Florida Lawyer Blog by Jim Martin

Florida recognizes three types of joint property: tenancy in common, joint with full rights of survivorship, and tenancy by the entirety. Only the last two avoid probate. Here’s the background.

When two people own property as tenants in common, each owns an undivided interest in the whole.  If one dies, then probate is required to deal with title to the property of the one who died.

When two people own property as joint tenants with full rights of survivorship, then each still owns an undivided interest in the whole, but when one dies his or her title automatically passes by operation of law to the surviving owner without probate. (There is controversy in Florida now whether creditors of the decedent can reach the joint property even though it does not pass through probate.)

When two people own property as tenants by the entirety, you know they are married because that form of ownership is reserved for married couples. The concept dates back to jolly old England hundreds of years ago when the property owned by husband and wife as tenants by the entirety was considered a “moiety” of title which could only be broken by voluntary act of both spouses. Thus, creditors of just one spouse could not reach tenancy by the entirety property. That rule still applies in Florida, which makes tenancy by the entirety a popular way for married couples here to hold title. In fact, Florida recognizes tenancy by the entirety in both real property like houses and in personal property like bank accounts and investments. And, of course, it avoids probate at each because tenancy by the entirety property passes automatically by operation of law to the surviving spouse.

Let’s apply the above concepts to a typical factual situation. A husband and wife in Florida own investment real estate as tenants by the entirety. One dies, and the property automatically becomes solely owned by the surviving spouse without probate.  Should he or she then add the children to the deed as joint owners with full rights of survivorship in order to avoid probate at her death?

Let’s suppose she did and then suppose that one of the children later has a nasty divorce proceeding and another child later has problems with credit card debt.  Can the children’s spouse and creditors reach the children’s interest in the joint property?  Yes, they can. This is a huge risk for anyone who adds someone else as a joint owner to their property for the purpose of avoiding probate.  While it might avoid probate at their death, it places the property at risk of being reached by the new joint owners’ present and future spouses and creditors.

Conclusion: It is simple to put property into joint names in Florida, but the effect is not so simple. Probate might be avoided, but at the risk of loss of the property before then to creditors of the new joint owners. There are other ways to deal with this problem. Ask your Florida lawyer.

I have drafted many legal forms in my law practice and have published many of them in book form through West Publishing.  Back in the days of standalone word processors and WordPerfect DOS, we could easily set the forms up to merge specific client information to generate documents for clients.  Not so with Microsoft Word. We had to use Hot Docs for Word.

I switched my law practice from PC to Mac in October 2009.  Alas, there is no Hot Docs for Mac. Then I switched my word processor from Microsoft Word to Apples Pages in February 2010. Alas alas, there is no Hot Docs for Pages. So, I have been hunting for software that searches and replaces multiple variables of text in an Apple Pages document in one pass.  And I found it…from Apple. It’s built in.  You just use Numbers to hold the client’s variable text, and you use Pages to generate the documents. Both Pages and Numbers are included in Apple iWork ’09.  Pages is Apple’s answer to Word, and Numbers is its answer to Excel.

Apple Pages mail merge can merge variable text from an Apple Numbers document into an Apple Pages document.  You usually think of mail merge as creating letters and envelopes. That’s how it works with Word, and that’s how it works with Pages, too. But Pages also lets you merge your own variables from a Numbers document into a Pages document.

The instructions for merging with your own variables, instead of just Address Book variables, are on page 236 of the Apple Pages ’09 User Guide. It’s really easy since it involves just two files, but I will walk you through the steps I go through to create legal form documents for merging with Apple Pages.  Here goes:

1. Find the legal form. Texas lawyer J. Harris Morgan taught lawyers years ago to throw copies of legal documents into whiskey boxes next to our desks. So, go to the whiskey box and pull out the form you want to “mergify”.  Let’s assume it’s a deed. Print it on page for convenience.
2. Mark through the variable text. Now, go through the deed and strike through all the variable text, like the grantor name, grantor address, grantee name, grantee address, property address, property legal description, county, etc.  Take your time. You don’t want Client A’s name to be on Client B’s deed.
3. Create the form document in Pages. Open Apple Pages and type that legal form document into it, or cut and paste it from an actual client file. This is your template.  Save it with a name like “Deed template 2010.03.27.pages”.  Note that I always put the date in the file name so that I know when I created it. Also note that you don’t need to save the file as a template.  Saving it as a .pages file works just fine.
4. Create the fill-in document in Numbers. Now open Apple Numbers and create a blank spreadsheet and save it with a name like “Deed fillin 2010.03.27”. This will hold the specifics for your client.  This is the variable text.
5. Enter the variable names in Numbers. In the first row type a variable name in each column.  For example, in row 1 column A type the variable name “grantor name”, and in column B type “grantor address”, etc.  Enter a column name for every variable text item in the deed (property address, property legal description, county, etc.)  Each name must be different.  Save this file for future use.  The second row will contain the client’s specific information in each column for those variables.
6. Enter the variables in the form document in Pages. Go back to your legal form document in Pages. Using your paper mark-up of the legal form as a guide, go to the first variable text item that you struck out and rename it with its variable name.  I add 3 asterisks around it for ease in viewing.  So, the first variable might be ***grantor name***. Then select that variable name and do the following in this order:
   1. In the form document in Pages, select the variable name including the asterisks so that it is highlighted;
   2. Click on the Inspector at the top of the Pages document’s bar;
   3. Click on the Merge button;
   4. Click the radio button for Numbers document;
   5. Navigate to your saved Numbers fill-in file and select it;
   6. Click the plus sign in the lower left of the Inspector window;
   7. Click Add Merge Field;
   8. Pages will insert your highlighted text into the window under the Merge Field column;
   9. The Target Name to the right is probably not the correct variable name that appears as a column in your Numbers file, so in the Inspector window click to the right of the Target Name that Pages inserted for your Merge Field and a drop down list will appear with all of the variable names you entered in the first row of your Numbers file; just select the correct Target Name for the variable text you are trying to insert in the form at that point (e.g., ***grantor name*** Merge Field should have “grantor name” as the Target Name if that is what you typed as the column heading).
   10. Do the above for every variable text entry in your legal form in Pages.
   11. Save your Pages document file for future use.
7. Enter client’s variable text in Numbers. The hard part is done. Open the Numbers fill in document.  Enter the client’s information in row 2 of each column. So, under the grantor name column you would enter “John T. Jones”.  Do this column by column. Save the Numbers file to your desktop or other location you can find.
8. Merge in Pages to create the client’s document.  Now go back to your form document in Pages and do the following:
   1. Click Edit;
   2. Click Mail Merge;
   3. Click Numbers Document and choose your fill-in Numbers document by clicking Choose and navigating to it if not already shown;
   4. Select Merge to New Document;
   5. Click Merge, and Pages creates a new Pages document by merging the client’s variable information into the Pages form.

