A short sale is a real estate transaction where the proceeds from selling a property fall short of the balance owed on the mortgage(s) or other liens. The homeowner sells the property for less than the outstanding mortgage amount, and the lender agrees to accept the reduced payoff to release the lien on the property. Key Features • Financial Hardship : The homeowner must demonstrate extensive financial hardship that prevents them from continuing to make mortgage payments. • Lender Approval : A short sale needs the lender’s approval to proceed. The lender must agree to accept a lower payoff amount due to the home being sold for less than the remaining mortgage balance. • Deficiency Balance : This represents an imbalance between the amount owed on the mortgage and the sale price of the property. The homeowner may still be responsible for an unpaid balance unless the lender agrees to forgive it. • Impact on Credit : A short sale has a negative impact on a homeowner’s credit score, although it is usually less severe than a foreclosure. The impact depends on the borrower’s credit history and how the short sale is reported. • Potential Tax Implications : The deficiency may be considered taxable income by the IRS unless the homeowner qualifies for an exemption. Benefits A short sale helps the homeowner avoid legal and financial consequences anticipated with a foreclosure, which is more damaging to credit scores and harder to recover from. It also mitigates lender losses by avoiding the higher costs and delays associated with foreclosure proceedings, minimizing financial losses. However, the lender accepts less than the full mortgage amount. This creates additional control over the sale because the homeowner can often stay in the home during the process and has more say in the timing and terms of the sale. During a foreclosure, control is lost to the lender or the court system. What You Should Know • Understanding the Short Sale Process : Familiarize yourself with each step, including listing the home, submitting all lender-required documents, and obtaining lender approval. • Identify Hardship : Clearly document the financial hardship that justifies the short sale request. • Know the Lender’s Requirements : Each lender may have different criteria, paperwork, and approval timelines. • Market the Property Competitively : Realistically price the home to attract buyers quickly and satisfy the lender’s requirements. • Understand Florida’s Deficiency Judgment Laws/Tax Implications : Lenders may pursue the remaining balance after the sale, and forgiven debt could be considered taxable income. • Assist with Offer Negotiations : Prepare to review offers, submit them to the lender, and handle counter offers. • Stay Up to Date on Legal and Market Changes : Rules and real estate market conditions change often. Therefore, staying informed is crucial to navigating the process effectively. • Communicate Effectively : Keep all parties regularly updated to prevent misunderstandings or delays. • Prepare for Possible Obstacles : Challenges such as delayed approvals, buyer financing issues, or multiple lender negotiations could arise. • Encourage Legal and Financial Advice : Recommend that sellers consult with a real estate attorney and finance professional to thoroughly understand the risks when completing a short sale and the protections available. Steps in the Short Sale Process 1. Pre-Qualification and Seller Hardship Documentation : 1-2 Weeks Confirm the seller qualifies for a short sale by gathering financial hardship documents. 2. Property Listing and Marketing : Varies. List the home at a competitive price and begin marketing in order to attract potential buyers. 3. Receive and Accept Offer : 1-3 Months A buyer submits an offer and the seller accepts it, subject to lender approval. 4. Submit Short Sale Package to Lender(s) : 1-2 Weeks This includes the purchase offer, seller’s hardship documents, financials, and a listing agreement. 5. Lender Review and Approval : 30-120 Days The lender reviews all submitted documents and the offer. 6. Negotiation with Lender : 1-2 Weeks Lenders may provide a counteroffer or request changes to terms. 7. Lender Approval : Varies Once the terms have been settled, the lender issues a short sale approval letter detailing the terms and conditions. 8. Closing Preparation : 2-4 Weeks Title work is completed, and documents are finalized for closing. 9. Closing the Sale : 1 Day All parties sign documents, funds are transferred, and ownership changes. 10. Post-Closing : Immediate to Several Weeks Depending on the agreement, the seller may need to vacate the home, and any post-sale reporting or tax issues may arise. Short Sale Addendum When listing a property as a short sale in the Multiple Listing Service (MLS), there are certain steps that must be taken in order to complete the listing properly. The listing must clearly state that the sale is subject to lender approval and disclose any known terms the lender requires. Along with this, the listing should have “Short Sale” selected in the MLS fields to alert buyers and agents and clarify that the contract requires third-party approval in order to manage expectations about timeline and contingencies. Florida utilizes two main real estate contracts, FAR/BAR and CRSP, that each have their own version of a short sale addendum. The FAR/BAR short sale addendum is used with the FAR/BAR “As Is” and Standard Residential Contracts for Sale and Purchase. This specifies that the contract depends upon the seller obtaining written approval from the lender, along with how long the buyer must wait for approval before either party may cancel. This also could address deficiency judgements, release of liens, and seller obligations. This addendum legally protects buyers and sellers if the short sale is not approved. As for the CRSP short sale addendum, this is used with the Contract for Residential Sale and Purchase (CRSP) form. This contains similar content to the FAR/BAR addendum, although it is formatted to align with CRSP contract structure. This specifies the buyer’s right to cancel if approval is not obtained within a set time. This also may address escrow refunds, seller’s continuing obligations, and lender-required changes. If you're considering a short sale in Florida, reach out to our team today. We're here to guide you through every step.

