Real Estate 2026 Comparisons

Real estate law in Florida is derived from a combination of Florida Statutes (Chapters 475 and 689), the Florida Administrative Code and case law. At the state level, the primary source is the Florida Statutes, which govern the ownership, transfer, financing and development of real property.

Florida courts also play a significant role through case law interpreting these statutes, particularly in areas such as contract enforcement, title defects, equitable remedies and lender rights.

In addition, local governments (counties and municipalities) impose zoning, land use and development regulations that directly affect real estate projects. These local ordinances govern permissible uses, density, permitting and entitlement processes, and are critical in both acquisitions and development.

Beyond formal sources of law, customary practice is highly relevant in Florida real estate transactions. Title insurance requirements, the Uniform Title Standards, survey standards, escrow and closing procedures often shape how transactions are structured and completed in practice.

Federal law may also apply in certain contexts, including environmental regulation, lending compliance and anti-money laundering requirements, particularly in transactions involving institutional lenders or foreign investors.

Overall, Florida real estate law operates as a layered framework in which statutory law, judicial precedent and local regulation are applied in conjunction with established transactional practice and federal law.

Main Trends

While the region continues to benefit from strong population growth, thanks to sustained domestic and international investment, and its position as a gateway market, transaction activity has become more selective and asset-specific. High-quality and well-located properties, such as hotel properties, have continued to perform, while other segments, particularly older condominium inventory and certain commercial assets, have faced pricing pressure and longer transaction timelines. Overall, the market has shifted from rapid growth in the immediate aftermath of the COVID-19 pandemic to a more balanced environment.

In large metropolitan areas, particularly in South Florida, affordability pressure has been an important trend, which is shaping both housing demand and development economics. That affordability pressure helps explain why multi-family demand remains durable and why workforce and attainable housing remain major policy themes.

In the residential condominium market, newer condominiums and luxury products continue to command very high prices per square foot. On the other side of the spectrum, older condominium stock has faced significant pricing pressure and longer marketing times. Many condominium boards are acting on deferred maintenance items in the aftermath of the 2021 Champlain Towers South collapse in Surfside. Rising costs of insurance have added further pressure on condominium budgets. Finally, older condominiums continue to grapple with the inspection, reserve and transparency requirements introduced by the Florida legislature in response to the Surfside disaster.

In the retail market, leasing activity remained healthy, which suggests retail in core South Florida corridors is still benefiting from population density, tourism and experiential uses.

Impact of Rising Inflation and Increases in Interest Rates

Consistent with the US market at large, rising inflation and higher interest rates have materially impacted the South Florida real estate market by increasing borrowing costs and reducing affordability. Inventory levels have increased significantly, particularly for older residential condominium units, shifting leverage toward buyers and extending transaction timelines. At the same time, the significant inflow of new residents allowed prices to remain fairly steady, despite the reduction in access to credit.

Real Estate Players Adapt to Current Trends

The use of artificial intelligence in property screening and due diligence is becoming increasingly prevalent, particularly by lenders and real estate investors. Several players are introducing real estate tokenisation structures for property investments, particularly targeting foreign investors. It remains to be seen if, by building a successful track record, tokenised real estate platforms will achieve the scale of REITs or large institutional investors.

Several recent and proposed reforms could materially affect real estate investment, ownership and development in Florida and nationally.

At the state level, Governor Ron DeSantis has advanced proposals aimed at eliminating real property taxes on homesteaded primary residences, potentially through a constitutional amendment requiring voter approval in 2026. While still under legislative consideration, this initiative could meaningfully increase the attractiveness and valuation of owner‑occupied single‑family homes, likely placing upward pressure on residential prices while shifting a greater share of the tax burden to non‑homestead residential, commercial and investment property. The proposal’s fiscal impact on local governments remains a central point of debate, but it has gained political momentum and remains a live issue in the current legislative cycle.

At the federal level, the Trump administration issued an executive order entitled “Stopping Wall Street from Competing with Main Street Homebuyers”, seeking to curb institutional investors’ acquisition of single-family homes by limiting access to federal financing, guarantees, securitisation and government asset dispositions, while expressly calling on Congress to codify broader restrictions (Executive Order, 20 January 2026, White House). Any permanent prohibition would require congressional action and would almost certainly face significant constitutional scrutiny, including challenges based on interstate commerce, due process and equal protection principles. As a result, near‑term impacts are expected to be indirect, though increased regulatory and antitrust review of large‑scale acquisitions is likely.

On the development side, Florida continues to expand and refine the Live Local Act, with recent amendments (commonly referred to as “Live Local 4.0”) extending “by‑right” affordable and workforce housing development to qualifying church‑owned and other religious institution properties, as well as certain public lands, notwithstanding underlying zoning (House Bill 1389, 2026 Legislative Session). These changes significantly broaden the pool of developable land, reduce entitlement risk and are already influencing multi-family and mixed‑use development strategies across the state.