So, this worked for me. I just discovered it today. So these instructions are still in beta, even if Pages and Numbers are not. Let me know if this works for you or if you have any tips or tricks of your own to make this work better. Thanks.

Jim Martin
St. Petersburg, Florida
March 27, 2010

How would you like to be pulled over by the Florida Highway Patrol for talking on a cell phone while driving. That might happen if the 2010 Florida Legislature adopts HB 323 in its present form.

The bill is intended to stop drivers from texting while driving. However, it defines texting rather broadly as “any digital communication manually created by a person to be transmitted electronically between physical devices”.  Oops. I think your dragnet picked up cell phones in that definition.

So even if you used a headset (which would be required if a different bill, HB 333, passes), you would not be allowed to use a cell phone at all.

Jim Martin 3/13/10

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The 2010 Florida Legislature is considering a bill that would prohibit deficiency judgments in foreclosures of homestead property.

If adopted and signed into law, HB 35 would take effect on July 1, 2010. It would prohibit the lender obtaining a deficiency judgment when foreclosing on a Florida homestead.

This would mean that the lender could only recover from the sale of the homestead at the courthouse steps. The lender would not be able to get a personal judgment against the borrower for the shortage between the sale price and the loan amount.

The bill is silent with regard to whether a lender may elect to sue only on the promissory note and not sue on the mortgage.  If this was not prohibited, then a lender could get a personal judgment on the note by electing not to foreclose the mortgage.

The Legislative Session only began on 3/1/10. Who knows whether this bill will become law?

Jim Martin 3/13/10

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The 2010 Florida Legislature is considering a law regulating how to remove data from computer media. It would apply to all state agencies and private corporations and entities doing business or located in Florida.

If adopted, HB 279 would become effective 7/1/10 and would mandate use of the purge or physical destruction techniques set forth in  ”Guidelines for Media Sanitization: Recommendation of the National Institute of Standards and Technology,” NIST Special Publication 800-88.

It would apply to all “any information that is deemed secret, private, personal, or confidential in nature; contains identifying information, including names, personal or business addresses, social security numbers, credit or debit card numbers, bank account numbers, telephone numbers, or photographs that are recorded on media.”

Sounds like a good idea. Wonder what it will cost everyone.

Jim Martin 3/13/10

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Welcome to America in the 21st century where in Florida we are considering adopting a “Foreclosure Bill of Rights”. The 2010 Florida Legislature has pending before it a bill that would provide additional rights when a homestead is foreclosed.

If adopted, HB 75 would become effective 7/1/10 and would allow a homestead owner to file a notice invoking the Foreclosure Bill of Rights. Within 45 days thereafter, the lender would have to obtain a new appraisal of the homestead.  Then the lender would have to provide the appraisal to the borrower along with copies of all the loan closing documents involving the mortgage.

So far so good in protecting the borrower. Here’s where the bill takes a left turn. The borrower would then have 30 days to provide a sworn financial affidavit and copies of 3 years of tax returns and bank statements.  These are documents that the lender would not have been entitled to receive before obtaining a judgment against the borrower.

So, this bill essentially requires the borrower to give up the right to keep these documents private in order to….what….require the lender to give the borrower copies of the loan closing documents and get a new appraisal. The loan closing docs are available through discovery, anyway. So far, the bill seems more beneficial to the lender than the borrower.

Jim Martin 3/13/10

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

When a client tells me “I signed a standard contract”, a red flag pops up in my brain telling me this is client code for “I didn’t read the contract before I signed it.”

A recent Florida case illustrates why I don’t like arbitration clauses. If the arbitrator makes a decision that misapplies the law, the losing party is stuck with the bad decision.  Call me old fashioned, but I want to be able to appeal the case when the decision-maker misapplies the law.  Iwant the chance for an appellate court to review what the lower court did, listen to my argument, then make its own decision on the application of the law to the facts. You don’t get that in final and binding arbitration.

The case is Commercial Interiors v. Pinkerton, which was released the week of September 28, 2009, by the Florida Fifth District Court of Appeal as Case No. 5D08-1493. The contract between Pinkerton and Commercial Interiors had an arbitration clause that required disputes be submitted to an arbitrator.  A dispute arose. It went to arbitration. One side claimed the contract was invalid.  The arbitrator disagreed. That side filed in state court, and the state court judge agreed that the contract was invalid.  Then the other side appealed, and the appellate court decided that id did not matter whether the arbitrator applied the law correctly or not.  The arbitrator’s decision stands, good or bad.

