USA – FLORIDA Law and Practice Contributed by: Eduardo M. Soto and Fabio Giallanza, Weiss Serota Helfman Cole + Bierman, P.L
7.2 Assigning Responsibility for the Design and Construction of a Project Design-bid-build, design-build and construction management (at-risk or agency) are all widely used in Florida. In design-bid-build, design and construction responsibilities are separated. Design-build places responsibility with a single entity, often reducing co- ordination risk. Construction managers may provide pre-construction services and assume performance risk depending on the structure chosen. Allocation is largely project-driven. 7.3 Management of Construction Risk Construction risk is managed through indemnities, insurance, performance warranties, limitations of lia - bility and waivers of consequential damages. Stand - ard contractual risk-shifting devices are enforce - able, subject to statutory limits on indemnification in construction contracts. Builders’ risk insurance and contractual claims procedures are standard. Florida law restricts certain indemnities but generally permits negotiated risk allocation. 7.4 Management of Schedule-Related Risk Schedule risk is commonly addressed through liqui - dated damages, milestone requirements and incentive provisions. Florida law permits liquidated damages if they reasonably estimate anticipated harm and are not punitive. Excusable and compensable delay provisions address force majeure and owner-caused delays. Con - tracts frequently include notice requirements and strict procedures for asserting time extensions. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Owners commonly require performance and payment bonds, especially on public projects. Letters of credit, parent guarantees and escrowed retainage are also used in private developments. Bonds are statutorily required in many public contracts but are also com - mon in large private projects. The form and amount of security depend on contractor creditworthiness and project risk profile. 7.6 Liens or Encumbrances in the Event of Non-Payment Contractors, subcontractors and suppliers may assert construction liens for unpaid work under Florida’s
Construction Lien Law. Owners may remove liens by payment, bonding off, contesting the lien or filing a notice of contest or transfer. Strict notice and timing requirements apply, and failure to comply can invali - date lien rights. Lien waivers are commonly used dur - ing progress payments. 7.7 Requirements Before Use or Inhabitation Before a project may be occupied or used, a certifi - cate of occupancy or certificate of completion must be issued by the local authority having jurisdiction. This confirms compliance with building codes, zon - ing, life safety and inspection requirements. Tempo - rary certificates may be issued for phased occupancy. Use without proper certification may result in fines, shutdowns or enforcement actions. 8. Tax 8.1 VAT and Sales Tax No sales tax, or other VAT equivalent, is charged on the sale or purchase of real estate in Florida. 8.2 Mitigation of Tax Liability In acquisitions of large Florida real estate portfolios, parties frequently use structuring techniques designed to lawfully reduce or defer documentary stamp and related transfer taxes, consistent with Chapter 201, Florida Statutes, and long-standing case law. One common method is a share deal structure, where the buyer acquires equity interests (LLC memberships or corporate stock) in property-owning entities rather than taking title by deed. Equity transfers are gen - erally treated as transfers of personal property and are not subject to documentary stamp tax, provided the entity is not a “conduit entity” and the transac - tion does not fall within the three-year look-back rule under Fla. Stat. §201.02 (1)(b). Another widely used approach is careful entity forma - tion and timing. Where real property is contributed to an entity at fair market value with documentary stamp tax paid upfront, future equity transfers can avoid con - duit-entity exposure. Investors also rely on mergers or statutory conversions, which transfer real property by operation of law without deeds and therefore without stamp tax, so long as no separate conveyance instru -
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