of the sale of your homestead property (as long as those proceeds are used to purchase other homestead property). For instance, Michael has a $2 million judgment against him stemming from a car accident in which he was at fault. The judgment creditor cannot take or attach his homestead property. Although, proving that the property is his homestead may (but does not always) require a court order, with notice to all of his creditors.

If a court order is obtained, it must also be timely. An order dated January 5, 2005, for the sale of property in February of 2005 will not be sufficient if the original sale fell through and the property is back on the market for sale in January of 2006.

Not surprisingly, title companies are reluctant to insure a sale of property in which a $2 million judgment lien has been filed against the seller. The cost to defend a subsequent action by the judgment creditor, even if the defense is successful, far exceeds the amount of premium that the Title Company would receive for the transaction.

Public records are laden with homestead affidavits that attempt to avoid the impact of judgment liens on property. Generally, these affidavits have not been accepted by title insurance companies, even though there is some statutory authority to do so. Recently, title companies have become more flexible, permitting reliance on affidavits that comply with their guidelines for smaller judgments.

Certain forms of liens are superior to the Florida Constitutional protections and cannot be avoided by either an affidavit or a court order. Federal tax liens “trump” state law, and must always be satisfied. Homestead property can be taken to satisfy these obligations. Real property ad valorem taxes are also given the same priority.

Finally, consult with your legal advisor before taking any “creative” steps with your homestead real property. Asset protection is a specialized field of law, and proper advice will not only anticipate the insulation of your homestead property from creditors, but also will also factor in the evolving status of federal bankruptcy law.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

YE OLDE FLORIDA HOMESTEAD

2006-05-01T08:18:00.000-07:00

Winter Park Home, May / June, 2006

The early settlers used to homestead land by building a home, and staking the land boundaries. In present day Florida, we do things differently. To homestead property we first purchase the property, which has already been staked, and then we move in. If only this was all there is to the concept of homesteading, a word that is the source of more questions, and more confusion, than any other in Florida real estate law.

This scenario will give you a glimpse into the legal concept of homestead property: Charlie Hustle is in a high stakes poker game, and has a full house. Convinced he has a winner, Charlie bets the house--literally. Charlie, his wife Charming, and their twin 10-year old boys, all live in the house. Winn Takem tops Charlie with four 3s. Since he is the only one in title, Charlie signs a deed in front of two witnesses and a notary public (who just happens to be at the game), conveying the house to Takem who records the deed the following day. Ashamed, Charlie forgets to tell Charming what happened. Two weeks later, Charming is served with an eviction notice by the county sheriff. Charlie may be an idiot but Charming isn’t. She hires an attorney and gets the deed set aside. Why – because of the Florida homestead laws. Although the title was solely in Charlie’s name, Charming and the family still have their rights of homestead.

Homestead laws were created to protect the family unit, and revolve around the concept of intent. In order for property to be characterized as homestead, the property owner must both reside on the property and INTEND to reside on the property as his/her principal residence. Only individuals can get the benefit of our homestead law--corporations, partnerships, limited liability companies, and the like cannot apply nor qualify for homestead status. This means that if you buy a house in your corporation’s name, and reside on the property, you cannot obtain the benefits of Florida’s homestead laws. There is also a size limit applied to homestead--up to one-half of an acre within the limits of a municipality, and up to 160 acres outside of the city limits, all of which land must be contiguous.

There are three separate and distinct homestead perspectives to consider--alienation of homestead property, protection from creditors, and real property tax reductions. This article focuses on the joinder / alienation provisions. Protection from creditors and taxes will be presented in a later article.

The Florida Constitution requires that every deed, mortgage, or other transfer of an interest in homestead property be signed by both the husband and the wife, even if only one of them is in title. Imagine the frustration of Jim Jones, who is transferring from New York to Orlando and has signed a contract to purchase a home solely in his own name. He has had a loan approved by the bank and has been told by the bank officer that his wife won’t have to attend the closing. At the closing table he learns that he can’t complete the purchase of the property (thereby losing his rate lock on the mortgage) because his wife is on out of town on vacation and can’t be. Many lenders insist that they don’t need to have the wife to sign the mortgage. When it is explained to the lender (typically an out of state lender unfamiliar with Florida law) that the transaction cannot be insured without the wife’s signature, they have a different response to the question.

An equally frustrating situation is that of a buyer in the middle of an acrimonious divorce, whose spouse refuses to sign anything while they are still married. You can imagine the potential for some unscrupulous twisting of facts in order to make the transaction close. If someone other than the buyer’s spouse poses as the spouse and signs, then the buyer’s spouse can (and often does) have the deed set aside, or the mortgage negated, since the real spouse didn’t sign. This is true even if the property has been transferred a couple of times since the time of the defective transfer. Title Insurance claims do get filed over this exact scenario.