“An award of arbitration may not be reversed on the ground that the arbitrator made an error of law.” This is what the court quoted from a 1989 Florida Supreme Court opinion.  It noted that, “Arbitration, after all, is a form of alternative dispute resolution.” And so it is.  I just don’t like that you cannot appeal when the arbitrator makes an error of law.

What’s the best way to avoid this?  Do not write arbitration clauses into contracts.  Do not sign contracts with arbitration clauses in them.  If you have a choice, that is.

Jim Martin 10/5/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Putting your name on the title to a car, truck or other motor vehicle in Florida makes you personally liable for the negligence of the driver.  The dangerous instrumentality doctrine  extends liability of the driver to become personal liability of every owner of the vehicle. This should give pause to parents before putting their names on car titles for children.  And it also means that spouses should title their vehicles only in the name of the spouse who is the prinicipal driver.  Otherwise, if the vehicle is not insured or if the damages exceed the insurance limits, then an injured plaintiff could recover the damages from the vehicle owners even if they were not driving the vehicle.

This is not a new law.  It has been around almost a hundred years.  “Adopted in 1920, Florida’s dangerous instrumentality doctrine imposes strict vicarious liability upon the owner of a motor vehicle who voluntarily entrusts that motor vehicle to an individual whose negligent operation causes damage to another.”  This is how the Florida Supreme Court described the doctrine in an opinion it wrote in 2000 in Aurbach v. Gallina, a case where an 18 year old driver allegedly caused an accident with a vehicle owned by her mother.  In that case, the injured plaintiff also sued the driver’s father on a theory that both parents should be liable as the ones who made it possible for their child to have the vehicle in the first place. (The court decided that, because the father’s name was not on the vehicle’s title, he was not liable.)

So, while a motor vehicle costs lots of money, it’s not really an asset. It’s really a liability.

Jim Martin 10/3/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

It is a common misconception that when a Florida resident dies the attorney who drafted the will must be hired to probate the estate. This goes along with the misconception that the attorney represents “the estate”. The reality in Florida is that the attorney represents the personal representative and not the estate and not the beneficiaries.  Therefore, it is up to the personal representative to choose the attorney. The same thing applies to living trusts. It’s the successor trustee who has the right to choose an attorney. Thus, the attorney who prepared the will or trust for the person who died has no client.

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

It’s happened more than once. A Florida resident dies. A family member finds the will, sees his or her name as personal representative (executor), and starts giving away furniture, cleaning out the house, etc.  Unfortunately, doing these things might create personal liability. That’s because the person named in a Florida will as personal representative generally has no right to start acting until the probate court appoints him or her to the office of personal representative. The same thing applies when the person is named successor trustee of a trust, except instead of a court appointment the person generally accepts the position of trustee by a written acceptance.  In either case, it’s best to have a Florida lawyer prepare the legal documents for appointment and acceptance.

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

One of the reasons people try to avoid probate, besides the obvious one, is to avoid percentage probate fees. Florida, like many states, expressly allows attorneys to charge attorneys fees based on a percentage of the value of the probate estate. But there is an alternative: hourly fees. An hourly fee more directly compensates the lawyer for the effort involved in the probate proceeding.  The effort varies depending on the number of assets, types of assets, number of creditors, number of beneficiaries, unusual facts, and other factors.  The value of the probate assets is just one factor. A lower value probate estate can take as much effort as a higher value probate estate, and vice versa.  Florida lawyers are allowed to charging hourly attorneys fees instead of percentage probate fees. So, it’s always worth asking.

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

People often create revocable living trusts in Florida to avoid probate. And some of those people actually transfer assets into the trust to fund it.  And it’s true that the trust’s assets are not assets of the probate estate when the person dies. But probate is still required for another reason: clearing possible claims of creditors.

You see, in Florida, revocable living trusts are liable for the claims of creditors of the probate estate. In addition, creditors have two years to file claims if there is no probate proceeding.  The probate proceeding claims process reduces the time to file claims to just 3 months after notice to creditors is published. That’s why a trust almost never avoids probate in Florida. There is no creditor claims process for trusts, but there is one for probate.

If a trustee ignores this, the trustee could be liable to creditors after distributing the trust. That’s why wise trustees always file a probate proceeding even if the trust is fully funded with all the assets the decedent owned at death.

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Everyone knows that it’s the “last” will that someone makes before they die that counts. But it’s really the last “valid” will that counts. So who’s to say what’s the last valid will? The probate court gets to decide that. And for the probate court to decide, it needs to have all the wills that person ever made.  So, if a rich uncle dies and leaves two wills in his desk at home, the person who finds them needs to file both of them with the probate court, and not just the one closer to date of death (and certainly not just the one that names that person).  In Florida we have a law that requires all wills to be filed within 10 days, and the law has teeth in it. (See prior blog).

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

I hear it all the time. “My uncle died in Florida last month and his brother won’t let me see the will. What can I do?” Well, Florida law requires that anyone holding an original will file it with the Clerk of Court within 10 days after receiving information of the death. If they do not file it within 10 days, then they can be required to pay damages and attorneys fees. It is surprising how effective a letter from a lawyer can be to such a person informing them of this law. The will gets filed with the Clerk, and anyone can obtain a copy of it then.

Jim Martin 8/15/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Florida courts generally obtain jurisdiction over a defendant when a summons and complaint is properly served on the defendant.  When the defendant resides outside Florida, the process server is usually unfamiliar with Florida’s process service requirements.  This often results in invalid service of process, which means the court lacks jurisdiction.  In such cases, the defendant’s Florida attorney can file a motion to quash service and dismiss for lack of jurisdiction over the person.

