USA – FLORIDA Law and Practice Contributed by: Eduardo M. Soto and Fabio Giallanza, Weiss Serota Helfman Cole + Bierman, P.L
and warranties commonly survive closing for a finite period, most often six months to one year, with longer survival for fundamental or environmental representa - tions. Seller liability is typically capped, often at the purchase price (and sometimes lower), and conse - quential and punitive damages are generally exclud - ed. Representation and warranty insurance is used selectively in larger or competitive transactions but remains less prevalent in purely asset-level commer - cial real estate deals than in corporate M&A contexts. 2.6 Important Areas of Law for Investors Each phase of a real estate investment will require special focus on a different area of the law. Real estate law considerations, particularly in the area of title or leases, form the backdrop of each phase in a real estate transaction. When evaluating an investment, tax law and govern - ance considerations are paramount. For example, in a syndicated investment, the tax residence of investors, as well as the “waterfall” rules for profit distributions, will need to be carefully evaluated. After a potential target asset has been identified and due diligence begins, then the focus shifts to other areas. Contract law principles are applicable to real estate contracts, including warranties and represen - tations and the remedies attached to them. Addition - ally, in the due diligence phase, particular attention is needed to verify that the property, as currently used and as proposed to be used by the buyer, complies with local land use and zoning requirements. 2.7 Soil Pollution or Environmental Contamination A buyer “inherits” the risks associated with any envi - ronmental conditions of a property. A buyer is there - fore exposed to the financial risks associated with the possible contamination of the property. To address this risk, buyers must carry out compre - hensive environmental due diligence assessments, conducted by environmental consultants who perform site visits and carry out soil sampling analysis. The most basic form of environmental site assessment (ESA) is known as a Phase I and it reviews current and historical uses of the property and surrounding
sites to identify potential environmental conditions. A Phase II ESA is typically conducted after a Phase I ESA identifies a recognised environmental concern. It involves targeted soil, groundwater, vapour or geo - physical testing to evaluate potential contamination and provide conclusions and recommendations. Additionally, it is customary for purchase and sale agreements to include environmental warranties and representations. These warranties and representa - tions are coupled with specific indemnities, to hold the seller responsible for any prior environmental con - ditions. Finally, because environmental representations are often tied to a knowledge qualifier, buyers in more significant deals are required to obtain pollution legal liability (PLL) insurance. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Comprehensive Plans and land development regula - tions listing the development parameters of a prop - erty, including uses permitted, density and floor area limitations, and other development criteria, are pub - licly available. Engaging with an experienced land use lawyer, particularly in the due diligence phase, is the best practice when it comes to confirming the devel - opment potential and roadmap for approval for the use of real property. Development agreements can benefit property owners by freezing development regulations and development fees as of the date of approval. Local governments often enter development agreements to memorialise and ensure compliance with local development regu - lations, infrastructure improvements required, and other considerations in connection with approvals for the development of real property – particularly in large-scale developments. 2.9 Condemnation, Expropriation or Compulsory Purchase Governmental entities, and some private entities (elec - tric companies, etc) in the State of Florida, have the statutory power of eminent domain. Pursuant to that power, these entities can acquire private property for public purpose upon the showing of necessity. Flor -
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