The Florida Legislature and Governor Ron DeSantis have approved the complete elimination of sales tax on commercial leases, impacting Florida’s commercial real estate market. On June 16, 2025, lawmakers voted on the state’s final budget and annual tax package, adopting an amendment to House Bill 7031 that contains this tax relief plan. The bill passed through both the House of Representatives and Senate, and on July 3, 2025, was approved by Governor Ron DeSantis. With this approval, this measure takes effect on October 1, 2025, meaning commercial landlords and tenants in Florida will no longer collect or pay sales tax on commercial rent. This is a significant change, considering Florida was one of the only states imposing sales tax on commercial leases. Impact on Landlords and Tenants Commercial landlords and their tenants should prepare for this change by updating their systems and lease agreements to reflect the lack of sales tax applicable to commercial rent payments on or after October 1, 2025. Notable Repeal As stated in Section 37 of the Bill, section 212.031 of the Florida Statutes is repealed, effective October 1, 2025. This repealed statute addresses the sales tax on commercial real estate rentals, which is part of the broader tax relief effort. Consequences for Local Governments A consequence of this plan includes a restriction on local governments’ ability to impose sales tax on commercial leases, limiting their potential revenue streams. Local governments will no longer be able to collect these taxes after October 1, 2025. What’s Next? Due to Governor DeSantis’s approval of this Bill on July 3, 2025, Florida’s commercial leasing market will endure a fundamental shift beginning in October 2025. This could attract more commercial tenants and promote economic growth across the state. If you own or lease commercial property in Florida, now is the time to prepare for these changes.

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If you are a short-term rental host, you probably don’t see yourself as a landlord. Florida Law, in most instances, will not deem short-term rental hosts to be landlords who are subject to a specific set of rights and obligations. But importantly, when it comes to getting guests to vacate, you may be required to act like one. The first step in handling guests whose stay you have terminated or who are remaining past their check-out time is working with your host website. Your host website can take actions such as initiating communication with the guests, placing a hold or extra charges on their credit card, and suspend their account or ban them from booking other stays. These actions are likely to motivate the guests to voluntarily leave, but they won’t be an immediate aid. Unfortunately, if your guests are far past their check-out date, causing commotion, making excessive noise, committing crimes or property damage - it is time to involve law enforcement. Many short-term rental hosts presume that law enforcement will, or is required to, treat their guests like hotel guests or transients and order them to leave. The reality is the outcome of contacting law enforcement will vary by location and the circumstances on the scene. In locations where short-term rentals are less regulated by the county or local government, less prevalent, and where the guest has a longer stay, the chance is greater that law enforcement deems it a “civil matter” due to the potential of a landlord-tenant relationship. If this occurs, your only recourse is to file an eviction lawsuit in the local county court, a process which can take several weeks or months to complete. There are a few measures short-term rental hosts can take to prevent this issue. Ensure a responsible party is always available to physically visit the property if issues occur and speak to law enforcement on the scene. This could be yourself, a business partner, or a property manager. Always have guest rules posted on the host website and conspicuously in the property. And, talk to an experienced landlord-tenant attorney about the overall setup of your property, review compliance with local ordinances, and discuss whether it is appropriate to have guests sign a Lease Agreement. If you have questions about short-term rentals and how to protect yourself, reach out to one of our attorneys at Martinez Law, P.A., (813) 803-4887, admin@martinezlawfla.com.