Equally disconcerting to property owners are the Constitutional limitations on devising the homestead by will. This body of law is complex and confusing. Simply stated, the law says that homestead property cannot be devised (transferred at death by a will) to anyone if the property owner has a minor child and spouse. In other words, the property must pass through the laws established by the Florida legislature. Additionally, if there are no minor children and there is a spouse, the only person you can devise the homestead property to is the spouse.

Many people try to bypass this limitation by transferring their property into a revocable trust. Unfortunately, there is case law that states this is not effective (if you are survived by spouse and/or minor child). The net effect will be the loss of time and the potential expense of a probate proceeding. This body of law is frequently misinterpreted by non-lawyers and lawyers alike. It is highly recommended that any estate planning involving homestead property include the counsel of an attorney familiar with Florida homestead law.

The definition of homestead, as presented here, is relatively simple and straightforward. Yet there are many court cases interpreting this law and, not surprisingly, often with different results. This article is not designed to guide you through all the various nuances and interpretations of Florida homestead law. Suffice it to say that you should always consult with your legal advisor before taking any creative steps with your homestead real property.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Rollins College - Featured Board Member

2006-03-01T10:53:00.000-08:00

ROLLINGS COLLEGE AND CENTER FOR EVTREPRENEURSHIP ADMINISTRATION FEATURED BOARD MEMBER -

FRANK POHL
Founder, Pohl & Short, P.A.

The idea of starting a business was never far from the mind of Frank Pohl. He grew up surrounded by family members that started and built their own businesses. “I grew up in a family of business owners.” Once he decided to become an attorney, it didn’t take long for him to make the decision to start his own firm. “In the early nineties, I realized that there was an opportunity in the legal market place for a local business boutique law firm that could provide an alternative to the larger commercial law firms. I decided to move on the idea, open a new law firm, and give it a try.”

In the 7 years since then, Frank has built Pohl & Short into a respective law firm with over 15 associates and four main areas of business law including: Corporate Law, Commercial Litigation, Real Estate Law and a combination of Probate, Tax, Estate Planning, Trusts and Asset Protection Law. Their attention to detail and focus on the individual has given Pohl and Short tremendous success and an outstanding reputation in Central Florida.

As a successful entrepreneur, Frank Pohl knows the challenges and joys of owning your own business. “Managing people always seems to present the most difficult issues for most entrepreneurs no matter what the industry. Because our legal practice deals day in and day out with entrepreneurs, we have a unique perspective on watching other business owners deal with daily issues. Consistently, they tell us that it is the management of people that raises the big challenges. The most fun about starting a business is watching it grow over time through the efforts of those involved.”

The idea of “making it grow” was key in Frank’s decision to join the Center for Entrepreneurship Board of Advisors. Frank recognized the importance of entrepreneurship to the Central Florida economy and as a positive force in the development of Rollins students. “I joined the Board as a way to give something back to others and to help influence other to take risks.” And while risks are an integral part of the entrepreneur’s life, some things are better not left to chance. When looking to the future, Frank has a clear idea of how he would like to be remembered. His idea of a great legacy is “having a great family and being able to freely exercise a sense of humor.”

We appreciate Frank’s service on the Center Board of Advisors.

WHAT DO YOU DO WHEN THE SALE FALLS THROUGH?

2006-03-01T09:49:00.000-08:00

Winter Park Home, March / April, 2006

Protecting your rights as a buyer through specific performance

Imagine yourself in this scenario: for weeks, or perhaps months, you have been negotiating the purchase of your dream home. You’ve signed the contract, secured financing, and are ready to close on the property. The morning of the closing, you get a call from the seller, who backs out of the deal. Perhaps the seller got a higher offer than the price you agreed upon in your contract, or the seller learned that comparable properties in the area recently closed for a price higher than your contract price. You have your heart set on purchasing this property.

What options do you have?

One avenue you may pursue is to sue the seller for specific performance. Specific performance of a land sale contract means that a court will require the seller to sell you the property for the contract price.

The first thing you must do as buyer seeking a ruling of specific performance is show that you have fulfilled all of your contractual obligations and met all conditions as set forth in the contract. This means you will need to prove that you are ready, willing, and able to perform your end of the transaction, which includes being financially able to purchase the property.

One term to look for in your land sale contract is a “time is of the essence” clause. This clause requires each party to perform his/her obligations within an agreed upon period of time. If a party does not perform within the specified timeframe, the general rule is that his rights under the contract will be void. Thus, if you as buyer had the obligation to secure financing by a certain date and are extremely late in doing so, a court may take that into consideration when deciding whether to grant specific performance.

You must also show that an award of the legal remedy (usually monetary damages) is inadequate. Establishing that money damages are inadequate for a land sale transaction is rather simple. Since all land is considered unique, money damages to a buyer of land is an inadequate remedy at law.

Another requirement that must be met in seeking specific performance is to show that enforcement by the court is feasible. With regard to feasibility, courts will typically find enforcement feasible when all parties and property at issue are located in the jurisdiction of the court where the buyer brings the action. In this situation, the court may transfer the property by court order if the seller refuses to comply.

