NEW FLORIDA LLC LAWS MAY AFFECT YOUR COMPANY
Effective January 1, 2015 Florida decided to revise the Limited Liability Company Act (let’s call it “the New Act”). This new and improved version of the New Act is to help facilitate the use of the Limited Liability Companies, often referred to as “LLC”.
LLCs have become the most popular entity choice in the state of Florida. In fact, it is becoming more popular than corporations. The trend indicates that it will continue to be that way. Florida has more LLCs than any State in the nation including Delaware and it is regularly used for Real Estate purposes. It is important to understand the New Act and how it will affect newly formed LLCs and existing LLCs.
Authority is the power given to an officer or agent of an entity to act on behalf of that entity. Prior to the New Act the names given those parties in authority were either “Manager-Managed” or “Member Managed”. The articles of organization outline, for the general public, the roles that are played by individuals who have authority to act on behalf of the LLC. Typically, you would have an LLC, which is either managed by members (Member Managed) or managed by managers (Manager Managed). Depending on the designation, it only determines who has the right to act on behalf of the LLC it does not disclose who owns the LLC. The New Act makes it clear who has the power to act in what manner depending on the designation chosen. This is something that the prior act did not do.
In the past, it was difficult for third parties to know who had the right to bind or be made a responsible party to act/pay. In order to simplify this process an LLC can now issue a “statement of authority” which is simply a written declaration that the named individuals have the power to act on behalf of the LLC. This statement can inform the public on whether or not the people named in this document can conduct a real estate transaction or not. This is particularly important for those individuals using the LLC for real estate purposes.
In real estate matters, the statement of authority is a key role because it helps parties that are relying on the public records to conduct the transactions. What that means is that most people do not know who has the right or power to make decisions on behalf an LLC. What these individuals are able to do is go on the Department of State (www.sunbiz.org) to verify authority. As an owner of an LLC this is important because if a third party relies on statements made by this person who claims to have power to make the LLC responsible then you may be stuck in a transaction you never intended to be involved in. Imagine having to pay a loan for someone else. This will help avoid this from occurring in the future if used properly.
There are so many changes made for this particular agreement that it would take at least three pages to explain some of the changes.
An operating agreement is a contract that sets outs the rights, duties and liabilities to the parties. The New Act has made strides to clean up the language so that the intentions are clear as to what those rights, duties and liabilities are. There are so many changes made for this particular agreement that it would take at least three pages to explain some of the changes. However, it is good to note that this contract basically states how the LLC will conduct business. Who has the right and power to act on behalf of the LLC is spelled out in this document. This document will further set rules as to how to, add or disassociate members or managers, who can receive a salary, who can change the LLC rules, and how much liability each member or manager may have. This is, in my opinion, the most important document to have.
Finally, a majority of individuals have chosen an LLC to conduct business, specifically for the protection against them individually. If you have an LLC that is made up of a multimember LLC and one of the members is sued individually from a personal creditor then that creditor is unable to take any membership interest. However, if you have a single member LLC then the creditor may have the right to come and take any or all transferrable interest of the LLC. What this means is that as a single member owned LLC you may lose the LLC altogether.
The creation of Chapter 605 of the Florida Statutes has made significant changes. Some of the existing LLCs may consider revisiting their existing documents to make sure their intentions are accurately reflected. If not then this LLCs may find themselves in costly litigation or even worse may lose the protection they are seeking to have.
It is important when choosing a business entity to understand the ins and outs of the entity of choice.
FLORIDA LAW PROTECTS THE CHURCH
In March of 2016, the Florida legislature passed Florida Statute 761.061, which was named Rights of Certain Churches or Religious Organizations or Individuals. This law in essence carves the exception to the rule as it pertains to same sex marriages.
We know that effective June 2015 the United States Supreme Court declared that all 50 states in the United States must recognize same sex marriages. We also know of the after effects that occurred upon the determination of this law made by the Supreme Court of the land. This law has created so much controversy in many minds. However, from a legal perspective it does carry some ramifications to certain individuals and organizations that fundamentally believe this to be against their belief systems.
We have also become familiar with cases from other states that have sanctioned business for refusing to provide services to same sex couples. Those controversies have been debated not only in court of public opinion but have also been debated within our legal system. Some of those outcomes have sparked fear in individuals and organizations that oppose this view and which affect their constitutional right to freedom of religion. However, in our State of Florida we have decided to make the law a bit more clearly in an effort to avoid having to absorb the court’s time and resources making those determinations.
Typically, most churches and clergymen and women have opposed to performing same sex marriages pursuant to their right of religious freedom. Florida has decided to carve out an exception to the Federal law.
Florida Statute 761.061 says that these churches, organizations and individuals can refuse to perform same sex marriages. Essentially, they do not legally have to perform the ceremonies for same sex couples.
Laws are formed to create fairness in an unfair world or to right the wrongs of the world. However, a law should not on its face be so one-sided that it affects the rights of all other law-abiding citizens. It is my belief that the intention of this law is to make sure we have a balance between what is fair to all interested parties. Seeing as the law makes these exceptions for those organizations and individuals, who fundamentally have a religious belief and which such belief is one of the core pillars of their belief system that it balances out the scales of justice. Regardless of which side of the coin you are on in regards to same sex marriages there is just something humane about having the ability to exercise your rights.
Historically, churches have taken the perspective that, fundamentally, same sex marriages are strictly prohibited by their belief systems. To now strip them of their core fundamental belief would then completely alter their religious freedoms. We have all heard of a separation of church and state. However, when the state tells a church what to believe then there is much to be said about how far the separation is. I am not implying that the law should allow for any religion to maliciously seek to harm the person of another based on a religious belief but to preserve their right to believe and have faith.
With the new laws in place, it will allow for the clergymen and women to be able to continue to perform their services without the fear of persecution. It is important to preserve our fundamental constitutional rights of religious freedom. Historically speaking there have been so many rights stripped from the masses and those events prove to be catastrophic for the people.
Churches must prepare themselves to be in compliance with the law.
There are certain criteria that must be met in order to be afforded the exception to the law. There must be a corporate formality and standard set to be made part of the church’s corporate documents. Often times rights are lost by simply not being prepared.
In the practice of law we see in all areas of law clients simply did not believe it would happen to them. Clients, who fail to plan, plan to fail. This does not have to always be the case. It is important to seek the advice of an attorney to plan ahead.