For example, Florida Statutes Section 48.194(1) requires that service outside the State of Florida be made “in the same manner as service within this state by any officer authorized to serve process in the state where the person is served.”

Florida Statutes Section 48.031(5) states that service in Florida requires the person serving process to place on the copy served “the date and time of service and his or her identification number and initials for all service of process.”

Florida Rules of Civil Procedure 1.070(e) provides that “[t]he date and hour of service shall be endorsed on the original process and all copies of it by the person making the service.”

Florida Rules of Civil Procedure 1.070(e) provides that “a copy of the initial pleading shall be delivered to the party upon whom service is made.”

The courts have held that these requirements “that govern service of process are to be strictly construed to insure that a defendant receives notice of the proceedings . . . [T]he burden of proving the validity of the service of process is on the plaintiff.” Anthony v. Gary J. Rotella & Associates, P.A., 906 So.2d 1205, 1207 (Fla. 4th Dist. App. 2005), quoting Carter v. Lil’ Joe Records, 829 So.2d 953 (Fla. 4th Dist. App. 2002). “Absent strict compliance with the statutes governing service of process, the court lacks personal jurisdiction over the defendant.” Anthony v. Gary J. Rotella & Associates, P.A., 906 So.2d 1205, 1207 (Fla. 4th Dist. App. 2005), quoting Sierra Holding v. Inn Keepers Supply, 464 So.2d 652 (Fla. 4th Dist. App. 1985).

Improper service of process should be raised at the first opportunity by the defendant’s Florida lawyer.

Jim Martin 7/5/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Bidders need not be present to win.” That’s the way it is in some court foreclosure sales in Florida. The Sarasota County Clerk of Court has joined Duval and Manatee County Clerks in holding court-ordered foreclosure sales online.  Starting July 14, 2009, bidders will be able to participate in Sarasota foreclosures by logging on to the Clerk’s RealForeclosure Online Sales Website. The Clerk expects this to increase the bidder pool and, possibly, increase sales prices for foreclosed properties.

More information is on the clerks’ websites: Sarasota, Manatee, and Duval.

Jim Martin 7/5/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

It looks like electronic filing of pleadings in state courts will become a reality for Florida lawyers in 2009.  The Florida Legislature has mandated the Florida clerks of court to “implement an electronic filing process” in order to “reduce judicial costs in the office of the clerk and the judiciary, increase timeliness in the processing of cases, and provide the judiciary with case-related information to allow for improved judicial case management.” Ch. 2009-61, Laws of Florida. The deadline to begin implementation is October 1, 2009.

Lawyers in Sarasota County got a jumpstart on efiling (also known as e-filing) because Clerk of Court Karen Rushing was an early advocate for efiling.  See“Deadlines set for statewide e-filing, integrated court computer system”, Fla. Bar News 6/1/09. Lawyers in bankruptcy and federal practice have also had this capability (responsibility?). Soon, all Florida lawyers will have the luxury of being able to electronically draft, sign and file their pleadings in Florida courts.

The next step is for the Florida  Supreme Court to “set statewide standards for electronic filing to be used by the clerks of court to implement electronic filing.” The Legislature requested this by July 1, 2009.

Jim Martin 7/5/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The 2009 Florida Legislature is considering whether to require everyone in Florida to follow the NIST’s “Guidelines for Media Sanitization”.  Well, not everyone.  It would not apply to individuals.  But, it would apply to all state agencies, all for profit corporations, all nonprofit corporations, all partnerships, all LLCs, all estates and trusts, and all other legal or commercial entities in Florida.

House Bill 1081 defines media as either “hard copy information” such as paper or “electronic information” such as bits and bytes on hard drives.  The bill then defines sanitization as the process of removing data from media that that it may not be retrieved.  The bill implies that data includes secret, private, personal and confidential information, names, addresses, SSNs, credit card numbers, bank account numbers, phone numbers, and photographs.  It’s pretty broad.

The bill would require that all these entities use the techniques for purging and destroying the media that are set forth in the NIST document.  By the way, the NIST is the U.S. Department of Commerce National Institute of Standards and Technology.  You can download the Guidelines for Media Sanitization as a PDF. They are very well written, as is HB 1081, and they are quite interesting.  However, the thought of what is involved in compliance is overwhelming.  Just read it.

Sometimes I wish we in Florida had laws that came with a cost of compliance disclosure requirement, like those federal laws that say it will take 45 minutes to fill out such and such a tax return.  That way, we would have advance warning.  We do know that, if enacted, the law would take effect July 1, 2009.  Watch out for this one.

Jim Martin 4/8/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

A new type of nonprofit corporation will exist in Florida if House Bill 1311 is enacted by the 2009 Florida Legislature. It would amend Florida Statutes Chapter 617 to create a new category of nonprofits known as “mutual benefit corporations”.  This is not something that would be elected by the incorporators in the articles of incorporation. Instead, this new class of nonprofits is defined in the negative as corporations that are not for religious purposes, are not 501(c)(3)s, and are not for public or charitable purpose that is required to distribute its assets on dissolution to the government or another 501(c)(3). They do not include condo or other homeowner associations.  Legislative committee analysis indicates they would include private clubs, such as country clubs organized as nonprofit corporations, but the definition is broad enough to cover other nonprofits.