Florida law recognises several categories of real property interests that may be acquired, ranging from full ownership interests to more limited possessory or use rights.

Fee estates represent the broadest category of ownership interests. The most common is the fee simple estate, which conveys full ownership of land, including the rights to possess, use, transfer and devise the property indefinitely, subject only to governmental regulations and private encumbrances. Fee simple is presumed under Fla. Stat. § 689.10 unless a deed expressly provides otherwise. More limited fee estates may also be created, such as defeasible fees, including fee simple determinable estates or estates subject to a condition subsequent, under which ownership may terminate or be divested upon the occurrence of a specified event. Florida law places statutory limits on the duration of certain reversionary interests, with specific exceptions for public or charitable transferees.

Leasehold estates grant a right of possession and use for a defined period without transferring ownership. Leaseholds arise from commercial or residential leases and are governed primarily by contract law. Tenants acquire exclusive possessory rights for the lease term, while the landlord retains the underlying fee estate. Leasehold interests may range from short-term leases to long-term ground leases that function economically similar to ownership.

Easements are non-possessory interests that grant the right to use another’s land for a specific purpose, such as access, utilities, drainage or conservation. Easements may be appurtenant (benefiting adjacent land) or in gross (benefiting a specific person or entity) and may be created by express grant, implication, prescription or necessity. Easements do not convey ownership but impose binding use rights on the servient estate.

In addition to these categories, Florida recognises various forms of concurrent ownership, under which multiple parties hold interests in the same property simultaneously. Common forms include tenancy in common, joint tenancy with right of survivorship, and tenancy by the entirety, the latter being available only to married couples and providing significant creditor protection. The form of concurrent ownership determines survivorship rights, transferability and exposure to claims of creditors.

Fla. Stat. § 689.01 governs the transfer of title for freehold estates (ie, estates for an indefinite term) and for estates with a duration of more than one year. It requires that any instruments conveying such estates shall be “signed in the presence of two subscribing witnesses by the party so assigning or surrendering, or by the party’s lawfully authorised agent, or by the act and operation of law”.

Transfer of title generally occurs by deed. A deed is an instrument conveying real property from a grantor to a grantee and is classified by the warranties (covenants of title) it contains, which are enforceable promises by the grantor, including present covenants assuring ownership, authority to convey, absence of encumbrances at delivery and future covenants guaranteeing defence of title, quiet enjoyment, and further assurances that define the scope of the purchaser’s protection during and after conveyance.

Fla. Stat. § 689.02 provides a form of statutory warranty deed that the parties may use to convey title to property. The statutory warranty deed requires the grantor to fully warrant and defend title against the claim of third parties.

Under Fla. Stat. § 45.031, title to property can also be transferred via a certificate of title filed by the clerk of courts after a foreclosure sale has taken place and no objections are filed within ten days after the sale.

Conveyances may also take place via a special warranty deed, by which the grantor only agrees to warrant and defend title against acts of the grantor or anyone claiming title through the grantor. A quitclaim deed, instead, offers no such warranty of title and it is generally used in transfers between related parties.

While Florida law does not mandate the use of a specific deed to transfer title to specific types of property in Florida, the FR/BAR “AS-IS” Residential Contract for Sale and Purchase requires the seller to deliver a statutory warranty deed to the buyer. The FR/BAR “AS-IS” Residential Contract for Sale and Purchase, jointly developed by Florida Realtors and the Florida Bar and periodically updated, is the template most often used in Florida for the conveyance of residential property.

A lawful transfer of title is accomplished by delivery to the grantee of a written instrument which meets the statutory requirements set forth in Fla. Stat. § 689.01. Specifically, the instrument needs to be in writing and signed by the grantor in the presence of two subscribing witnesses. The instrument, generally a deed, must contain ordinary words of conveyance evidencing the intent to effect a transfer of real property (Flinn v Van Devere, 502 So. 2d 454 (Fla. 3d DCA 1986), rev. den., 511 So. 2d 998 (Fla. 1987)). The deed must describe the property such as to identify it from others. A description is deemed sufficient if a surveyor could locate the land “in light of all facts and circumstances referred to in the instrument” (Mendelson v Great Western Bank, F.S.B., 712 So.2d 1194, 1196 (Fla. 2d DCA 1998)).

The execution and delivery of a deed to the grantee is sufficient to transfer title between two parties and recording is not essential to its validity (see Sweat v Yates, 463 So.2d 306, 307 (Fla. 1st DCA 1984)). Recording is, however, required by law for the conveyance to be “good or effectual in law or equity against creditors or subsequent purchasers for a valuable consideration and without notice” (Fla. Stat. § 695.01).