Finally, of the seller / defendant claims that he or she has defenses, the plaintiff / buyer must defeat those defenses to prevail.

One advantage to filing a lawsuit when a seller backs out of a land sale contract is that in addition to your lawsuit, you may also file a notice of lis pendens on the property. A notice of lis pendens is a document recorded in the public records which puts the world on notice that the specified property is the subject of your lawsuit. Thus, if the seller sells the property to a third party, that third party is deemed to have notice of your lawsuit and is then purchasing the property subject to the outcome of your lawsuit.

Although it is up to the court to hear all the facts of your case and determine whether to grant specific performance in your favor, having a notice of lis pendens recorded in the public records will likely hamper the seller’s efforts in selling the property to a third party, who may not want to become embroiled in litigation. Cutting off the seller’s ability to sell the property to a third party purchaser may give you some leverage in settling your dispute outside of court. In short, filing a specific performance lawsuit may be enough to prompt the seller to honor his or her commitment.

In any event, you should consult an attorney if you are faced with a situation in which the sale falls through due to a seller’s failure to perform. The attorney can help clarify the steps necessary for obtaining a court ruling for specific performance and explore other options that may be more advantageous to you.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Building Central Florida – New Member Profile

2005-11-01T10:39:00.000-08:00

Building Central Florida, November, 2005

Pohl & Short, P.A. is a business boutique law firm, focusing its practice on the representation of Florida’s small and mid-size companies. A boutique firm is one with a concentrated practice area, providing high quality legal services at a reasonable rate. A boutique law firm serves as an alternative to the large law firms in which clients often lose a sense of personalized service. At Pohl & Short, most of the attorneys have years of experience in their practice area and handle their cases directly, rather than delegating them to less experienced associates.

Pohl & Short has recently joined ABC to highlight its long-standing representation of the various players in the construction industry, including private developers, public owners, general contractors, subcontractors, suppliers, architects, and engineers. Over the years, the firm’s attorneys have handled complex construction matters, including contract drafting and negotiation, scheduling claims, bid protests, terminations, design and construction deficiencies, licensing issues, and lien and bond disputes. James C. Washburn, Esq., an attorney with the firm, is Board Certified in Construction Law, representing The Florida Bar’s highest level of recognition for an attorney’s competency in a particular area of law.

Pohl & Short recognizes that in addition to purely construction-related legal matters, their corporate clients and their principals have issues common to all small and mid-size business owners. The ability to address these other tangential issues - with the personalized service associated with boutique firms - is what makes Pohl & Short the firm of choice for many in the construction industry.

In addition to purely construction related matters, our attorneys practice in the following areas of business law: corporate law, commercial litigation, real estate law, and a combination of probate, tax, estate planning, trusts, and asset protection law.

Pohl & Short’s Business Transactions Department offers sophisticated legal services, drafting documents and providing tax and other regulatory advice regarding the organization, operation and sale of all business entities, both domestic and international.

Our Tax and Estate Planning Department allows our clients to have their personal estate planning and business legal matters met in an atmosphere dedicated to meeting their unique needs, including family business succession planning.

The firm also maintains a Real Estate Department, providing legal guidance on issues such as: commercial land acquisition development, mortgage financing, commercial leasing, zoning and land use, residential real estate, as well as, our own in-house title division.

Pohl & Short’s Litigation Department handles arbitrations, alternative dispute resolutions, mediations, and administrative hearings at the federal, state and local levels.
To discuss how Pohl & Short can serve your legal needs, please contact us at (407) 647-7645 or visit our website at www.pohlshort.com.

IF ONLY…WHEN “FEE SIMPLE” MAY NO BE SO SIMPLE.

2005-09-01T11:05:00.000-07:00

Winter Park Home, Fall, 2005

A potential client (who I will refer to as Ann) recently asked me to handle the closing on a property that she owned with her aunt, who had died two months earlier. Ann had already signed a contract to sell the property and was looking forward to a problem free closing. As I read the deed, it became immediately apparent that this wouldn’t be a simple closing process. Unfortunately, the deed did not include the magic words “as Joint Tenants with full rights of survivorship”.

I had to tell Ann that she only owned a half interest in the property and that she would have to probate her aunt’s estate in order to close on the property. Furthermore, unless she is the aunt’s sole heir, Ann will have to share the property and its proceeds with one or more of her aunt’s heirs. Shocked at this unexpected discovery, Ann repeatedly told me that she and her aunt had numerous discussions regarding the disposition of the property in the event of her aunt’s death. These discussions took place before they bought the property and her aunt clearly wanted Ann to assume sole ownership of the property when the aunt died. I had to explain to Ann that although I understood her position, the law says otherwise.

Regrettably, this situation is all too familiar. Unless the intentions of each party are clearly expressed in the deed, the wishes of the parties cannot be acted upon. They simply become unrealized wishes.