Categorizing nonprofits is something new in Florida.  For 25 years I wrote the nonprofit corporations volume for West’s Legal Forms, so I know that a number of other states have done this.  However, it also seems to make things more confusing.  Nonprofits are difficult enough to categorize because there are as many different kinds of nonprofits as there are ideas about what is good for the public.  Many nonprofits have been formed in the last decade by those whose wealth was created by the technology boom.  While all of their business corporations had a common goal of maximizing the bottom line, each of their nonprofits has a different goal.  It is not easy to categorize all nonprofits.

The proposed Florida law does not merely define mutual benefit corporations.  It places restrictions on all nonprofit corporations including mutual benefit corporations.  For example, it creates a new law that prohibits transfer of a nonprofit corporation membership, unless it is a mutual benefit corporation.  It creates another new law that prohibits terminating a membership without a procedure that is fair and reasonable and is carried out in good faith.  It generally allows distributions only by mutual benefit corporations.

One can debate whether or not this is good law and whether or not it will create more litigation within nonprofits, but it is certainly clear that this change will require a great deal of study and thought by nonprofit corporation lawyers in Florida. First, they will need to analyze whether their clients are mutual benefit corporations. Second, they will need to analyze whether their clients’ existing practices are still allowed under the new law.

If enacted, the law would take effect October 1, 2009.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The 2009 Florida Legislature is considering a bill which if enacted would exempt accountings filed in probate proceedings from public disclosure. The Florida Probate Code requires the personal representative of the estate of a decedent to file an initial inventory of the assets of the probate estate within 60 days of being appointed PR and to file a final accounting of the receipts, disbursements, distributions, capital transactions and remaining assets at the conclusion of the probate proceeding.  Interim accountings are optional.  Under present law, only the inventory filed in probate proceedings is exempt from disclosure. The interim and final accountings are publicly available.

The reason for this difference in present law goes back to the 1970′s when Norman Dacey wrote his bestselling book on how to avoid probate. Dacey criticized the public nature of probate and encouraged people to write living trusts to avoid probate.  Partly in response to the public concern about probate, the Florida Legislature revised the probate code in about 1974 by providing that the inventory not be subject to public inspection.  It made no such provision for the accountings, which actually have much more information.  This inconsistency has been the law for over 30 years.

The 2009 Florida Legislature has before it Senate Bill 1400 that would provide that both the inventory and all accountings are exempt from public disclosure. Here are the findings in the proposal:

“The Legislature finds that it is a publicnecessity to exempt from public-records requirements all inventories of property of estates of decedents, including amended and supplementary inventories, and all inventories of elective estates of surviving spouses, whether initial, amended, or supplementary. In addition, in order to preserve the privacy of information that would otherwise be available in an accounting filed in an estate proceeding, the Legislature finds that it is a public necessity that all accountings, whether interim, final, amended, or supplementary, filed in the estate  proceeding be made exempt from public-records requirements. The Legislature finds that the public disclosure of estate  inventories and accountings would make public the decedent’s  financial information and would produce undue harm to the decedent’s heirs or the beneficiaries of the decedent’s estate.”

Jim Martin 4/7/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The 3/09 Scientific American article “The World’s Smallest Radio” by Ed Regis talks about using carbon nanotubes as super miniature radios that could be used as a communication element for nanothings like pills that seek out cancer cells in the human body or devices for search and rescue in collapsed mines. The nanotube radio has the potential to change the world around us in the same way the microchip computer processor changed it.  The computer chip’s phenomenal impact on society was anticipated 30 years ago by Christopher Evans in The Micro Millennium . Evans predicted the computer chip would change the world, and it did. The same thing might happen with the nanotube radio. Who knows? Maybe future businesses will be using nanotube technology the way businesses today use microchip technology.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Don’t you think it would be nice if you could do corporation minutes online? And keep them in an online minute book? Instead of keeping them in a 3 ring notebook?  Well, I do. I dream of it. Minutes in the cloud.  I’d type them up, hit the upload button, and watch them magically appear, organized in chronological order, right there on the web page. The online minute book web page. It would have to be secure, of course. Only those with permission could see them. But they’d be there all the time. Whenever you needed to review them, you’d just click and down they would come from the Internet cloud onto your computer screen.  Like rain.  Minutes would come from the cloud like rain. Ahh. That would be nice.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

The Florida Annual Report (formerly known as the Florida Uniform Business Report) is the annual report that most Florida corporations, partnerships and limited liability companies (LLC) must file with the Florida Division of Corporations of the Florida Department of State in order to remain an active legal entity. The form must be filed no later than May 1st each year. The form may be filed and the filing paid online at the Secretary of State website at sunbiz.org. It is wise to have a lawyer assist in completing and filing the report.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

There are many kinds of entities. Partnerships, corporations and limited liability companies (LLC) are the most common. There are also limited partnerships (LP), limited liability partnerships (LLP, and limited liability limited partnerships (LLLP). Let’s start with the common and work up to more the complex.

But before doing that consider this: is an individual engaged in business on his or her own an entity? Not yet. Lawyers call that person a sole proprietor. Generally, a sole proprietor is liable for contracts entered into and for negligence and other torts commited by the business and employees. So, it’s a not a very sophisticated way to engage in business. But, it’s easy to form a sole proprietorship because it’s automatic when a natural person (a legal term for people) starts his or her own business.

A partnership is generally formed when two or more persons engage in business to share profits and losses. This is a general partnership. The persons can be individuals or entities such as corporations or other partnerships. Like a sole proprietorship, partners are usually liable for the contract debts of the partnership. Also, it’s easy to form a partnership because it’s automatic when two persons go into business and share profits and losses and do not form a corporation, LLC or other type of entity. Even if there is no written partnership agreement. Of course, it’s best to have a written partnership agreement, and they are often complicated to draft because there are so many optional provisions that can be included.

