Old Florida Condo Law
Originally in Florida, bulk condo buyers were considered developers if they bought more than seven condos in a building of 70 condos or more. Ultimately, this made these bulk buyers legal liable the same as developers for construction defects if they assumed the responsibilities in writing - giving condo buyers another available remedy for poor construction.
However, the bill - which originally became effective in 2010, but now extended until July 2015 - eliminates the "developer" designation for bulk condo buyers, meaning these investment groups may not be liable for construction defects.
]]> The purpose of the bill was to stimulate condo sales with the idea that investors would be more likely to buy condos if their legal liability was limited. This purpose has in fact been realized in South Florida, with more than 100 bulk condo deals in Broward, Palm Beach and Miami-Dade counties, according to the Bal Harbour consultants CondoVultures.com. These deals have a value totally almost $3 billion.Given the success of this bill in South Florida, some want to make this law change permanent. However, it is important to remember that these sales are partially coming at the cost of individual condo buyers consumer protections. After the real estate market rebounds, Florida lawmakers may realize this bill has in fact stripped private individuals of remedies that they once had for construction defects.
Source: Sun Sentinel, "Bulk condo bill extended for 3 years," Paul Owers, April 10, 2012
]]>Unfortunately, those with a connection to the estate may not always approve of the way the personal representative is handling their administrative duties, which can lead to Florida probate litigation, and in some circumstances, a request for the removal of the personal representative.
In order to remove a personal representative in Florida, certain steps must be taken and many requirements met. Recently, a Florida appellate court opined on one of these requirements, namely due process.
Third District Court of Appeals Decision
Last week, the Third District Court of Appeals in Florida reversed a probate court's order that had removed a woman as the personal representative of her brother's estate because the probate court had failed to meet due process requirements.
]]> The probate court had originally removed the woman as personal representative pursuant to a generalized order asking her to show cause why she "should not be held in contempt for a purported failure" to comply with court orders as the personal representative, among other reasons. However, the appellate court took issue with this process and stated, "Because removal was ordered without notice or an evidentiary hearing, the ruling did not meet even the most rudimentary requirements of due process."Generally, due process is the conduct of proceedings according to a set of rules and principles that are created to protect and enforce private rights, which include the right to notice and a fair hearing. Since these requirements were not met in this case, it was ordered that the personal representative be reinstated to her position.
As this decision illustrates, it is of vital importance to know all of your rights and obligations before entering any type of probate litigation, which an experienced probate attorney can always provide guidance on.
Source: Third District Court of Appeal, State of Florida, Lezcano v. Estate of Hidalgo, April 25, 2012
]]>According to the complaint, the SEC alleges that the accused and an investment company generated at least $11 million in new investment since 2005 by claiming bogus annual returns - returns as much as 26 percent. They further allege the accused transferred investor monies of more than $2.5 million to entities under his control.
In a statement to the South Florida Business Journal, Eric I. Bustillo, Regional Director Miami's SEC Office, said, "This is a sad lesson that investors must always be skeptical of claims of high and steady investment returns, even when the manager is recommended by trusted friends or members of one's own community."
]]> Florida Investment ScamsUnfortunately, this type of lesson has been repeating dozens of times in Florida in recent years. Every kind of investment scam imaginable has been perpetrated against unsuspecting investors - everything from multi-billion ponzi schemes to smaller local real estate investment scams.
Often times, in order for investors to seek remedies after being defrauded they must be able to show that their investment was made in reliance on a misrepresentation or nondisclosure that a reasonable person in a similar situation would not have know to further investigate.
Ultimately, investment fraud can have a devastating impact on the families of investors, which is why they need to be vigilant in discovering fraud and in protecting their rights.
Source: South Florida Business Journal, "SEC files charges against...," April 6, 2012
]]>The reason for the uptick in investment fraud cases is likely due to the fact that Americans in general are investing in the securities markets at a higher rate than they ever have in history. This has the side effect of making the economy increasingly dependent on the integrity and performance of the securities markets.
Preying on this increased dependence on securities markets are unscrupulous persons and institutions - the fraud that they perpetrate leads to billions of dollars of loss every year. Most often, these individuals target individuals, financial institutions, companies, retirement funds and government agencies.
One of the most common types of investment fraud is securities fraud. "Securities fraud" refers to many different types of illegal activities that encompass deceiving investors or manipulating financial markets. Three of the most common types of illicit schemes common to Southern Florida are:
]]>To avoid being a victim of securities fraud, the FBI advises potential investors to be skeptical of investment promoters and sales pitches, and conduct their own research into the investment. In addition, investors should always check to see if the investment company is incorporated and make sure it is filing regular financial reports, as required by law.
Securities fraud is a serious offense under federal and state law. Offenses can be punished by imprisonment of up to 20 years. In addition, the Securities and Exchange Commission and the National Association of Securities Dealers can civilly fine persons and companies convicted of securities fraud.
Source: "Investment fraud is big business in Miami," The Miami Herald, 2/16/12
]]>The Marquet report - which was their fourth annual embezzlement study - analyzed 473 specific cases of embezzlement from 2011. These cases generally included only those employee theft schemes that stole $100,000 or more from their employers.