There are three “fee simple” (fee simple means unconditional ownership) forms of ownership pertaining to real property (or “tenancy”) by two or more individuals. These forms are tenants by the entirety, tenants in common, and joint tenants. Each form has specific purposes and, when properly stated, will have the intended results.

Tenancy by the Entireties applies ONLY to married couples. If the grantee of a “fee simple” deed is a husband and wife, a tenancy by the entirety is created, even if the deed doesn’t recite the marital status. If a contrary intent is desired, it must be specifically stated in the deed. This means the husband and wife own the property as one entity. If one dies, the property automatically goes to the other. It also means that any judgment against one (and not both) cannot be enforced against the property as long as they remain married. However, if the parties get a divorce, the survivorship and judgment benefits go away and they become tenants in common. Even if they subsequently patch things up and remarry, the newlyweds would have to execute and record a new deed in order to re-establish the marital/entireties status.

The most frequent for of tenancy used by non-married individuals is known as “tenancy in common.” Each individual owns his/her share completely, to the exclusion of the other owners. In a tenancy in common, the proportional shares are whatever the parties want (equal or unequal). The proportional shares must be expressed in the deed or the parties are presumed to be equal shareholders. Each tenant can sell his or her share by separate deed.

If no form of tenancy is stated on the deed, the property is automatically owned as tenants in common. This oversight brought about Ann’s problem. If a party to the deed dies, his/her share must be transferred by will or the laws of intestacy to the deceased’s heirs. In such a case, there will be the additional expense to probate the estate in the circuit court, as well as the time lost in processing the necessary forms. For some people, this process is quite acceptable. For others, it creates a costly and unnecessary hardship. For those individuals, the “joint tenancy” form can be used to avoid the probate process. If two or more non-married individuals want the property to pass automatically to the surviving parties, “joint tenancy” is an excellent way to accomplish that objective without probate.

Each tenant must have an identical interest in the property, and the joint tenancy language, which I referred to earlier as “the magic words,” must be present in the deed. For example, if three people buy property as joint tenants, their interest must be one-third each. If any other percentage is stated, the parties will own the property as tenants in common, even when the words “joint tenants with full rights of survivorship” are stated in the deed. In cases where the joint tenancy language is clearly stated, any one of the joint tenants can still terminate the joint tenancy status by separately selling, mortgaging, or even leasing his/her interest. By doing so, that tenant will now own his/her property as a tenant in common with the remaining property owners. However, the other owners will remain joint tenants as to each other.

Let’s say that Harry, Ron and Hermione take title to property as joint tenants with full rights of survivorship. Later, Ron separately deeds his share of the property to Rubeus. Rubeus now owns his share as a tenant in common. If Rubeus dies, his interest in the property will need to be probated. But, Harry and Hermione will remain joint tenants as to each other. If Hermione dies, her interest will automatically go to Harry, thus leaving Harry with a 2/3 interest in the property and Rubeus with a 1/3 interest as tenants in common.

At the closing table when two non-married people are asked whether they want to purchase the property as joint tenants or as tenants in common, I hear many different responses. Often, there is a hesitation, an unstated query of “what is in my best interest.” The question may be easy for a mother and daughter to answer, but not so easy for two unrelated individuals.

As a morose as it may seem, when entering into a “fee simple” ownership contract, it is important to anticipate the worst case scenario-the death of one of the parties. Otherwise the survivor could be left to sort out a host of legal problems while thinking, “If only I had addressed this issue when we closed on the property.”

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

MECHANICS LIENS & HOW TO AVOID THEM

2005-07-01T07:13:00.000-07:00

Winter Park Home, Summer, 2005

As a Winter Park homeowner, you are undoubtedly going to be contracting for repairs or improvements to your property from time to time. For small jobs involving a single tradesperson or a company that performs all facets of the work, the process is usually pretty straightforward. The company does the work and you write a check for the agreed to contract price.

Larger and more complex undertakings can often involve several subcontractors and suppliers brought in by the general contractor. That’s when the Florida mechanics lien law becomes a very important aspect of the project. The law provides the homeowner with certain protections and also requires specific warnings to help the homeowner navigate and assure payment of multiple bills--often from unknown suppliers, subcontractors and laborers.

Let’s assume that you’ve decided to build that new master bathroom. You contract with Slamemup Renovations to handle the job. Slamemup, acting as general contractor, will probably bring in a variety of subcontractors and suppliers to provide the materials and do some or all of the work. You make progress payments to Slamemup and expect the company to pay the subcontractors and suppliers their share. If the subcontractors fail to receive payment for their products and services, they can file a lien against the property to assure payment.

A lien is a statutory mechanism that allows the unpaid lienor to have the property foreclosed and sold, if necessary, in order to receive payment. The mechanics lien law also allows the foreclosing lienor to recover attorneys’ fees and costs as well as the entire value of the lien. Now that you are sufficiently alarmed and all of those unscrupulous contractor horror stories you’ve read over the years have come flooding out of the deep recesses of your mind into the forefront of your consciousness, you should also know that the Florida lien law provides a reporting system that helps you keep track of the entire payment process.