Risk is everywhere and it is especially prevalent in investment decisions. Short-term rental hosts often feel they are taking on less risk than putting their hard-earned funds into the stock market or a startup company, but in some situations that may not be the case. As the owner of a property where people are being invited to stay as guests, the potential for liability exists if property damage or personal injury is suffered by those guests. Some common examples include: - Slip and falls - Furniture collapse - Electrocutions and burns - Swimming pool and watersport accidents Taking ordinary care in the maintenance of your property eliminates a substantial amount of risk that the above types of incidents may occur, but other areas of risk will be largely out of your control. Ultimately, if an incident occurs, the finding of liability and allocation of fault is a proc ess. First, you will find out from the guest what occurred and most likely, the expenses that resulted. Then, you have a decision to make, you will either compensate the guest, refer them to your or the host website’s insurance to process a claim, or deny compensation. The process of insurance claim handling can take months to years, especially for more severe injuries or losses. Whether you are personally handling the issue, or an insurance company is, the victim can decide to file a lawsuit at any time up to four years from the date of the incident. If you personally own the property, meaning your name is on the deed, you will be named as a defendant. If the victim wins the lawsuit, you are obligated to pay the resulting judgment and your personal assets such as money, investments, and properties can be seized to satisfy the judgment. This risk can actually be eliminated by not personally owning the property. Instead, seek the assistance of a real estate or property lawyer to change the way your property is held to a Limited Liability Company or a Florida Land Trust so that in a worst-case scenario situation your personal assets cannot be seized. Also, spend time reviewing your options for insurance coverage and discussing your short-term rental business with your insurers to make sure you are adequately covered.

Business interests are among the most commonly contested areas in probate litigation. Many business owners spend a significant amount of time considering what will happen when they die, instructing business partners on how to keep things running and sharing with spouses and children where important documents are kept. Unfortunately, verbal instructions are never enough to be legally effective and written instructions must take a specific form under Florida law. Ensuring the business ends up in the hands of the right people requires careful planning. Our approach is to work backwards – think of who you want to receive your business interest and explore the options from there. If you want your heirs, such as your spouse and children to receive the business interest, there are several options. First, you could declare that intent in your Last Will and Testament and upon your death, the probate court will enter an order allowing them to take your place. Second, you can have a separate contract, such as an Operating Agreement for your Limited Liability Company, or a Shareholders Agreement for your Corporation, which states who should receive your interest upon your death. Or third, you can create a Revocable Living Trust that gives your assets to your heirs at death, but transfer your business interest into the trust while you are still alive. If you do not want your heirs to receive the business interest, or you know they do not want to receive it – similar options are available. You could declare in your Last Will and Testament who should take your place in the business. Also, you could have a separate contract that designates who receives your interest or if other members of the business have a right to purchase your interest. Each of these options comes with practical considerations regarding who is best suited to take your place and how which are best reviewed before an Estate Planning Attorney. To discuss these and other option, contact one of our attorneys at Martinez Law, P.A., (813) 803-4887, admin@martinezlawfla.com

With the rise in popularity of the Florida Limited Liability Company or “LLC”, many people have become familiar with its separation from the Managers or Members, and specifically that it keeps living even if those managers or members are dead. The information gap is many people do not know exactly how this works. Your ownership of an LLC, whether it is 100% or 10% is an “interest”. Some people call this your “stake in the business”, “piece of the pie”, or other colloquialisms. Unless there is a properly drafted agreement to the contrary, when you die this ownership will go to whomever is listed in your Last Will and Testament, or according to the Florida Statutes if you do not have a will. It may go entirely to one person, such as your spouse, or may be divided among multiple persons. For example, if you die without a Will and have a spouse with children in common, the interest will go to your spouse. However, if you die without a will, with two children and no spouse, your children will each have a 50% interest in the LLC. Their ownership is formalized during the probate process and an update with the Division of State is completed to finalize the change of ownership. This is unlikely to be a desirable outcome, but thankfully with careful planning there are alternatives such as the following: 1) Creating or revising your operating agreement to state who receives your interest at death, if other members will automatically receive or purchase your interest; 2) Drafting a Last Will and Testament that specifically states which of your heirs should receive the ownership interest; and 3) Creating a Revocable Living Trust that will allocate assets to your heirs upon death and during your lifetime, transfer your ownership interest into the trust. To discuss these options in more detail, contact one of our attorneys at Martinez Law, P.A., (813)803-4887, admin@martinezlawfla.com.