Some states allow or require partnerships to file a partnership registration statement with the state secretary of state or other filing office. Such states often maintain online databases of public records information about partnerships that file annual returns and registration statements. This information might include names of partners, addresses, and sometimes copies of documents.

Florida allows a partnership to file a statement of qualification to elect to have limited liability, so that it then becomes a limited liability partnership or LLP.

A limited partnership is similar to a general partnership but it has two types of partners: general partners and limited partners. The general partners have liability for contract debts of the limited partnership, but the limited partners do not (if the limited partnership and partners comply with the limited partnership law). The limited partnership is usually formed by filing a certificate of limited partnership with the state secretary of state or other filing office. Florida allows a limited partnership to elect limited liability for its general partner by filing a statement of qualification with the state, thus becoming a limited liability limited partnership or LLLP.

Partnerships, limited partnerships, LLPs and LLLPs are burdened with complex income tax codes and accounting methods that often challenge intuition. For that reason, many lawyers and accountants still advise clients to form corporations for their businesses instead of partnerships or limited liability companies (LLC’s usually elect to be taxed the same as partnerships).

A corporation is an entity generally formed by one or more persons filing articles of incorporation with the state secretary of state or other filing office. Most states maintain online databases of public records information about corporations that file annual reports, articles of incorporation, mergers, name changes, and other forms. This information might include names and addresses of officers, directors and registered agents, as well as copies of documents. This information often includes names of presidents, vice presidents, secretaries, treasurers and other officers of corporations.

S corporations are corporations that have filed a form with IRS to elect to be treated as such for tax purposes.

Public corporations are corporations whose shares of stock are held by many people such that they are subject to the Securities Exchange Act. Privately (closely) held corporations are the typical corporations of businesses whose stock is not traded publicly.

Of course, it is likely that the ownership interests in all corporations, partnerships, limited liability companies and other entities are securities that are subject to the federal and state securities laws.

Nonprofit corporations are generally formed by three or more persons filing articles of incorporation with the state secretary of state or other filing office. Some states have various categories of nonprofit corporations, such as religious, charitable, benevolent, etc. If the nonprofit corporation requires tax exemption, a separate application for recognition of tax exempt status must be filed with IRS. This makes nonprofit corporations frequently more complicated to form than for profit business corporations. Nonprofit corporations usually appear in state online databases of corporate information.

A limited liability company (LLC) has characteristics of both a corporation and a partnership.  It is formed by filing articles of organizations with the Florida Secretary of State, but it has members instead of shareholders, directors and officers.  It can elect to be taxed as a partnership.

There are other types of entities, such as business trusts, real estate investment trusts, but they are less common and are usually created by special purpose statutes for specific types of business, government or quasi-government functions. They often do not appear in state online databases of public records information due to their unusual nature.

By the way, this is not legal advice. This is a general background discussion of the types of entities in the US. The specifics vary from state to state because entities are generally created under state law, and each state has its own law, so there are 50 sets of entities laws in the US.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

Florida, like many states, has long required by statute that any person operating a business under a fictitious name file a certificate in a public office disclosing the true names of the owners of the business. (Some states refer to fictitious names as assumed names.) The purpose for this registration is to provide notice to the public, and especially to creditors, of the identities of persons who are doing business under fictitious names for the purpose of protecting creditors from fraud and deceit. (See Jackson v. Jones, 423 So.2d 972 (Fla. 4th DCA 1982), review denied, 436 So.2d 99 (Fla.1983); 1957 Op. Att’y Gen.Fla. 057-283 (September 17, 1957)).

Until July 1, 1990, the Florida Fictitious Name Statute, Florida Statutes Section 865.09, required that a person engaged in business under a trade name do the following if the trade name was not the proper name or known called name of the person: (1) publish once a week for four weeks in a newspaper in the county in which the principal place of business was located notice of intention to register the fictitious name; and (2) record in the office of the clerk of the circuit court of that county an affidavit signed by all of the owners. “Person” included partnerships and corporations, as well as natural persons. Failure to so register subjected the person to criminal liability, as well as civil liability. However, compliance was no assurance of avoiding civil liability. See Robinson v. Lane, 557 So.2d 908 (Fla.1st DCA 1990), which held an individual liable for a corporate contract even though the individual disclosed she was signing in an agency capacity for “Slender World” and even though the corporation had properly registered that fictitious name under the former F.S.A. Section 865.09.

Because fictitious name registrations were being filed in all counties throughout the state, it was often difficult to ascertain the true ownership of a business operating under a fictitious name in more than one county. A single, state-wide system of registration was needed to effectuate the statute’s purpose of providing notice to the public.

On July 1, 1990, the Florida Fictitious Name Statute became the Florida Fictitious Name Act. Florida Statutes Section 865.09 was amended in its entirety by Chapter 90-267, Laws of Florida, by changing the notice publishing from four times to one time and by changing the place of registration from the Clerks of Court to the Division of Corporations of the Florida Department of State. The penalties for not registering a fictitious name remain the same under the new law: second degree misdemeanor criminal penalties, and prohibition against maintaining a lawsuit in this state until compliance. F.S.A. Section 865.09(9).

The registration requirements under the new law are as follows, which are reflected in forms promulgated by the Division of Corporations:

• Advertise the intention to register the business at least once in a legal newspaper in the county of the principal place of business; and
• File a sworn statement with the Florida Division of Corporations listing the name to be registered, the mailing address of the business, and the name and address of each owner, and the federal employer’s identification number and Florida incorporation or registration number if the owner is a corporation; and
• Pay a filing (processing) fee to the Division of Corporations, presently $50.00.