Each supplier, subcontractor, or (in some cases) laborer who is not directly contracting with the homeowner is required by statute to give the homeowner a notice that they have worked on the property. This document is called a “Notice to Owner” and must be delivered within 45 days following the first delivery of materials or first work performed on your home by that supplier or subcontractor. Failure to provide a Notice to Owner within the specified time period results in the absolute loss of any right to later claim a lien against the home.

Depending on the complexity of the project, you should expect to receive these notices from multiple parties. You may not have even been aware of some of them. The Notices are provided so that you can police your general contractor and ensure that at every step along the way each and every party who should be paid has been paid.

The Notice to Owner will also ask you to contact the subcontractor or supplier and ensure that they have been paid prior to disbursing funds to the general contractor. It helps assure that you don’t wind up paying twice for the same services or materials.

These notices will be delivered to your home via certified mail because statutes require that suppliers and subcontractors send their Notice to Owner by that delivery method. The notice process is set up in such a way that the homeowner can rely on certified mail to ensure that the notices are delivered and when they arrive. The homeowner has no obligation to seek out parties who do not provide a Notice to Owner.

Savvy homeowners keep a log of each Notice to Owner received and require proof of payment from the general contractor before disbursing funds or require a progress payment affidavit from the contractor as a condition to making a payment.

Each supplier or subcontractor must record a Claim of Lien within 90 days of the last date that the individual or company worked at or delivered supplies to your home. The statutes also require that the homeowner be provided with a copy of the Claim of Lien by certified mail in order to ensure that the homeowner knows of the outstanding bill prior to disbursing any final payments to the general contractor.

Before making any final payments to a general contractor, the homeowner should require a Final Contractor’s Affidavit, wherein the general contractor swears that all subcontractors and suppliers have been paid in full under penalty of criminal law.

Although few home renovation or repair contracts go awry, it does happen. Whether it’s a well-intentioned general contractor whose business collapses or an unscrupulous contractor who collects the lion’s share of the money and then skips town, the result is the same – a homeowner who must deal with unpaid suppliers and subcontractors. Thus, the advice of an attorney should be sought to explain the “ins and outs” of the Mechanics Lien Law and to assist the homeowner in obtaining the appropriate affidavits from the general contractor with respect payments to all those who participated in the enterprise.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Boutique Firm Sticks To Early Roots

2005-03-04T06:33:00.000-08:00

Pohl & Short, P.A.
Year founded: 1993
Name partners: Frank Pohl, Houston Short
Attorneys: 14
Total staff: 55
Practice areas: Real estate, business law, commercial litigation and tax and estate planning
Web site: www.pohlshort.com

Pohl & Short, with 14 attorneys, calls itself ‘the alternative to a large law firm.’
By Jill Krueger/Staff Writer

ORLANDO—A dozen years ago when attorney Frank Pohl and Houston Short broke away to start their own firm, they searched far and wide for a formula to sustain what they wanted: a boutique law practice. Pohl, in fact, traveled to New York, Chicago and Los Angeles to observe the inner workings of successful specialty firms.

In shunning a general practice structure, the partners established in 1993 a firm, they say, rooted almost exclusively in four practice area: real estate, business law, commercial litigation and tax and estate planning.

Today, Pohl & Short, P.A. has not wavered from its focus. The firm targets small to midsize businesses that are dealing with complex problems and want more personalized service than large law firms can offer.

“We are the alternative to a large law firm,” says corporate and tax law attorney Gary A. Forster.

‘Preventive law’
Though Pohl & Short started with three lawyers and a paralegal, the firm now has 14 attorneys and a total staff of 55 people.

Pohl gives several reasons for the firm’s longevity.

Among them is the fact that the firm practices “preventive law.” Pohl refers to the firm’s attorneys as “counselors at law” who build relationships with their clients and help them solve problems before they develop into big issues.

Take, for example, Dr. Alan M. Cohen, chief executive officer and medical director of the National Deaf Academy LLC.

“I have not had a single contract with a secretary or a paralegal,” he says. “I have direct access to three senior attorneys whenever I need it.”

Cohen says he’ll continue doing business with Pohl & Short, because “it is a small commercial firm that offers sophisticated legal services.”

Limiting firm’s size
Pohl & Short recently added a new partner and a litigator. But unlike many other small law firms, Pohl says he’s limiting the firm’s size.

“Our goal is no more than 15 or 16 lawyers,” he says. “We don’t want to add clients just to add clients, but to add quality clients.”

Rich Heinle, a corporate business law veteran previously with Foley & Lardner, was recently elected as a partner. Pohl also brought aboard Orlando litigator Steve McDonald, who has more than 20 years of experience.

Their backgrounds are typical of the firm’s attorneys, who have an average of 10-plus years of experience.

Beyond the two recent additions, Pohl says he plans to add two more attorneys at the most.