Therefore, recording is meant to provide “constructive notice” to third parties of a conveyance. Without such constructive notice, a conveyance cannot be enforced against creditors and subsequent purchasers for value.

To be valid against creditors and subsequent purchasers for value, deeds are recorded in the Official Records maintained by the office of the Clerk of the Circuit Court in the county where the land is located (Fla. Stat. § 28.222). To achieve constructive notice, the deed must be drafted in a way that allows proper indexing by the clerk in the proper “chain of title”.

Furthermore, a deed is entitled to recording only if it meets the acknowledgment requirements set forth in Fla. Stat. § 695.03. Specifically, the grantor must acknowledge the deed before a notary public or other official listed in the statute. Additional technical requirements for recording can be found in Fla. Stat. § 695.26.

In light of Florida’s recording system, complex chains of title, and high volume of transactional activity, title insurance is very common in Florida, and it continues to play a vital role in facilitating transactions. In financed transactions, all lenders require a loan policy covering the mortgage. Title insurance is also generally required by purchasers in cash transactions. Florida’s title insurance regulations, contained in Rule 69O-186.003, Florida Administrative Code Rates, establish rates for title insurance, which are common among all underwriters.

The due diligence process for a real estate purchase or financing transaction generally covers the areas of title review, property condition, tenant screening, environmental due diligence, land use and zoning approvals, insurance and service contracts review. The type of property being acquired informs the scope of due diligence carried out by the buyer. Due diligence is performed by the buyer’s counsel with the support of external consultants such as civil engineers, property inspectors and environmental consultants.

The process begins as soon as possible, often even before a binding contract is signed. The contract will establish a due diligence period (generally 30, 60 or 90 days) during which time the buyer can terminate the contract for convenience. The buyer’s counsel generally includes a list of requested due diligence documents in the purchase agreement. These generally include: governmental notices to the property owner, prior title insurance policies, any title exceptions, surveys, site plans, plats, permits, environmental reports, engineering reports, leases, service contracts, insurance policies and loss reports. The buyer’s counsel is in charge of the review and analysis of these documents as well as co-ordinating the activities of any outside experts.

In a typical Florida commercial real estate transaction, property is sold “as-is”, that is in its present condition and with no representations and warranties other than those expressly made by seller. Seller representations and warranties focus on matters uniquely within the seller’s knowledge and that materially affect value or risk allocation. These include representations regarding title and authority; the status of leases and rent rolls; the absence of undisclosed service or management contracts; compliance with laws; liens and mechanics’ liens; and environmental matters. Environmental representations are heavily negotiated and often limited by knowledge, time and scope, with liability frequently addressed through a separate indemnity. As a general matter, there are no broad statutory seller warranties in commercial real estate sales as to building condition or the presence of hazardous materials such as asbestos; instead, these risks are addressed contractually through disclosures, diligence (eg, Phase I/II ESAs) and negotiated representations and indemnities.

Buyer remedies for misrepresentation or breach typically include contract damages and indemnification claims, subject to negotiated limitations, and in limited pre-closing circumstances, termination rights. Post-closing equitable remedies are uncommon absent fraud. To secure enforcement, it is customary for sellers – particularly single-purpose entities – to provide credit support in the form of an escrow holdback, a guaranty or a letter of credit. Seller representations and warranties commonly survive closing for a finite period, most often six months to one year, with longer survival for fundamental or environmental representations. Seller liability is typically capped, often at the purchase price (and sometimes lower), and consequential and punitive damages are generally excluded. Representation and warranty insurance is used selectively in larger or competitive transactions but remains less prevalent in purely asset-level commercial real estate deals than in corporate M&A contexts.

Each phase of a real estate investment will require special focus on a different area of the law. Real estate law considerations, particularly in the area of title or leases, form the backdrop of each phase in a real estate transaction.

When evaluating an investment, tax law and governance considerations are paramount. For example, in a syndicated investment, the tax residence of investors, as well as the “waterfall” rules for profit distributions, will need to be carefully evaluated.

After a potential target asset has been identified and due diligence begins, then the focus shifts to other areas. Contract law principles are applicable to real estate contracts, including warranties and representations and the remedies attached to them. Additionally, in the due diligence phase, particular attention is needed to verify that the property, as currently used and as proposed to be used by the buyer, complies with local land use and zoning requirements.

A buyer “inherits” the risks associated with any environmental conditions of a property. A buyer is therefore exposed to the financial risks associated with the possible contamination of the property.

To address this risk, buyers must carry out comprehensive environmental due diligence assessments, conducted by environmental consultants who perform site visits and carry out soil sampling analysis. The most basic form of environmental site assessment (ESA) is known as a Phase I and it reviews current and historical uses of the property and surrounding sites to identify potential environmental conditions. A Phase II ESA is typically conducted after a Phase I ESA identifies a recognised environmental concern. It involves targeted soil, groundwater, vapour or geophysical testing to evaluate potential contamination and provide conclusions and recommendations.