Not surprisingly, the study discovered that 72.3 percent of the schemes were perpetrated by employees who held accounting, finance or bookkeeping positions - with each scam lasting on average five years. In addition, 64 percent of the incidents involved female embezzlers, but on average, their male counterparts embezzled 25 percent more. The study also found that in almost 22 percent of all cases in which motivating factors were known the embezzler had gambling problems.
The study reviewed data from not only 2011, but also the three previous years. After reviewing four years worth of data, the report concluded that Florida was among the states most at risk of loss due to embezzlement, which also included Vermont and Virginia.
]]> Commons Signs of EmbezzlementAccording FindLaw.com - a leading provider of online legal information - some of the common warning signs of embezzlement include:
Business owners in Florida need to keep an ever-watchful eye out for employee embezzlement, but unfortunately even the most vigilant employer can be taken advantage of by an unscrupulous employee. When this happens, the business owner needs to pursue every legal avenue they have at their disposal to help recover their losses suffered through embezzlement.
Source: "THE 2011 MARQUET REPORT ON EMBEZZLEMENT," Marquet International, Ltd.
]]>Many homeowners' association members in Florida believe this is unfair and are finding a communal voice to make some changes. The Community Association Member Party has already signed more than 300 homeowners to its community in hopes of persuading lawmakers to create an agency that will protect homeowners, or at least expand their current unit to include them.
]]> Condo owners believe they have earned this right because they pay an association fee, whereas HOA communities are typically single-family, unattached properties that don't share common amenities. Condo and timeshare owners do pay their fee, although the fee for the Division of Florida Condominiums is only $4 per unit per year - a sum homeowners would gladly pay in order to protect their properties.Although having a government agency working alongside you isn't always a blessing, in the case of an HOA or Condo Association, it definitely is. Condo owners are not subject to government regulations, but they have support should they need someone to back them up.
Because homeowners do not currently enjoy this service, an experienced attorney can provide helpful advice when trying to resolve an HOA dispute or fraud claim. Until homeowners are protected by the Division of Florida Condominiums, Timeshares and Mobile Homes Agency, or until they have one of their own agency, an attorney may be the only person able to help them.
]]>In this particularly complex Florida trust litigation, the appellate court sided with arguments proffered by attorneys Keith Grumer and Maidely Macaluso of Fort Lauderdale based Grumer & Macaluso, P.A.
The emphasis of this particular case involved issues of probate and not the criminal liability surrounding their tragic deaths - specifically the case revolved around a revocable trust created by James Hughes years earlier.
In 1999, Mr. and Mrs. Hughes were married and Mr. Hughes subsequently executed a revocable trust. The trust provided that "Martha would receive the family home in Florida, the country home in North Carolina, a sum of one million dollars, the contents of the residences, and various other items of personal property," according to the court opinion.
Following their passing, the probate court deemed their deaths to be simultaneous - per Florida statute - since the coroner could not determine which spouse died first. Accordingly, Mr. Hughes' estate was to be disposed of as if he survived Mrs. Hughes - unfortunately for the heirs of Mrs. Hughes, it was unclear if she was required to survive her husband in order to receive the benefits of the trust, and thus be able to pass these benefits on to her heirs.
]]> At the trial level, the personal representative of Mrs. Hughes' estate argued that Mrs. Hughes' interest in the trust became vested when the trust was created - the trial court actually sided with this argument when it decided that Mrs. Hughes' interest in the trust vested prior to the death of Mr. Hughes, and thus Mrs. Hughes' heirs had an interest in the property.The appellate court ultimately reversed the trial court's opinion. The opinion was based on common law since the trust was created prior to the enactment of a Florida anti-lapse statute.
Under Florida common law, when the beneficiary or devisee (Mrs. Hughes) of a trust dies before the grantor (Mr. Hughes), a lapse occurs and the gift reverts back to the estate - which means the property belongs to Mr. Hughes' estate and Mrs. Hughes' heirs will get nothing. The court noted:
The intended beneficiary's interest lapses should the beneficiary predecease the grantor. Mr. Hughes was the sole trustee and beneficiary under the Trust during his life. Mrs. Hughes was among the contingent residual beneficiaries whose interest came into creation only upon the death of Mr. Hughes and who were entitled to distribution of the then remaining corpus of the trust. Because it was judicially determined that Mrs. Hughes predeceased her husband, her interest in the Trust lapsed upon her death.
Probate issues such as this only illustrate how complex these cases can be. It is always best to speak with a knowledgeable attorney before you find yourself in over your head in a probate dispute.
Source: Darian v. Weymouth
]]>With all the distressed real estate in Florida, there can be numerous problems that may erode the value of the deal. If a property has been vacant for an extended period, there can be physical issues with the structure, from integrity of the roof to issues with the mechanical and plumbing systems that can represent large, unforeseen costs.
There can also be other undisclosed claims against the property. In the frantic building boom that preceded the crash, not all transactions received the care they deserved and formalities may have been overlooked. There may be conflicting claims fed by inaccurate or incomplete documentation.