When you go beyond 15 or 16 attorneys, “it is hard to maintain the quality of what goes out the door,” he says.

Visit our website for more information on this subject.

WHO DO YOU TRUST?

2005-03-01T09:13:00.000-08:00

Winter Park Home, Spring, 2005

Trusts can be tricky. Consider the case of a man who turned to me when he ran into a huge obstacle that derailed his efforts to obtain a mortgage from a local bank. Ironically, he had inadvertently created the obstacle by his own actions. Fresh from attended a seminar on trusts and excited about the potential advantages offered by these legal tools, the individual promptly conveyed his home into a trust, using forms he had received at the seminar. Unfortunately, he failed to name a trustee on the deed.

Upon reviewing the trust, I determined he had not only failed to name himself (or anyone else) as the trustee, but also had not granted any powers to a trustee anywhere in the trust. He had, in effect, written his property into an inaccessible box. He could neither sell nor mortgage it until substantial legal work was undertaken to extricate him from this self-inflicted problem.

Trusts are often used to purchase real property. When properly set up, they are an effective form of ownership. Their purposes include, but are not limited to, estate planning, insulating property from the claims of judgment creditors, and/or allowing multiple properties to be purchased without disclosing on the public record the identity of the actual principals. Let’s examine the basic format of a “trust” and some of the issues associated with conveying real property in Florida, when title is held in a trust.

A “trust” is a form of ownership by which a Grantor transfers property to a named individual (a “trustee”), under the terms of a written document (the “trust”), to administer the property for the benefit of one or more individuals or entities (the beneficiaries). In most trusts, known as “active trusts,” the trustee is given the power to make all decisions involving the assets of the trust, including the power to sell, convey and mortgage real property, without interference or direction from any other parties. In other trusts, known as “passive trusts,” the beneficiaries direct the trustee on how to act – the trustee in this example is more of a figurehead, without any real power.

Conveyances involving trusts must include both the name of the Trustee and the name of the trust itself. It is the Trustee acting on behalf of the trust, and not the trust itself, that has the legal power to convey real property. If the land trust powers are recited in the deed, but the name of the trustee is not shown on the deed, the benefits of any land trust will be lost, since the trustee will have to prove his identity on the public record. This can only be done by recording the entire trust, or relevant portions of the trust. If the trust is passive, each one of the beneficiaries will be treated as an actual owner of the property, and will also have to execute the deed or mortgage. Since most trusts are created to avoid letting others know the terms of the trust and the names of the beneficiaries, the advantages of placing the property in the trust will obviously be eliminated in this case.

Homestead is another factor to consider when conveying property into trusts. Under Florida law, if the trustee uses the property as a primary residence, any deed or mortgage by the trustee will also have to be signed by the trustee individually, along with the trustee’s spouse.

There is also a misconception that placing property into a trust guaranties that the property will not have to be probated when the trustee dies. Although this may often be true, it is important to be guided by competent legal counsel. The following example illustrates a situation where property held in trust still needs to be probated.

Michael Johnson, a divorced father of minor children, owns homestead property and places it into his trust, naming himself as the trustee, while reserving the right to revoke the trust at any time. Mr. Johnson then dies without leaving a will. The successor trustee named in the trust now contracts to sell the property.

Even though the language in the trust clearly authorizes the successor trustee to sell the property, Florida law prohibits the successor trustee from transferring the property because Mr. Johnson was survived by minor children. The property will have to be probated because minor children have rights in homestead property that must be probated.

There are obviously many factors to consider when creating a trust.

Before transferring any real property into a trust, you should always obtain competent legal advice to determine the correct parameters of your trust document, and the best language to be placed into the deed when you initially purchase the property on behalf of the trust.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

SURVEYS CAN BE A BUYER’S BEST FRIEND

2004-10-01T10:54:00.000-07:00

Winter Park Home, Winter, 2004

As an attorney involved in real estate closings and the issuance of title insurance, I find that clients frequently raise the issue of a property survey. The question is almost always the same. “Do I really need a survey for this property or am I just throwing money away on an unnecessary exercise?”

If a mortgage lender is involved, you probably won’t have a choice. Most banks and mortgage companies require a survey at closing. It’s for their protection…and yours. Even if it’s a cash sale, I always tell buyers to get the survey. The buyer needs to know the exact location of the property boundary lines in order to know precisely what is and what isn’t part of the property.

Over the years, the exact location of boundary lines can often become fuzzy in people’s minds. An owner may think a boundary runs to the left of an old oak tree, when it actually runs to the right. As a result, improvements made during the previous owner’s tenure may encroach on a neighbor’s property or a neighbor’s improvements may encroach onto your property.

Another common occurrence is an improvement that encroaches on a utility easement. In many cases the consequences of such an encroachment are almost nonexistent. In others, they may be catastrophic. If a house sits directly over a power easement through a lot, the power company could make the owner move the house. Fortunately, in unusual situations like this, power companies will usually agree to re-route the utility easement or (if it isn’t being used) vacate the easement entirely.