Additionally, it is customary for purchase and sale agreements to include environmental warranties and representations. These warranties and representations are coupled with specific indemnities, to hold the seller responsible for any prior environmental conditions.

Finally, because environmental representations are often tied to a knowledge qualifier, buyers in more significant deals are required to obtain pollution legal liability (PLL) insurance.

Comprehensive Plans and land development regulations listing the development parameters of a property, including uses permitted, density and floor area limitations, and other development criteria, are publicly available. Engaging with an experienced land use lawyer, particularly in the due diligence phase, is the best practice when it comes to confirming the development potential and roadmap for approval for the use of real property.

Development agreements can benefit property owners by freezing development regulations and development fees as of the date of approval. Local governments often enter development agreements to memorialise and ensure compliance with local development regulations, infrastructure improvements required, and other considerations in connection with approvals for the development of real property – particularly in large-scale developments. 

Governmental entities, and some private entities (electric companies, etc) in the State of Florida, have the statutory power of eminent domain. Pursuant to that power, these entities can acquire private property for public purpose upon the showing of necessity. Florida’s eminent domain process is governed primarily by Chapters 73 and 74 of the Florida Statutes. Before filing a condemnation action, the condemning authority must engage in good faith pre-suit negotiations, provide a written offer supported by an appraisal, and allow the owner time to respond.

Importantly, Florida is a full compensation state, which means that the condemning authority must pay for the property being acquired, any damages to the remaining property (“severance damages”) and the reasonable fees and costs, including experts, of the property owner whose property is being acquired.

In a transaction involving the direct purchase and sale of Florida real estate, the primary transfer tax is the Florida documentary stamp tax on deeds under Fla. Stat. §201.02. The tax is generally YSD0.70 per USD100 of consideration (or fraction thereof). In Miami-Dade County, the base rate is USD0.60 per USD100, plus a USD0.45 surtax on transfers other than a single‑family residence, resulting in an effective rate of USD1.05 per USD100. “Consideration” includes cash paid and any mortgage indebtedness encumbering the property, whether or not assumed. By market custom, the seller pays the documentary stamp tax on the deed, while the buyer pays recording fees, title insurance, and financing-related documentary stamp taxes (eg, on notes and mortgages under Fla. Stat. §201.08, taxed at USD0.35 per USD100 of principal, with limited caps and exemptions).

In a share deal (transfer of stock, LLC interests or partnership interests in a property-owning entity), documentary stamp tax is generally not triggered, because equity interests are treated as personal property. However, an important exception applies to “conduit entity” transactions: if unencumbered real property was contributed to an entity without full stamp tax and an ownership interest in that entity is transferred within three years, stamp tax may apply to the equity transfer based on consideration. Partial ownership transfers can trigger tax only if they result in a taxable conveyance under the conduit rules or involve shifts of mortgage debt. Numerous exemptions exist, including transfers by operation of law (mergers, conversions), gifts of unencumbered property, and certain family or estate-planning transfers.

Florida law imposes significant restrictions on certain foreign investors acquiring real estate. Under Senate Bill 264, which became effective 1 July 2023, “foreign principals” associated with designated “foreign countries of concern” (including China, Russia, Iran, Cuba, Venezuela and others) are subject to targeted prohibitions. Foreign principals are barred from acquiring agricultural land anywhere in Florida and from acquiring property located within ten miles of military installations or critical infrastructure such as airports, seaports and power plants. Existing owners are subject to mandatory registration requirements and daily civil penalties for non-compliance, and property acquired in violation of the law may be forfeited to the State. A narrow exception allows certain visa holders to acquire limited residential property, subject to strict location and size limitations. Notably, individuals and entities domiciled in China are broadly prohibited from acquiring any Florida real estate, with very limited exceptions.

The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) affects real estate transactions in Florida by expanding the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to cover certain “pure” real estate deals involving foreign persons. Under FIRRMA and its implementing regulations (31 C.F.R. Part 802), CFIUS may review – and potentially block, condition, or unwind, the purchase, lease or concession of US real estate by a foreign person when the property is located near sensitive military installations, airports, or maritime ports or could otherwise raise national security concerns.

The most common method is granting a mortgage on the real estate along with a collateral assignment of revenues generated from the real estate. Additionally, and sometimes in conjunction with the mortgage, the equity holders of the entity owning the real estate will pledge their ownership interests as collateral, allowing the lender to step into their shoes as an alternative to foreclosing on the real estate.

Typically, the real property and personal property of the borrower are pledged as collateral along with the revenues from the property. Depending on the nature of the asset, the lender may require an interest reserve which may be fully funded at closing or drawn from loan proceeds each month and then added to the principal balance. Lenders may also require the borrower to pledge additional property or cash collateral.

