Is an “agri-hood” in your future?

VEG img_5251As reported by Anjali Fluker in the Orlando Business Journal, this is an idea I really like … an “agri-hood”.  Read more about it here: 2,900 Home “agri-hood” Planned Near UCF.  Having an agriculture background, I think it is great that neighborhood agriculture, like urban agriculture, is becoming a “thing”.  The more aware people are of where their food comes from, what it takes to produce it and where the bulk of it comes from (family farms, large and small), the better off we all are as consumers and the better off is the Florida agriculture industry as a whole.  Agricultural education is key.

“I’m waiting for …” What? Why? Don’t wait! Do something!

I saw the post below online this morning and it reminded me of one of those “lessons learned.” As a young associate I once started a response to a senior attorney (who wanted an update on the status of an important matter) with “I’m waiting for ….” That’s far as I got! “Why? Why are you waiting? Pick up the phone and call him. Get it done. GO.”

Whoa. My first reaction was “What a jerk!” And, frankly, he was. THEN, however, I realized the reason I was waiting was because I was intimidated at the prospect of calling the attorney on the other side. I was stalling because of my own insecurity. And there was no reason for it! He’d made his point.

Lesson learned: Whenever you find yourself starting a sentence with “I’m waiting for …,” take a second and think about whether you should be waiting for anything at all or whether, instead, you should take control and make something happen! More often than not that is the better choice!

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Too Busy To Blog! But that’s no excuse …

writing-life-300x200Sorry for my absence, lately! I understand now what marketing professionals mean when they tell me that the key to a successful blog is consistency, as in consistently providing new, meaningful content on a regular basis. Trust me, it’s a really hard thing to do, especially if you demand to personally write all of your own material, as I do. If I don’t write it myself I just don’t “feel” it, it’s not “me”, and that’s not the type of blog I want mine to be.

Unfortunately, the result is that I sometimes fall into the predictable pattern of many bloggers, which goes like this: (1) I find myself not as busy as I’d like to be or I’m busy with pretty mundane or unprofitable work; (2) I write articles to fill in any time gaps I may have, hoping to build business and find meaningful, profitable work; (3) I get busier with good work and feel (almost always wrongly) that I don’t have time for anything else; (4) I neglect to write articles because I’m so busy; (5) Suddenly, I finish a project or wrap up a big closing and realize I’m once again not as busy as I’d like to be; and (6) It occurs to me that I haven’t written an article in a long time and I think “Hey, I really need to write an article.” But it is SO hard to get those wheels turning again once they’ve stopped.

Successful blogging is very much like exercise. To get the greatest benefit one must exercise consistently and regularly because once you slow down or stop, it is 10 times harder to get going again. Same with the blog. Once I’ve slowed down or stopped, getting started again is akin to starting all over again with the proverbial “blank sheet of paper” that just stares back at you while all the great ideas for articles you used to have seem to have just evaporated.

Well, I’m back now and away we go. I’ll try to do better. The good news is that as I write this I am actually pretty busy. The commercial real estate market is clearly heating up, if not to the “hot as the sun” levels of the bubble years 5 or 6 years ago, at least to a nice, steady simmer, and maybe even a gentle boil. New buildings and shopping centers are going up all around the Central Florida area, and I have been working on quite a few commercial leases, purchase and sale transactions, and loan closings, but of course could always do more! Just down the street (17-92 in Winter Park) the new Trader Joe’s is going up fast, as is the new ABC Fine Wine & Spirits across from Winter Park Village, and it looks fantastic. Other parts of the Metro-Orlando area appear to be just as busy. Clients of mine who are commercial tenants report that they are having a more difficult time finding available space and shopping center owners are actively shopping for new centers. All of this bodes well for Central Florida’s economy and I’m glad to see things picking up.

Remember, if you are involved in commercial real estate, buying, selling, leasing or financing, get an experienced commercial real estate attorney (I hope it’s me!) involved early in the transaction. If you’re leasing, have your lease reviewed before you sign it. If you’re buying, have your contract reviewed before you sign it. Hopefully, we’ll all be busy with meaningful, profitable work for a long time to come AND I’ll do a better job of adding new, interesting content to the blog at the same time. And exercising. Mustn’t forget to exercise.

Thanks for reading!