When considering a property purchase, it’s easy to assume that an existing fence or hedge accurately reflects the actual property boundaries. All too often, that’s not the case. Never assume that the owner’s recollection is accurate or that the location of greenery is related to actual legal boundaries. Even seemingly harmless encroachments can cause legal problems down the road. When that happens, the question really becomes, “who pays for the remedy?”

You want to know BEFORE the closing, that your property is clear of any significant encroachments. Even if you decide that an encroachment is acceptable to you, it could have a negative impact on your ability to sell the property in the future.

Surveys can uncover property-related problems that range from the mundane to the arcane. A good survey will not only reflect the location of all physical improvements and public utility easements, it will also delineate public right-of-ways. At the arcane end of the spectrum, a survey could point out that the property is not legally adjacent to a public street. Most of us would assume that you would be fully entitled to drive to and from your house without interference. However, that isn’t always the case. For example, if the property is located next to a dirt road, you will need to ascertain that you have a legal right to use that road to access a public street or highway. (Interestingly, a number of homes in Central Florida are, in fact, landlocked.)

Surveys also depict recorded building setbacks and the location of fences. If you plan to build a new home or addition that will extend into the building setbacks, make sure that you can get a variance to the setbacks prior to purchasing the property. Without an approved variance, the city will not issue a building permit. Even in the unlikely event that you do manage to circumvent the need for a variance and acquire a building permit, the association (in a platted subdivision) or a next door neighbor could object and bring suit to prevent construction or force you to comply with the setbacks.

If you buy an existing home that violates setbacks, the possibility of a challenge becomes increasingly unlikely and unsupportable with the passage of time. Even if the house is old, a fence extending into neighbor’s property or into a public right-of-way, may have to be removed or relocated if the city or adjacent property owner objects.

A survey can also record physical evidence that someone is using the property in a manner inconsistent with your exclusive ownership. For instance, there might be a pathway crossing through your property from a neighbor’s property. This could be evidence of a prescriptive (an unrecorded right to cross the land based on usage over time) easement by neighbors. Blocking their usage by putting up a fence may seem a reasonable solution, until they file suit to force you to take down the fence and allow continued use of the path across your land. You may legally prevail in fighting the suit, but the effort could be costly.

The survey normally becomes an integral part of an Owner’s Policy of Title Insurance that is issued as part of the property closing. Under Florida law, providing a current survey at closing will remove any generic survey language and exceptions from the title policy. The issued policy will reflect only the matters specifically appearing on the survey. This effectively insures you that there are no adverse matters, except those shown on the survey. If the survey company fails to reflect a substantive problem and that problem causes you to suffer a financial loss, you may have a claim against both the title insurance policy and the surveyor.

Surveys help you identify and understand any potential problems associated with a property. They provide useful information for deciding whether or not to complete the purchase; renegotiating the terms of the sale or requiring that all potential problems be resolved prior to closing; and, clarify the manner in which you can expect to improve and enjoy your land.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

WHEN A TREE FALLS IN WINTER PARK...WHO PAYS?

2004-09-01T07:01:00.000-07:00

Winter Park Home, Fall, 2004

After the hurricanes tore through Winter Park, many homeowners found themselves poking through a mass of limbs, branches, and leaves to assess the damage to their homes, cars, and other valued possessions. Like most of us, they hadn’t really thought much about who would ultimately be responsible for the extensive damage that those normally benign shad trees can cause when they come crashing down.

Many of us assume that the owner of the property on which the tree formerly resided would be the responsible party. In most instances, that’s not the case.

According to Frank Pohl, partner at Pohl & Short, a Winter Park law firm specializing in real estate law, “In general, it doesn’t matter whose property the tree was located on prior to its collapse. Once that falling tree crosses your property line it becomes your responsibility.” You and your insurance company are responsible for removing the carcass and repairing or replacing any structures, vehicles, or other items on your property that were damaged or destroyed by the wayward tree.

However, Pohl notes that there are exceptions to the rule. If the neighbor’s tree was in obvious decline through damage or disease for a significant period of time prior to falling on your property AND you had made several attempts to notify the neighbor of your concerns in writing (preferably with copies to the city’s Forestry Division), you may have a case for suing the property owner for negligence.

Proving negligence is very difficult without a strong paper trail of prior notifications that went unheeded. So, Pohl cautions that the generally accepted premise that the falling tree becomes your responsibility upon crossing your property line is the only realistic approach in most situations.

Visit our website for more information on this subject.

Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Seminole Chamber of Commerce - 1999 Small Business Award

1999-10-07T19:10:00.000-07:00

PRESS RELEASE: Winter Park, Florida
October 7, 1999

Winter Park Law Firm Recipient of
Greater Seminole Chamber of Commerce
"1999 Small Business Award"

Pohl & Short, P.A. was named a winner of the 1999 Small Business Award by the Greater Seminole Chamber of Commerce. The Greater Seminole Chamber of Commerce commended Pohl & Short, P.A. as a small business that demonstrates hard work, vision and entrepreneurial spirit. The offices of Pohl & Short, P.A. are located in Winter Park, Florida.