While Florida’s SB 264 prohibits the purchase of Florida real estate interests by residents of certain foreign countries of concern, it does not prohibit the acquisition of a security interest in Florida property. Note, however, that for those particular “countries of concern”, other federal laws and sanctions programmes may de facto prohibit payments. Additionally, payments to a foreign lender may be subject to tax withholding as FDAP income, unless the loan has been properly structured to take advantage of the so-called “portfolio interest” exemption.

In Florida, loans secured by real property are subject to documentary stamp and intangible taxes based on the size of the loan. These fees are paid to the state of Florida and are paid at the time of recording. The actual recordable instruments are also subject to nominal recording fees.

Generally, the entity must be registered and in good standing in its state of organisation. Depending on the type of asset, it may also have to be qualified to do business in the state. With respect to the entity’s authority to grant valid security over the real estate, this is usually governed by its organisational documents (ie, operating agreement, by-laws or partnership agreement). These documents must be reviewed carefully to ensure that the entity has properly approved the transaction.

As far as formalities, this is governed by the actual loan documents. Regardless of whether formal written notice is actually required under the loan documents, it is best practice to provide written notice of the default. Different types of defaults may trigger notice requirements, cure periods, or afford the borrower the opportunity to cure the default through alternative methods. For example, if a property does not satisfy a debt service coverage covenant because it is not generating sufficient income, the borrower may be allowed to pay down the debt to a level which would satisfy the covenant. Generally, the intention is that the mortgage is a first position lien on the property at the moment it is recorded. In order to accomplish this, the lender’s attorney will review a title commitment and ensure that any liens or instruments that could have priority over the mortgage are satisfied or subordinated at closing. There are certain liens that will retain priority over a mortgage such as real property taxes, so it is important to make sure that taxes are current at closing and are timely paid each year. The timeline for realising upon the collateral can range from a couple of months to years. There is an active market for purchasing distressed loans and there are several private debt funds which may purchase the loan with the intention of either attempting a work out or moving towards foreclosing on the asset.

It is possible to subordinate existing debt, but this requires the existing lender’s consent and a recorded subordination agreement.

A lender holding a mortgage or other security interest is generally not treated as an “owner” or “operator” for purposes of environmental liability solely by virtue of making a loan or enforcing its remedies. However, lender liability can arise under certain federal and state environmental laws if the lender takes title (for example, through foreclosure or deed in lieu) or otherwise participates in the management or operation of the property or a borrower’s environmental compliance. As a result, lenders typically conduct environmental due diligence (including Phase I/II ESAs where appropriate) and structure workouts, property control arrangements and foreclosure strategies carefully to preserve available secured-creditor protections and to avoid conduct that could be viewed as operational control.

Typically, a security instrument is not voided by the borrower’s insolvency, but other creditors may raise issues of enforceability due to lack of consideration. Loan documents will generally address a borrower’s rights to declare insolvency and waiver of stay provisions. Regardless, an insolvency will almost certainly delay enforcement proceedings.

In Florida, mortgages are subject to documentary stamp and intangible taxes based on the size of the loan without a cap on the amount to be paid. There are certain strategies to minimise or eliminate taxes in connection with a refinance. Loans which are not secured by real estate are subject to documentary stamp taxes up to an amount of USD700,000 which equates to USD2,450 in taxes. For example, a non-real estate secured loan of USD700,000 and USD7 million would pay the same amount of taxes – USD2,450. A loan in the amount of USD700,000 secured by Florida real estate would be subject to USD2,450 in documentary stamp taxes and USD1,400 in intangible taxes. A loan in the amount of USD7 million secured by Florida real estate would be subject to USD24,500 in documentary stamp taxes and USD14,000 in intangible taxes.

Land use, development, design and construction are governed by several strata of regulation. State-wide regulation can impact the entire gamut of land use, development and construction through the Florida Statutes, the Florida Administrative Code, the Florida Building Code and others. These state-wide controls have often dealt with minimum construction and engineering standards for development and environmental concerns. As of late, state-wide controls have increasingly encroached into local planning and zoning jurisdiction in areas such as affordable housing, transit-oriented development and environmental permitting. At the local county and municipal levels, the Comprehensive Plan is a state-mandated tool by which local governments set out their prospective (future-looking) planning visions for their jurisdiction. The implementation of the Comprehensive Plan is done through land development regulations such as zoning codes and are specific to each county and municipality.

State statutes are drafted and adopted by the legislature, and signed or vetoed by the governor. The Florida Administrative Code and its rules are guided by state agencies like the Department of Environmental Protection. At the local level, the county commission and local municipal commissions and councils are responsible for adopting Comprehensive Plans and land development regulations.