The new law defines a fictitious name as any name under which a person transacts business other than his, her or its legal name. For example, the following would be fictitious names of a person legally named John Smith: ABC Lumber, John’s Lumber, Jack’s Gas Station. But John Smith may engage in business as “John Smith” or “Smith” without registering the name. In addition, if John Smith is a lawyer or other licensed professional, he may use any trade name allowed by the profession and need not register the name since attorneys and persons licensed by the Department of Professional Regulation are exempt from the new law. F.S.A. Section 865.09(7).

The word “person” is broadly defined in F.S.A. Section 1.01 to include individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations. Thus, the new law applies to any person, firm, partnership or corporation engaging in business in Florida under a name other than its legal name.

It is important to note that, if a corporation is the owner of a business, it is the corporation that must register and not the shareholders of that corporation. Thus, the sworn statement to be filed with the Division of Corporations should be signed by the president or other authorized officer of the corporation and not by the shareholders.

The law prohibits registering a fictitious name containing the words “Corporation” or “Corp.” or “Incorporated” or “Inc.” unless the owner is a corporation. F.S.A. Section 865.09(14).

A Florida corporation is not required to register its name as a fictitious name unless the corporation conducts business under a name other than the corporation’s name stated in its articles of incorporation. F.S.A. Section 865.09(14).

“Business” is defined as any enterprise in which a person sells, buys, exchanges, barters, deals, or represents the dealing in any thing or article of value, or renders services for compensation. It is not clear from this whether a nonprofit corporation engaged in a charitable purpose without compensation is required to register a fictitious name. For example, if a nonprofit corporation named Charity Health Concerns, Inc. owns a hospital named Charity Clinic and does not charge for its services or goods, then it might not be required to register the fictitious name since it is not in business, as defined by the new law.

Fictitious names registered under the new law are valid for five (5) years and expire on December 31 of the fifth (5th) year. Registration may be renewed for five (5) years by filing a renewal statement in the fifth (5th) year.

If the ownership of a business changes, the owner of record must file a cancellation and reregistration of the fictitious name on forms prescribed by the Division of Corporations. F.S.A. Sections 865.09(4) and 865.09(11).

There is a common misconception that registration of a fictitious name assures the registrant of exclusive rights to the name. The new law clearly states that registration is for public notice only, registration does not give rise to any presumption of the registrant’s rights to own or use the name registered, and registration does not affect trademark, service mark, trade name, or corporate name rights previously acquired by others in the same or similar name. F.S.A. Section 865.09(8). Registration itself does not grant any trademark or other proprietary rights in the name. (However, note that F.S.A. Sections 607.0401 and 617.0401 require that names of corporations be distinguishable from the names of all entities or filings registered and on file with the Division of Corporations.)

Because it is a crime not to comply, Florida businesses continue to have a strong incentive to register their fictitious names. Compliance is easier under the new law since the Division of Corporations promulgates forms and instructions for such compliance. In addition, the information provided by registrants will be more readily available to the public since, in the past, there was not a single state-wide office for filing registrations. The Division of Corporations has shown through its maintenance of computer records on the hundreds of thousands of Florida corporations that it can efficiently handle this task.

Fictitious name registration forms and instructions are available by writing to the Fictitious Name Section, Division of Corporations, Florida Department of State, P.O. Box 6327, Tallahassee, Florida 32314, or calling (850) 487-6058.

Florida fictitious name registrations (as well as corporations and partnerships) can be searched on the Florida Department of State’s database on the Internet at:

http://ccfcorp.dos.state.fl.us/index.html

NOTE: Effective June 9, 2001, the 2001 Florida Legislature amended the Florida fictitious name law so that publishing notice in a newspaper is no longer required. The following article was written before this new law took effect. Laws of Florida, Chapter 2001-200, Section 1, adds subsection (6) to Florida Statutes Section 15.16 to read as follows: “(6) Notwithstanding s. 865.09(3)(d), the Department of State may waive the requirement that a person advertise the intention to register a fictitious name if the department indexes the fictitious name registration in a central database available to the public on the Internet.”

The Florida Department of State has informed the author that it waives the advertising requirement on all fictitious name registrations submitted to it and that it has removed from the fictitious name registration application form the statement about the fictitious name having been advertised.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.

This blog entry summarizes the process for mortgage foreclosures in Florida. It does not give tips or tricks for plaintiffs or defendants. I represent both lenders and borrowers, and I don’t want to help the other side in a pending or future case. But I think it is always beneficial for all parties to know the process, so this article is intended as a general statement of the process to foreclose a mortgage in Florida.

Underlying Obligation. Every mortgage has an underlying obligation. It is usually a promissory note, but it can be a loan agreement, a guaranty, a property settlement agreement, a contract or any other legal obligation. If the legal obligation is a promissory note, the one who owes the money is called the “maker” and the one to whom the money is owed is called the “payee”.  If the note is assigned, then the one who holds the note is the “holder”.  The underlying obligation is important when foreclosing a mortgage because without an underlying obligation, there can be no mortgage.

Mortgage.  The mortgage is a writing by which the underlying obligation’s performance or payment is secured by a lien on real estate.  Technically, a mortgage is given by the property owner to the lender, but sometimes we hear about a bank giving a customer a mortgage.  What is really meant is that the bank is giving the customer a mortgage loan. It’s the customer who gives the bank the mortgage, in order to secure payment of the promissory note that evidences the loan.