Candidates for the Award were judged on four areas: Human Resources and Community Involvement; Innovation and Imagination; Growth, Stability, and Staying Power; and The Future Goals of the Business.

Pohl & Short, P.A. considers itself an "old fashioned" law firm wherein trust is established between lawyer and client. Pohl & Short, P.A.’s lawyers have exclusive practice areas and tries to deliver its services at reasonable rates. Pohl & Short’s approach to legal services has been to provide the consumer with an alternative to large law firms wherein the quality of its lawyers matches what one would expect to find in large firms but where the atmosphere is one of a small "mom and pop" business.

The law firm of Pohl & Short, P.A. plans to continue into the future as a business boutique law firm that services the legal business needs of small to mid-size businesses. The law firm hopes that at the same time it provides quality legal services to its clients, that it also provides the type of working environment that benefits not only its employees and its clients, but also the community at large.

Pohl & Short, P.A. Recognized by Fannie Mae 1998

1998-10-30T19:07:00.000-08:00

Pohl & Short, P.A. was recognized by Fannie Mae as one of their top three closing agents in the Southeast Region of the United States. Pohl & Short, P.A. was nominated for the "Signature Award" at the 1998 Awards Banquet in Houston, Texas. Pohl & Short, P.A. was commended as a law firm that excels in innovative problem solving. The offices of Pohl & Short, P.A. are located in Winter Park, Florida.

OBJ - Pohl's 'Boutique' Enjoys Healthy Growth

1996-05-31T12:00:00.000-07:00

ORLANDO BUSINESS JOURNAL

WEEK OF MAY 31-JUNE 6, 1996

Pohl’s ‘boutique’ enjoys healthy growth

By ALEX FINKELSTEIN
Staff Writer

The Winter Park firm of Pohl & Short, created in September 1993 because of its founder’s frustration with big law firms, has doubled its client base and experienced a 30 percent annual growth rate in billings.

Frank L. Pohl, who says he left his former firm largely because he felt stymied by in-house committees “meeting every time you have to make a decision,” declines to disclose his firm’s gross billings or its number of clients.

“Just say it’s more than six and under 15,000,” says Pohl, who keeps the numbers close to his vest for an obvious reason: “Even though growth opportunities are there, the current market throws off only so much business.”

“We must be doing something right for the small business community or we wouldn’t be expanding or even be in business ourselves today,” Pohl says. “We’re a small business ourselves.”

At 6,500 square feet, Pohl & Short is the largest tenant in a 30,000-square-foot office building off downtown Winter Park at 280 W. Canton Ave.

“I don’t know of another boutique shop in metro Orlando that is doing what we are doing,” Pohl says. “That is, offering and delivering quality legal services at reasonable rates. In fact, I don’t know of another boutique shop similar to ours in Orlando at this time.”

His is not a discount operation, however.

“Just like accountancy or any other kind of professional service, you can get legal services far less expensively at firms smaller than ours,” Pohl says.

“We’re the alternative to the big guys’ hourly rates,” he says. “We’re not the cheapest, and we’re not the most expensive.”

Pohl & Short fees are “flexible” and will vary depending on the amount of research involved. "Our lawyers are not given a quota to run up billable hours for a client just for the sake of reaching that office’s monthly or quarterly quota,” he says.

“If we have three hours of research on a case, for example, and we know we can make a reasonable profit by charging for less than that amount, we’ll do it if it makes good business sense.”

“We’ll do it because we don’t have the overhead of the major firms. We don’t have marble floors or pay high rents. We don’t have that same pressure to meet goals or quotas that most lawyers have at the big firms.”

Pohl says he started his firm only after realizing Orlando offered no alternative choices for legal services.

“I researched New York, Chicago, Detroit, Los Angeles and other large metropolitan centers and found they all had boutique shops except for Orlando,” he says. “I knew then my concept was on track.”

Pohl defines a “boutique shop” as one that offers expertise in the four main areas of business or commercial law: litigation, real estate, corporations and a combination of taxes, estate, trusts and asset protection.

The Columbus, Ohio native concedes he “probably couldn’t do what we’re doing now three or four years ago because we wouldn’t have been able to find the quality legal talent to do so. My fervent wish is for the big law firms to get even bigger and more successful so that we will be able to continue drawing off some of their top talent.”

Pohl says his current staff joined him from larger firms for various reasons, none of them based primarily on six-figure compensation.

“It may sound corny, but many professionals today want to be working in a certain office ambience,” he says.

“They’re looking for a certain lifestyle. They don’t like to be just another number in a big office. Most want to be part of ‘a family’ of professionals. Some want regular recognition. Others prefer to work without a business development manager breathing down their backs.”