Depending on the specific jurisdiction, and the nature of the requested development, there are different ways which development entitlements are obtained. Some entitlements can be by right, meaning that the applicant simply needs to meet the technical criteria for a building permit to be entitled to build. Some entitlements may have an administrative review of specific criteria by the jurisdiction’s planning or zoning official, or require approval of the proposed development at a public hearing before the land planning agency or full-fledged council or commission. These discretionary approvals involve the application of criteria set forth in the applicable land development regulations to the proposed development and an approval or denial must be supported by substantial competent evidence.

Third parties can generally object, and may be entitled to appeal when they have standing. Appeal rights and procedures are often set out in the land development regulations. Appeals can go to the local jurisdiction’s land planning agency, council/commission, or to the appellate division of the circuit court for that jurisdiction. Third parties who own property or reside in the immediate vicinity of the subject of approval, because their interest in the application exceeds that of the general member of the public, are generally recognised as having standing. This provides them with additional due process and an opportunity to present their objections and case against an application. Finally, there are other methods to object, such as comprehensive plan consistency challenges that are original actions rather than appeals.

Generally, zoning restrictions are listed in the land development regulations. They are enforced when an applicant presents their proposed plan for development. A zoning official may make comments and disallow any aspect of the development proposal which is contrary to the land development regulations or Comprehensive Plan. When approvals are granted, they may carry conditions or restrictions which may be enforced by local code enforcement officials, by withholding additional development approvals for lack of compliance, or by an action in court.

Investors in US real estate commonly hold assets through a variety of legal entities, including corporations, partnerships, and limited liability companies (LLCs). The most frequently used vehicles are LLCs taxed as partnerships and corporations, depending on the investment’s objectives, number of investors, financing requirements and exit strategy. LLCs are widely used because they offer flexible governance, limited liability for members and ease of customisation through operating agreements, making them well suited for joint ventures and multi-investor projects. Partnerships, including limited partnerships are used, although less often, particularly where roles between managing and passive investors must be clearly delineated.

Corporations are another common vehicle, especially for large or institutional investments, as they provide a well-understood governance framework, centralised management, and clear equity structure. In more complex investments or multi-asset portfolios, sponsors often use single-purpose entities (often an LLC), with each property held by a separate entity to isolate liabilities and simplify dispositions. Overall, entity choice is driven primarily by liability protection, governance flexibility, financing considerations and long-term investment planning.

Each entity type used in real estate investment has distinct structural and legal characteristics that affect operations and taxation. LLCs and partnerships are generally treated as pass-through entities for US income tax purposes, meaning income, gain, loss and deductions are allocated directly to owners in accordance with the governing agreement. This structure allows investors to tailor economic rights and management authority with significant flexibility, but it also requires detailed operating or partnership agreements to address distributions, capital accounts and transfer restrictions.

Corporations, by contrast, are taxed as separate entities and are governed by statutory corporate law, with shareholders holding equity interests and a board of directors overseeing management. Corporate structures provide predictability and administrative simplicity but involve an additional layer of taxation on earnings and distributions.

Disregarded entities, such as single-member LLCs, are treated as extensions of their owners for tax purposes, although they remain distinct legal entities for liability protection.

Across all structures, state and local taxation must also be considered, as income derived from real property is typically taxed where the property is located. The choice of entity therefore requires balancing governance needs, investor expectations, compliance obligations and the projected lifecycle of the investment.

Real estate investment trusts (REITs) are a well-established and commonly used investment vehicle in the United States, including Florida. Both publicly traded REITs (listed on US stock exchanges) and private (non-traded or private placement) REITs are widely available. REITs are generally open to foreign investors, subject to US tax rules such as FIRPTA. Key advantages include corporate-level tax efficiency, liquidity (for public REITs) and diversified real estate exposure.

Florida law generally does not impose a statutory minimum capital requirement to form or maintain entities commonly used to invest in real estate, including corporations, LLCs and partnerships. A corporation may be validly organised with a single shareholder and minimal stated capital, and similarly, an LLC or partnership may be formed without a minimum capital contribution beyond what is contractually agreed among the owners. That said, adequate capitalisation remains a practical and legal consideration, particularly in real estate transactions involving lenders, counterparties or third-party claims.

Undercapitalisation may be considered by courts when evaluating veil-piercing claims, especially if combined with failure to observe entity formalities or evidence of misuse of the entity. In practice, initial capital is typically driven by the acquisition price, lender equity requirements, working capital needs and jurisdiction-specific closing costs rather than entity law mandates. As a result, real estate investors often capitalise entities at levels sufficient to support the intended project and demonstrate economic substance, even though no formal minimum is required by statute.