BH

How Do You Define Confidence? Here’s One Way …

ConfidenceSaw this on the internet the other day and it rang true to me. For me, one way of defining confidence as an attorney is being able to respond to a client’s question by admitting, without any shame, “I don’t know … ” but being able to ‘confidently’ add “however, I can get that answer for you.” I recall an instance when, as a young associate at a large firm, I whined to my supervising partner, “You never explain anything to me. I feel like I’m always trying to figure everything out.” He looked at me, perplexed and a little annoyed, and said, “We’re ALL just trying to figure everything out.”

Lesson learned. NOBODY has all the answers.

When hiring an attorney don’t be dissuaded by one who says “I don’t know.” Instead, if he or she has the other characteristics you’re looking for … solid reputation, significant experience, strong work ethic, a personality you’re comfortable with … be encouraged by their willingness to be open and honest and rely on their determination to doggedly pursue the answer. Remember, the “law”, like the “internet”, is a massive thing. Nobody knows it all. BH

Two Words On “Attitude” …

Captain Jack Sparrow, channeling Charles R. Swindoll …

Captain Jack Sparrow - AttitudeThe longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, than education, than money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company … a church … a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past … we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you … we are in charge of our Attitudes.  Charles R. Swindoll

Confused By Documentary Stamp Tax and Intangibles Tax? Everyone Else Is, Too!

DocstampLast week I attended a Continuing Legal Education (CLE) seminar on Florida’s documentary stamp tax and non-recurring intangibles tax and I left feeling as though I knew less about about them than when I walked in. Now, of course, that’s not entirely true – a lot of good information was conveyed and I did learn things I didn’t know before. However, it did leave me keenly aware that Florida’s documentary stamp tax and intangibles tax are confusing even to the experts who study them closely.

I don’t really know why they’re so confused. The general rules are pretty simple: (1) any instrument that conveys any interest in real property for consideration is subject to Florida’s documentary stamp tax; and (2) any obligation to pay money that is secured by Florida real property is subject to Florida’s non-recurring intangibles tax.

With regard to documentary stamp tax, deeds, easements and options are just a few of the instruments that convey real property interests that are subject to the doc stamp tax so the list of instruments subject to tax is probably broader than most people realize. But, other than figuring out if a conveyance of a real property interest is occurring it’s all pretty simple.

Well, except that some conveyances are made for no consideration, such as gifts of property, transfers between spouses for estate planning purposes, transfers due to divorce, and so on. And sometimes even if you don’t think there’s any consideration the State has defined certain situations where consideration is “deemed” to have been given even if no money changes hands, so the definition of “consideration” can be confusing. But, really, other than figuring out if a conveyance of a real property interest is occurring and whether consideration is being given or is deemed to have been given, it’s all pretty simple.

Well, except that there’s also a long list of specific exemptions – situations where you would think tax would be due but the State says it’s not. And some of the exemptions aren’t very clear. But, really, other than figuring out if a conveyance of a real property interest is occurring and whether consideration is being given or is deemed to have been given and whether any random exemptions apply, it’s all pretty simple.

Oh, I forgot. Documentary stamp tax is also due on obligations to pay money (such as a promissory note) executed or delivered in the State of Florida. Executed OR delivered. In state. So a borrower and lender can take one step over the state line, sign a note, and no tax is due? Or take a boat out into international waters? True! As long as it is signed AND delivered outside of the State of Florida. So let’s just always do that, right, because we’ll save money, right? Not so fast. The tax is capped at $2,450 if it’s not secured by real estate so travelling out of state is generally not worth the trouble and expense because the cap makes it cheaper to just pay the tax in most cases. Why $2,450? The State is smart enough to have calculated the average cost that a person is willing to tolerate paying before going to all the effort to travel out of state with their banker just to execute and deliver a note. Pretty clever, huh?

[Update Feb. 13, 2014 – Question posed to me: What about an out of state lender with an out of state borrower who wants to sign a note while he’s here on vacation? With no other connection to the State of Florida except that he’s vacationing here. Tax is due because the note was executed in-state. Crazy!]

 Ok, I lied. I understand exactly why everyone is so confused. It’s because, sometimes, Florida’s documentary stamp tax makes no sense whatsoever!

At least Florida’s intangibles tax is pretty easy to understand. If you have an obligation to pay money secured by Florida real property the intangibles tax is due. Period. End of story. I think.

