Miami Business & Commercial Law Blog

There are many new construction projects starting in Florida almost all the time. These construction projects could include just improvements to existing structures and dwellings or could involve construction of completely new buildings. These construction projects generally begin with the owner of the property signing a contract with a contractor in which the contractor agrees to complete the construction and the owner agrees to pay the contractor for their work.

However, in most instances the contractor is not paid in full up front. There may be a down payment, but usually contractors are not paid in full until all the work is complete. This means that the contractor must simply rely on the owner's word that they will in fact be paid. Unfortunately, sometimes this does not occur, and the contractor can lose a lot of money as a result. So, to help protect these people, the law allows the contractor to place construction liens -- or mechanic's liens as they are commonly referred.

Some companies in Florida own the real estate they do business on. Other companies prefer to rent their premises. This can be very lucrative for the landlord, particularly when the real estate can be portioned out for use by multiple commercial tenants. However, just like real estate in general, the commercial real estate market fluctuates and buildings are sometimes worth more than at other times. Recently the market has been fairly hot, so there have been a number of sales as owners are trying to make the most on their investments.

In June there were a number of significant commercial real estate transactions. We previously wrote a post about one of the sales, but now the sale price is known. It has now been revealed that the sale price for the 1111 Brickell Avenue building was $248.5 million. Another office park was purchased for $34.75 million. Another office building sold for $23.7 million while two others sold for $13.5 million and $13 million. These new owners will now become the new landlords for the many different tenants in the respective buildings.

There are many different corporations in Florida. These corporations are set up to run businesses and ultimately make money for the shareholders of the corporation. However, since not all shareholders can effectively make decisions for the corporation, the shareholders of the corporation will select directors and officers to run the corporation. This means that the shareholders, who have invested their money in the corporation, need to put their trust in the directors that they will run the corporation competently. If they do not it could lead to business disputes.

To ensure this occurs directors of corporations have fiduciary duties to the shareholders. Generally this means that the directors have a duty of loyalty and a duty of care. Directors must use their judgment to make decisions that are in the company's best interest. This does not mean that every decision has to work out, but they need to act as a prudent person in their position would act. However, from time to time directors breach these duties and shareholders may have claims against them.

Construction is big business in South Florida, with its booming commercial real estate market. Occasionally, the rush to complete a project or development - or perhaps faulty engineering or design - can result in construction defects. When a construction defect is discovered in Florida, the typical procedure under state law is to file a notice of construction defect with the general contractor of the project. This is a requirement before a lawsuit can be filed.

The general contractor will then usually look to its insurer to cover not only the defects themselves but also to defend the contractor against liability for the construction defect(s) or to cover the costs of the defense. In one such case, Altman Contractors, Inc., general contractor on the Sapphire Condominium project - a high-rise in Fort Lauderdale - received numerous claim notices from condominium owners that alleged over 800 construction defects. Altman, in turn, tendered defense to its insurer, Crum & Forster Specialty Insurance Company.