Governance requirements for entities used to invest in Florida real estate vary by entity type and are primarily dictated by state law and the entity’s governing documents. Corporations are governed by a board of directors responsible for overall management and strategic decisions, with officers handling day-to-day operations. Corporations must observe formalities such as adopting by-laws, issuing shares, maintaining corporate records and approving material actions through board or shareholder resolutions. Annual or periodic meetings are customary, although many actions may be taken by written consent, particularly in closely held entities.

LLCs offer significantly greater flexibility. An LLC may be structured as member-managed or manager-managed, allowing investors to tailor governance to passive or active ownership models. The operating agreement is the central governance document and typically addresses decision-making authority, approval thresholds for major transactions, transfer restrictions, allocations and distribution mechanics. LLCs are not generally required to hold formal meetings unless specified in the operating agreement, reducing administrative burden.

Partnerships are governed by partnership agreements or default statutory rules and often involve shared management unless otherwise agreed.

The Corporate Transparency Act (CTA) was originally intended to require beneficial ownership reporting for most US and foreign entities, but its scope has been significantly curtailed by executive action and rulemaking under the Trump Administration. In March 2025, FinCEN issued an interim final rule exempting all US-formed entities and US persons from reporting, limiting CTA compliance solely to foreign entities that are registered to do business in a US state. As a practical matter, this scenario is relatively uncommon in real estate structures, which typically rely on US-formed holding entities, leaving most domestic real estate investments outside the current CTA reporting regime unless future regulatory changes expand its reach.

Across all entity types, maintaining adequate records, respecting separateness and following stated governance procedures is critical to preserving limited liability, satisfying lender requirements, and supporting enforceability of the ownership structure in real estate transactions.

Annual maintenance and compliance costs for real estate holding entities vary by entity type, jurisdiction and complexity of operations. At a baseline, corporations and LLCs incur state annual report or franchise tax fees, registered agent fees and basic legal maintenance to preserve good standing, typically ranging from nominal amounts to several hundred dollars per entity per year, depending on the state. Governance-heavy entities, such as corporations, may incur additional legal costs related to board actions, annual meetings and recordkeeping, while LLCs tend to have lower ongoing governance costs once the operating agreement is in place.

Accounting and tax compliance costs are often the most significant recurring expense and depend on factors such as number of properties, financing arrangements, intercompany transactions and reporting requirements. These typically include bookkeeping, preparation of federal and state tax returns, and financial reporting to investors or lenders. Larger or multi-entity real estate structures commonly centralise accounting but still budget several thousands of dollars annually per active entity for compliance and professional services.

Florida law recognises several arrangements permitting the occupation and use of real estate for a limited period without ownership. These include commercial and residential leases, licences, subleases, ground leases, easements for limited uses, and concessions. Leases are the most common structure and may grant exclusive possession. Licences are more limited contractual rights, typically revocable and non-exclusive. Ground leases allow long-term use while preserving fee ownership. Temporary occupancy may also arise through management or operating agreements.

While such lease types are not codified in a statute, common forms used in Florida leasing practice include gross leases, triple-net (NNN) leases, modified gross leases, percentage leases (typically retail), ground leases and build-to-suit leases. Office and industrial properties often use gross or modified gross structures, while retail assets commonly use NNN and percentage rent arrangements. The lease type is largely driven by asset class, bargaining power and market standards rather than statute.

Commercial rents and lease terms in Florida are generally freely negotiable and not subject to rent control or statutory caps. There is no voluntary commercial leasing code. Parties may allocate risks and responsibilities as agreed, subject only to general contract principles and limited statutory overlays, such as zoning, building codes, and health and safety laws. Residential leases are more regulated, but commercial leasing remains largely governed by freedom of contract.

Commercial lease terms vary by asset class and market. Lease lengths typically range from three to ten years for office and retail, with longer terms for industrial or ground leases. Tenants usually maintain and repair the premises they occupy, while landlords retain responsibility for structural elements unless otherwise agreed. Rent is most commonly payable monthly in advance, though some ground or specialised leases require quarterly or other periodic payments.

In most commercial leases, rent does not remain static for the full lease term. Leases typically provide for scheduled rent increases, such as fixed annual steps, consumer price index adjustments or percentage increases. Retail leases often include percentage rent tied to gross sales in addition to base rent. Whether rent changes and how frequently is entirely contractual, as Florida law imposes no automatic rent adjustment mechanism for commercial leases.

Where rent adjustments apply, new rent is determined based on mechanisms agreed in the lease. Common approaches include predetermined fixed increases, inflation-based indices, open-market resets determined by appraisal, or revenue-based formulas in retail leases. Ground leases often use periodic revaluations based on fair market rent. If the lease provides no rent-setting methodology, Florida courts generally will not imply one, and disputes may arise.