And so it goes. Just call your trusted commercial real estate attorney (hey, maybe that’s me!) if you have questions about Florida’s documentary stamp tax or non-recurring intangibles tax. It’s confusing enough that occasionally he or she (or I) may not have the answer immediately and might have to do a little research to get you the right answer, we might even have to call the Department of Revenue to figure it out, but it will be worth it (a) to save tax where tax can be saved, and (b) to avoid a Florida Department of Revenue inquiry if tax should be paid, but isn’t.

As always, thanks for reading. Please send your questions and comments and SHARE this article with others!

BH

It’s the end of “the closing” as we know it, but it feels fine.

Does it seem as if your life revolves around emails, texts, computers, tablets, the internet, the “cloud” and other electronic forms of communication? Well, the practice of real estate law really isn’t any different and it has changed the way real estate closings are typically conducted. In my commercial real estate practice, it is actually more unusual to have a traditional “sit down” closing, with all parties physically present at the same time, than for the closing to be handled electronically or by “mail away.” While residential closings are still often conducted in the traditional manner, although they are changing also, in my commercial practice it is more often the case that communications between myself and opposing counsel are by phone, email and overnight courier such as Fed Ex or UPS.

Typically, documents are drafted by the closing attorney, transmitted by email for review by the various parties and comments are received back via email or phone. The documents are then finalized and sent out for execution by email or overnight courier, executed and returned by overnight courier. Funds are wired in and wired out. In many cases I never meet opposing counsel or their client face to face and, in fact, I would say that has become the norm in more sophisticated transactions.

Personal checks? Unless you feel like waiting a couple of days until that check clears my trust account, forget it. Attorney trust accounting rules are so strict now that delivery of funds by check, even by certified check, just slows down the process. With my license to practice law riding on it, I’m not disbursing a dime until all funds are confirmed by my bank as being in my trust account and available for disbursement, so don’t try to talk me into cutting any corners!

That being said, I kind of like this new style of closing because, if done right, I think it makes the whole process less stressful for the parties involved. True, it can be impersonal, but it is more systematic, there’s more certainty and there is less opportunity for a last-minute dispute to arise at the closing table. However, it takes a lot of planning, attention to detail and good execution to make this all go smoothly.

To make sure your closing go smoothly, engage an attorney who is willing to put in the work early on to make the day of closing a “non-event.” Documents and closing statements should be prepared and provided for review in advance of the closing date. Comments should be provided and changes to the documents should be made quickly. Money should be wired into the closing attorney’s trust account in advance, perhaps a day or two before the closing date, if possible. If the closing attorney has all the executed documents in-hand and all the funds in his or her trust account no later than the morning of closing, the so-called “closing” becomes as simple as issuing notice to all parties that “we’re closed.” In other words, closing becomes a simple, stress-free non-event. That, in my book, is a successful closing.

An experienced commercial real estate attorney will work with you and guide you through the process in order to make your closing as uneventful as possible!

As always, thanks for reading.

BH

Commercial lull: Orlando builders slow down in October

From Orlando Business Journal – Nov 25, 2013

Central Florida commercial construction values fell in October, but residential values were up significantly.Jim Carchidi

Central Florida commercial construction values fell in October, but residential values were up significantly.

, Senior Staff Writer- Orlando Business Journal

After several strong months, metro Orlando’s commercial construction values were down 32 percent in October when compared to the previous year, according to a new report by McGraw-Hill Construction.

Builders in the Orlando region pulled $29.8 million worth of permits for commercial construction projects last month, down from $43.5 million in October 2012. But homebuilders’ residential construction permits were 68 percent higher last month, from $205.5 million in October 2012 to $344.4 million last month.

In all, total building permit values were up 50 percent last month, from $249.1 million last year to $374.2 million this year.

Increased construction activity signals continued job growth and recovery among construction companies, which make up one of Central Florida’s most dominant industries and are making a comeback from being one of the hardest hit during the Great Recession.

For the first 10 months of this year, residential and commercial permit values hit the $4 billion mark, a 53 percent jump from $2.6 billion in January-October 2012. Commercial construction values were 40 percent higher, from $876.6 million last year to $1.2 billion this year, while residential values grew 60 percent, from $1.7 billion last year to $2.8 billion this year.

