USA – FLORIDA Law and Practice Contributed by: Eduardo M. Soto and Fabio Giallanza, Weiss Serota Helfman Cole + Bierman, P.L
ida’s eminent domain process is governed primarily by Chapters 73 and 74 of the Florida Statutes. Before filing a condemnation action, the condemning author - ity must engage in good faith pre-suit negotiations, provide a written offer supported by an appraisal, and allow the owner time to respond. Importantly, Florida is a full compensation state, which means that the condemning authority must pay for the property being acquired, any damages to the remain - ing property (“severance damages”) and the reason - able fees and costs, including experts, of the property owner whose property is being acquired. 2.10 Taxes Applicable to a Transaction In a transaction involving the direct purchase and sale of Florida real estate, the primary transfer tax is the Florida documentary stamp tax on deeds under Fla. Stat. §201.02. The tax is generally YSD0.70 per USD100 of consideration (or fraction thereof). In Miami-Dade County, the base rate is USD0.60 per USD100, plus a USD0.45 surtax on transfers other than a single‑family residence, resulting in an effec - tive rate of USD1.05 per USD100. “Consideration” includes cash paid and any mortgage indebtedness encumbering the property, whether or not assumed. By market custom, the seller pays the documentary stamp tax on the deed, while the buyer pays recording fees, title insurance, and financing-related documen - tary stamp taxes (eg, on notes and mortgages under Fla. Stat. §201.08, taxed at USD0.35 per USD100 of principal, with limited caps and exemptions). In a share deal (transfer of stock, LLC interests or part - nership interests in a property-owning entity), docu - mentary stamp tax is generally not triggered, because equity interests are treated as personal property. However, an important exception applies to “conduit entity” transactions: if unencumbered real property was contributed to an entity without full stamp tax and an ownership interest in that entity is transferred within three years, stamp tax may apply to the equity transfer based on consideration. Partial ownership transfers can trigger tax only if they result in a taxable conveyance under the conduit rules or involve shifts of mortgage debt. Numerous exemptions exist, including transfers by operation of law (mergers, conversions),
gifts of unencumbered property, and certain family or estate-planning transfers. 2.11 Legal Restrictions on Foreign Investors Florida law imposes significant restrictions on certain foreign investors acquiring real estate. Under Senate Bill 264, which became effective 1 July 2023, “for - eign principals” associated with designated “foreign countries of concern” (including China, Russia, Iran, Cuba, Venezuela and others) are subject to target - ed prohibitions. Foreign principals are barred from acquiring agricultural land anywhere in Florida and from acquiring property located within ten miles of military installations or critical infrastructure such as airports, seaports and power plants. Existing owners are subject to mandatory registration requirements and daily civil penalties for non-compliance, and prop - erty acquired in violation of the law may be forfeited to the State. A narrow exception allows certain visa hold - ers to acquire limited residential property, subject to strict location and size limitations. Notably, individuals and entities domiciled in China are broadly prohibited from acquiring any Florida real estate, with very limited exceptions. The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) affects real estate transactions in Florida by expanding the jurisdiction of the Commit - tee on Foreign Investment in the United States (CFI - US) to cover certain “pure” real estate deals involving foreign persons. Under FIRRMA and its implementing regulations (31 C.F.R. Part 802), CFIUS may review – and potentially block, condition, or unwind, the purchase, lease or concession of US real estate by a foreign person when the property is located near sen - sitive military installations, airports, or maritime ports or could otherwise raise national security concerns. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate The most common method is granting a mortgage on the real estate along with a collateral assignment of revenues generated from the real estate. Additionally, and sometimes in conjunction with the mortgage, the equity holders of the entity owning the real estate will
758 CHAMBERS.COM
Powered by FlippingBook