]]> These formalities could undermine the title with potential mechanics and tax liens, which even if defective, may require expensive litigation to quash. Any of these could develop into protracted litigation that could further diminish the value of the deal.Sloppy construction could be exacerbated by poor or nonexistent maintenance after the property fell into foreclosure. While many of these problems should come to light during the due diligence made prior to the transaction, property from this period may need a much more exacting standard of examination.
What is the True Value?
Another issue is the inflated "value" that much property carried during the bubble. A buyer needs to be clear that many properties were never worth their loan values. Many properties were falsely inflated by the bubble and a $20 million property may now only be worth $10 million - making a $10 million deal today just average.
Before signing on the dotted line, an experienced commercial foreclosure attorney can review the transaction and help to see whether the deal will meet your expectations following the closing.
]]>After an internet user types in a search request, search engines generally display results in order of relevance using complicated algorithms. However, often times search results are not only based on relevance - for example, many search engines will also allow other websites to bid on particular keywords. Thus when a specific keyword is purchased and entered into the search engine, the website of that keyword purchaser will be listed as a sponsored link. Unfortunately, when a website owner purchases a competitor's trademark as a keyword, disputes inevitably arise regarding trademark infringement.
In order to prevail in a trademark infringement suit, the plaintiff must not only show that they own the mark, but also that the defendant's use of the mark in commerce creates a likelihood of confusion among consumers.
]]> In most cases brought against search engines involving keywords the court never addresses the issue regarding likelihood of confusion - but in one case that did, J.G. Wentworth v. Settlement Funding, a Philadelphia federal court determined there could be no likelihood of confusion because "[e]ven accepting plaintiff's allegations as true - i.e., assuming that defendant did in fact use plaintiff's marks through Google's AdWords program or in the keyword meta tags for its Web site - as a matter of law defendants actions do not result in any actionable likelihood of confusion under the Lanham Act."This area of the law in incredibly complex, and there has yet to be created an established test. However, it is believed that much of the analysis may have to do how clearly the link to a sponsored site is labeled following a search - if the sponsored link is obviously for a competitor of the trademark owner, it is less likely that likelihood of confusion will be found. After all, if an internet user types "Brand-X" into a search engine simply looking for a type of product, and gets some results for a clearly marked "Brand-Y" website, the argument that the user believes Brand-X and Brand-Y are the same is less persuasive.
]]>Generally, internet search engines use advanced algorithms to process an internet user's search request to display results in order of relevance. However, not all search results will be based solely on relevance. For example, many search engines will also allow websites to bid on certain keywords that internet users may enter as they search the web.
So, if a particular purchased keyword or phrase is entered into the search engine, the website of that keyword purchaser will appear as a sponsored link. In addition, some search engines also offer programs that recommend to the website owner certain relevant keywords that they may purchase.
However, purchasing keywords that also happen to be a competitor's trademark has created some debate in the internet community, with some disputes leading to lawsuits.
]]> Trademarks as KeywordsIn order to prove trademark infringement, generally one of the elements a plaintiff must show is that the defendant has used the plaintiff's trademark "in commerce." This element can be problematic, especially in the case of internet searches - when much of the process is done behind the scenes and never actually seen by the consumer.
Although not expressly decided in the Eleventh Circuit, it has been discussed in other areas of the country. The leading case is a Second Circuit case entitled Rescuecom Corp. v. Google, Inc. In this case, a competitor of Rescuecom Corp. purchased the phrase "Rescuecom" as a keyword, so that when internet users entered the phrase "Rescuecom," the competitor's website would be prominently displayed.
The court in Rescucom determined that since Google recommended the mark as a keyword in one of its advertising programs that the mark was in fact being used "in commerce" - despite the argument that the search algorithm itself was invisible to internet users.
The court was careful to note that this does not mean the trademark was infringed, but just that it was used in commerce and that the lawsuit could proceed. As for the other elements of trademark infringement in the internet context, please check back for future blog postings.
]]>This blog will serve as a forum for discussing the legal, regulatory, economic and business considerations that underlie what often turns out to be the central issue in many commercial disputes: how to apportion the loss when contractual commitments from several years ago turn out to have been based on overstated asset values in sales, lease or loan transactions.
For many lenders and borrowers since 2008, the main problem has been to avoid the worst consequences of performance or payment obligations that cannot possibly make economic sense today, but that several years ago looked sound enough in light of the ostensible asset values that underlay the original commitments.
Our civil litigation practice since the financial crisis gives our lawyers an excellent understanding of the ways that the contraction of equity values has affected the negotiation strategies, business practices and dispute resolution tactics of parties on both sides of the divide between buyers and sellers, lenders and borrowers, and landlords and tenants.
This blog will apply this perspective to comment on developments of interest to our Florida business litigation clientele. To see what our attorneys and others have to say about these issues, return to this page often. For additional information about our civil litigation practice, call or visit online the law firm of Grumer & Macaluso, P.A., in Fort Lauderdale.
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