This month, the Florida legislature passed a major revision of the laws governing limited liability corporations. Holland & Knight partner Lou Conti, head of the LLC Drafting Committee for the Florida Bar, tells us CRE execs need to become familiar with it, since it addresses provisions directly affecting LLC-owned real property. (Plus, it's a great beach read.)
1. It's An Improvement
The new version of the LLC Act is better organized, more comprehensive, and should be more useful for real property developers and investors, Lou says. The improvements are also timely, since CRE developers, lenders, and others are dealing with LLCs in ever greater numbers, and that trend will continue.
2. The Law is Wide-Ranging
The new provisions cover everything from voting rights of members, distributions, management--including conflicts of interest for managers--agency, and authority to bind the LLC, including the newly created Statements of Authority, Lou notes. It will also cover dissociation of members, dissolution, and winding up of the company. (It's more thorough than the Boy Scout handbook.) He also says that about 90% of the real estate litigation he sees is disputes among LLC stakeholders, many of whom are upset with the designated manager. The new law expands protections for LLC investors and allows them to sue the managers or LLCs directly.
3. It Deals With Non-US Entities
The new law will also allow, for the first time, domestication of non-US entities as Florida LLCs, for their operations in Florida and the US, without the need to create subsidiaries. Previously, non-US entities that wanted to domesticate to operate in Florida had to domesticate in Delaware, then register their Delaware LLC in Florida as a foreign LLC registered to do business in Florida, a circuitous process. The new law cuts out the need to go to Delaware (unless you wanna go to Dover Downs to see Tony Orlando in concert).
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