L.L.C., P.A., INC. and LTD. These are all initials that refer to various forms of legal entities authorized by Florida and which may own and convey real property. Typically, on a daily basis, a community association may do business with one entity or another without paying any attention to whether the company is a professional association (P.A.), a corporation (INC.) or a Limited Liability Company (LLC). In most cases it makes little difference in nominal transactions what form of business entity a vendor uses; however, when a transfer of property, including the execution of a lease, is involved, the legal form of entity that is either, leasing, buying or selling a piece of property becomes vitally important. There are different statutes that apply to each of the different forms of ownership and there are different requirements concerning who must sign and in what form. A recent case decided by the Third District Court of Appeal, the appellate court that considers appeals from trial court proceedings in Miami-Dade and Monroe Counties, points out the significance of being certain about how a particular entity may properly execute a lease.

In the Skylake Insurance Agency, Inc. v. NMB Plaza, L.L.C. case (33 FLW D2215), NMD Plaza, L.L.C. executed a lease with a prospective tenant, Skylake Insurance Agency, Inc. to occupy a portion of a building that was then under construction. The lease was signed on behalf of the limited liability company only by a member of the LLC; there were no witnesses to the member's signature. When the building neared completion and Skylake anticipated moving in, the LLC repudiated the lease claiming that the lease was not valid since there were no witnesses to the member's signature. At trial, the court concluded that the landlord was correct and denied Skylake's effort to force the landlord to lease them the space.

The appellate court's opinion reveals that not only was the trial court confused about the proper way for an LLC to execute a lease, but the lawyers representing the tenant were also mistaken about what was required. The tenant's lawyers argued that the LLC's member's signature was adequate because of some particular language in a statute. The appellate court pointed out that the tenant's lawyers were confused since the section that they were relying on only applied to corporations and not to an LLC. Even though the section of the statute that was pointed out by the tenant's lawyers did not apply to an LLC, the court indicated that it had done some research on its own and concluded that there was another statute that applied specifically to LLC's which validates the lease in this case. Interestingly, the court included a footnote in its opinion indicating that it did not fault the trial court for ruling improperly in this case since the correct statutes were not called to the trial court's attention by the parties' lawyers.

Since each of the various forms of fictional entities authorized by Florida Statutes have different rules concerning how that entity may operate, there is enormous room for potential error. The NMB Plaza case points out that the issues can be so confusing that even a trial court and some lawyers can become confused about which statutes apply. To make sure that your association enters into binding contracts with those entities with which it does business, it is important to confirm that the contract is being executed properly consistent with whichever statute applies.

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