Real Estate. The real estate can be a house, a home, a homestead, a condominium (condo), an office, a store, a building, a lot, vacant land, a farm, a ranch, etc. Real estate and real property mean the same thing. Real property is land, dirt, ground, earth and what is attached to it: buildings, trees, fences, flag poles, swimming pools, streets, driveways, etc.

Mortgagor and Mortgagee; Borrower and Lender; Defendant and Plaintiff.  The owner of the real estate is called the “mortgagor”, and the one to whom the mortgage is given is called the “mortgagee”. So, the borrower is the mortgagor, and the lender is the mortgagee.  When the mortgage is foreclosed, the lender is the plaintiff, and the landowner is the defendant.

Default. To foreclose a mortgage in Florida, there must be a default of the underlying obligation or a term in the mortgage. Notes and mortgages usually define what constitutes a default. They usually state that failing to pay a monthly payment on a promissory note when it is due constitutes a default. They usually state that such a default gives the lender the right to declare the entire principal balance of the note to be due and payable right then.  They sometimes include a grace period to bring the note current and avoid acceleration of the entire balance.

Demand Letter. The lender usually sends the borrower a demand letter before foreclosing on the mortgage. It usually states a date by which payment must be made to avoid foreclosure.  A demand letter might not be required, but it is often sent to avoid litigation and to resolve the dispute out of court.  It is always best to engage a lawyer to send a demand letter and to reply to a demand letter. Let me go back and say this, too: it is always best for the lender to have a lawyer prepare the note and mortgage before making the loan, and it is always best for a borrower to have a lawyer review the note and mortgage before signing it.

Complaint; Lawsuit; Pleadings. How do you foreclose a mortgage in Florida? By filing a complaint with the clerk of court. A complaint is the writing that starts a lawsuit.  It requires a hefty filing fee. We Florida lawyers generally refer to any  papers we file with the court as “pleadings”, but that’s wrong because we file motions all the time and they are not technically pleadings. That’s a reason it’s always best to engage a lawyer to represent a plaintiff or defendant in court: the wording on the paper counts. We are bound by what we say. We may waive rights if we do not say the right thing or do not say it in time.

Summons; Service. When the complaint to foreclose the mortgage is filed, the clerk issues a summons. The summons commands all the sheriffs in Florida to serve the complaint on the defendant (borrower). It also commands the defendant to respond to the complaint within 20 days. The summons and complaint are served on the defendant by a sheriff or a process server. Instead of serving the defendant, they can also serve someone else in the defendant’s place of abode. The rules are technical, so once again it is best to consult a lawyer. Especially if your 17 year old son says someone came by and dropped off papers but he doesn’t remember where he put them. You only have 20 days to find them, hire a lawyer, and file with the court.

Answer. Generally the defendant must file an answer within 20 days after service of the summons. Sometimes a motion can be filed that tolls the time to file the answer. Sometimes a counterclaim can be filed, as well. These are technical writings that only a lawyer should prepare. Failure to raise defenses and claims at this time may result in loss of the defenses and claims.

Default. If an answer or proper motion is not filed within the required period (usually 20 days), then a default may be entered that will result in an immediate judgment being entered in favor of the lender and against the borrower without holding a hearing or trial. This is bad, if you are the borrower, but good if you are the lender.  It can be very difficult to set aside a default judgment so this is something for all borrowers to avoid.

Discovery. Parties in lawsuits are entitled to seek discovery from other parties by asking them questions in front of a court reporter (oral depositions), sending them written questions (interrogatories), asking for copies of documents (document production), etc. This can be quite time consuming and expensive, but it is standard practice in most lawsuits to engage in discovery in order to avoid surprises at trial.

Summary Judgment. The lender will often ask the court to enter a foreclosure judgment without holding a trial. A summary judgment is often granted in foreclosure cases when there is no material issue of fact or law. Again, this is very technical, is the domain of lawyers, and varies from case to case.

Mediation. Courts generally require mediation before trial.  Sometimes cases settle as a result of mediation, avoding the need for a trial.

Trial. Unless a default judgment or summary judgment was entered or the case settles, the case will eventually go to trial. At the trial, each side will present evidence needed to prove its side of the case, after which a decision will be made as to whether the plaintiff/lender wins or the defendant/borrower wins.

Judgment; Foreclosure Sale. The court’s decision is set forth in a writing called a “judgment”. In foreclosure cases, the judgment directs the clerk of court to sell the real estate on a specific date, time and place. The sale proceeds are applied to what the defendant owes the plaintiff.  Generally, the bidding is open to anyone who wants to buy the property. The plaintiff is allowed to bid on the real estate at the sale and, instead of paying cash, may apply up to the judgment amount toward the bid amount.

Special Rules. There are so many foreclosures in Florida now that some courts have adopted special rules for mortgage foreclosures.  For example, in Pinellas County, institutional lenders must follow specific rules and file specific forms to foreclose mortgages.  The goal is to anticipate and avoid common legal and evidentiary problems before they reach the judge on the day of trial, thus saving precious courtroom time for cases that truly have issues of fact to be tried by the court.

Conclusion. Of course, this is just the tip of the Florida mortgage foreclosure iceberg. Florida lawyers are creative, so we try to come up with ways to help the lender enforce its remedies for a mortgage default and ways to help the borrower defend against mortgage foreclosure. Today there is much economic uncertainty for both lenders and borrowers. Courts will be the place of final resolution for most of the mortgage crisis in Florida and America. Florida lawyers will be there to foreclose mortgage in Florida for the lender and defend the foreclosure for the property owner.

Jim Martin 4/2/09

FLORIDA BAR STATEMENT The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask the lawyer to send you free written information about the lawyer’s qualifications and experience.