Construction values were up 52 percent year-to-date in September.

Here’s some more future construction activity coming down the pike:

Exclusive: Expedia inks lease for Orlando welcome center

3 quick facts about AV Homes’ new Kissimmee project

Exclusive: 10 new projects in Orlando’s construction pipeline

Make sure to read Orlando Business Journal’s Nov. 29-Dec. 5 weekly edition for a closer look.

Due Diligence – Survey Review

In a previous post in this series on “Due Diligence” I explained, generally, the types of physical investigations a buyer of commercial real estate should undertake to learn more about the property he or she is buying. In another, I explained the format and content of a typical title insurance commitment and the basic process of the legal investigation of the legal status of the property, otherwise know as “title review.” An important component of due diligence that combines both an investigation of the physical properties of a site and its legal status is the “survey review.”  I hope that after reading this post you will understand how important the survey review is to the due diligence process.

If I can teach you nothing else about surveys, please learn that you need to GET ONE!

People ask me all the time, “do I need a survey?” In almost every situtation, residential or commercial, the answer is “YES!” If you are buying real estate, get a survey. It’s the only way to know what piece of land you are actually buying. Surveys are usually not all that expensive, relative to the other transaction costs, they’re usually not difficult to obtain, they convey a great deal of information very quickly (remember, a picture is worth a thousand words) and … from a legal perspective … they give you another party to hold accountable (the surveyor) if down the road you find that the property was described incorrectly or some other error occurred. So, just plan on getting a survey and get it early in the due diligence process, please! It will make all our jobs easier.

“Isn’t the description of the property already on the property appraiser’s website?” “Can’t I just use that appraiser’s parcel number or something?”

These are common follow-up questions I hear. “Well, it might be there,” I say, “at least some description will be there, but you can’t rely on it.” The property descriptions found on county property appraisers’ websites are often abbreviated versions of the full legal description of the property and they are notoriously incomplete, indecipherable or just plain wrong. They are a shorthand description of the property as made up by the staff person responsible for inputting that information on the appraisers’ website. The parcel identification number of a property is merely a reference number tying it to the tax information in the appraiser’s and tax collector’s database, including that potentially incorrect legal description, nothing more! It is just not appropriate to rely on that information as the basis for the conveyance of real property. So, no, you can’t just use that description or that ID number. Get a survey.

When the survey is ordered, or as soon thereafter as possible, you or your commercial real estate attorney should give the surveyor as much information as possible about the property and very clear instructions as to what is required for your transaction, including any specific requirements the lender may have. If available, the surveyor should be provided with the legal description of the property, a copy of the title commitment and copies of all title exception instruments, a copy of a prior survey, if one is available, and the names of all parties to whom the survey should be certified. The surveyor should be instructed to show all title exceptions (such as easements) that can be plotted on the drawing or, if they aren’t plottable, to explain why. The surveyor should also be instructed to provide a preliminary copy of the survey so it can be reviewed prior to the surveyor signing and sealing the final version. The more information that is provided early on and the clearer the survey instructions, the more time (and, potentially, money) that is saved by all parties involved. An experienced attorney should be well-versed in communicating with your surveyor so the process is as efficient as possible.

OK, I’ve got my survey (finally!) – What’s it telling me and how do I read this thing?

A typical survey contains several important categories of information, including (1) the legal description of the property, (2) the surveyor’s notes and survey legend, (3) the surveyor’s certifications and (4) the actual drawing of the land. These are also the primary areas to focus on when reviewing a survey so we’ll go through them one at a time, as we did earlier when we discussed the various sections of a title commitment.

(1) Legal Description

When I review a survey, I generally start by reviewing the written legal description of the property. The legal description might be very short or very long, simple or complicated. If a property consists of a platted lot, for example, the description might be as simple as “Lot 6, Riverview Acres, according to the Plat thereof …” and then cite the plat book and page where the plat was recorded. At the other end of the spectrum, the description could be paragraph after paragraph of confusing metes and bounds measurements and angles and distances and degrees and minutes and seconds and directions and weird language like “thence proceed … ” and “from the point of commencement” and what-not. No matter what, a careful review of the legal description is critical. Ideally, the survey legal description will be identical to both the description found in the prior deed by which the seller took title to the property and the legal description shown in the title commitment. And when I say “identical” I mean “identical.” As in, “identical,” down to every last degree, minute, second, measurement, comma, semi-colon, and so on. If those three descriptions are not identical, it is important to ask why and do further investigation to make sure you are getting the property you think you are getting. Primarily, though, the legal description should be reviewed for accuracy and consistency. All errors or typos must be corrected.

(2) Surveyor’s Notes and Legend

The surveyor’s notes contain informational and explanatory statements by the surveyor about the property or the drawing. For example, there should be a note stating whether the surveyor was provided with the title commitment and whether the survey depicts all items shown in the commitment. There should be a note about the surveying standard followed by the surveyor and that the survey complies with that standard. There may be a note confirming that all above-ground improvements, utilities and apparent uses of the property are depicted on the survey, and so on. The notes convey information from the surveyor that isn’t readily shown in the drawing itself and help explain and interpret what is drawn. Likewise, the surveyor’s legend is a list of symbols or abbreviations used by the surveyor in the drawing and their definitions or meanings. All of this is valuable information in understanding the content of the survey (both what is included and what is not included) and the manner in which the survey was prepared.

(3) Surveyor’s Certifications

The Surveyor’s Certifications may be contained in the surveyor’s notes or may be stated separately and they are a series of statements by the surveyor regarding the content of the survey and a list of the parties to whom the survey is “certified,” meaning the parties who are entitled to rely on the survey as being an accurate depiction of the property. Typically, the survey should be certified to the purchaser of the property, the purchaser’s lender, if any, the title company issuing the purchaser’s title insurance policy and the title agent. Sometimes the seller will ask to be a certified party, as well. Certified parties have standing to sue the surveyor if they rely on the survey and it is later discovered that it contained errors that caused that party to suffer a loss of some kind, so it’s important to provide the surveyor with a proper list of the parties to whom the survey should be certified. Often, a commercial lender will have a standard form of survey certification that it requires to be on the face of the survey or executed by the surveyor as a separate instrument.

(4) The Drawing

After reviewing the legal description, the notes and the certifications, the survey drawing itself can be reviewed and understood. Following the written legal description of the property, the property boundary as drawm should be traced to make sure the written and drawn descriptions are identical. Any discrepancies should be corrected or explained. This is like math, there’s only one right answer (usually.) It’s either right or it’s not. Your attorney shouldn’t be bashful about telling the surveyor to fix typos or to explain any discrepancies.

All title exceptions listed in the commitment should be shown on the drawing or, if they can’t be plotted, the surveyor should provide an explanation as to why not. Often the surveyor will confirm that certain title exception items do not affect the property at all and those items can then be deleted from the title policy.

The drawing should also be reviewed to confirm that there is legal access to the property (i.e. that there is some connection, either physical or legal, to a public right of way by which the property can be accessed,) that any easements do not adversely affect the proposed use of the property, that any beneficial easements necessary for utilities or any other purpose are in place, and whether any of the improvements located on the property encroach onto adjacent property, or vice versa. At the most basic level, the survey should be reviewed for signs of anything that impacts the title to the property, access to the property or the future use of the property. Your attorney should be experienced at identifying such things and have the ability to work with the surveyor or other affected parties to resolve any issues that are identified.

Signed and Sealed! 

After the preliminary survey has been reviewed and it is confirmed as meeting all of the requirements provided to the surveyor, the surveyor can be instructed to sign it and seal it with his official seal and to provide as many signed and sealed originals as are required by the various parties to the transaction. This final survey is an important instrument that will be valuable to you, as the buyer, likely for the entire period that you own the property. It may serve as the basis for future improvements to the property, future loans that may be secured by a mortgage on the property, the future sale of all or any portion of the property or even to resolve possible boundary disputes, and it will be well worth the time and money invested in it’s preparation and review.

Both the title commitment and survey provide a great deal of information about the property in their own right, but they are most valuable when reviewed and understood together. When reviewed by an experienced commercial real estate attorney, together they provide almost “3D” level of information about the property with respect to both its physical and legal characteristics. Involving your attorney early in the process and obtaining the title commitment and survey as quickly as possible during your due diligence period will greatly improve your knowledge and understanding of the real estate you are buying and will help ensure that your decision to purchase the property is a well-informed one.

As always, thanks for reading.  BH

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