Florida does not impose VAT. Until 1 October 2025, rent charged for the use of commercial property was subject to the Florida Sales Tax at a rate of 2%. House Bill 7031 (2025) eliminated the sales tax on commercial leases. No sales tax applied to residential property rentals. Accordingly, as of the date of writing, no sales tax is payable on rent in Florida.

At lease commencement, tenants typically pay a security deposit, the first month’s rent and sometimes the last month’s rent. Additional costs may include advance common area maintenance charges, insurance deposits, utility deposits and fees for permits or inspections. In retail and office leases, tenants often pay for build-out contributions, architectural review fees and professional fees related to lease negotiation.

In multi-tenant properties, landlords typically manage and maintain common areas such as parking lots, landscaping, lobbies and shared systems. The cost is passed through to tenants as common area maintenance (CAM) charges, usually allocated on a pro rata basis by square footage. The scope of recoverable costs and any caps or exclusions are negotiated in the lease and are not statutorily prescribed.

Utilities and telecommunications are typically separately metered and paid directly by each tenant. Where individual metering is impractical, landlords often allocate costs proportionally through operating expense charges. Telecommunications services are typically arranged directly by tenants with service providers, subject to building rules and access rights. In larger assets, landlords may contract master services and pass costs through under the lease.

In triple-net and many retail leases, tenants reimburse landlords for property taxes on a proportionate basis. In office and gross leases, landlords typically pay taxes directly and pass them through as part of operating expenses. Ground leases often require tenants to pay all real estate taxes directly. Allocation of tax responsibilities is contractual and varies by asset class and market norms.

Landlords typically insure the building and common areas against casualty risks such as fire, windstorm and other insured hazards. Tenants usually carry general liability insurance and insurance for personal property and improvements. Business interruption insurance is commonly required of tenants. During the COVID-19 pandemic, many tenants sought recovery under business interruption policies, but coverage was frequently denied absent physical damage, leading to significant litigation with mixed results.

Landlords may impose contractual restrictions on permitted use, hours of operation, signage and compliance with exclusive use clauses. These restrictions are enforceable if clearly stated. In addition, zoning laws, environmental regulations, building codes, and health and safety requirements impose statutory limits on how property may be used. Tenants must comply with both lease restrictions and applicable governmental regulations.

Tenants are generally permitted to make alterations and improvements with the landlord’s prior written consent, except for minor non-structural changes. Landlords typically require approved plans, licensed contractors and compliance with building codes and permitting requirements. Conditions often include restoration obligations at lease end, limits on structural changes, lien waivers and insurance coverage. Improvement allowances are commonly negotiated in office and retail leases.

Residential leases are heavily regulated under Florida’s Landlord and Tenant Act, particularly regarding habitability, notices and remedies. Commercial leases are far less regulated and are largely governed by contract law. Special rules apply to certain asset classes such as hotels, condominiums, mobile home parks and agricultural land. Pandemic-related legislation did not materially alter commercial leasing law but temporarily affected eviction enforcement.

Outside bankruptcy, tenant insolvency typically constitutes an event of default allowing termination. In bankruptcy, US federal law governs, and tenants may assume or reject leases subject to court approval. Landlords are stayed from enforcing remedies without relief from the automatic stay. Rejection limits landlord damage claims, while assumption requires curing defaults and providing adequate assurance of future performance.

Commercial tenants generally have no right to remain after lease expiry or termination unless expressly agreed. If a tenant holds over, the lease typically converts to a month-to-month tenancy at an increased rent or subjects the tenant to damages. Landlords must pursue statutory eviction proceedings to regain possession. Clear lease provisions and prompt legal action are critical to preventing extended holdover occupancy.

Tenants may assign or sublet only if permitted by the lease. Most commercial leases require landlord consent, which may be absolute or subject to reasonableness standards. Conditions often include financial qualification of the assignee, continued liability of the original tenant, delivery of notices and payment of transfer fees. Some leases allow assignment without consent in connection with corporate restructurings.

Landlords typically have termination rights for non-payment of rent, abandonment, insolvency or other material defaults. Tenants may terminate for prolonged casualty, condemnation or landlord default following notice and cure periods. Florida law does not imply broad termination rights, and remedies are primarily contractual. Force majeure clauses may excuse performance but rarely permit termination unless expressly stated.

Leases exceeding one year may be recorded but are not required to be. Memoranda of lease are commonly recorded for long-term or ground leases to protect tenant interests. Recording triggers documentary stamp tax if consideration is stated, and recording fees. Stamp tax is modest and typically paid by the party requesting recording, often the tenant.

A tenant may be evicted for default through summary court proceedings. The process generally takes several weeks to a few months if contested. The landlord must provide statutory notice, file an eviction action, and obtain a writ of possession. Pandemic-era eviction moratoria have expired, and no commercial eviction moratoriums are currently in effect in Florida.

Leases may be terminated by governmental authorities, primarily through eminent domain or regulatory action rendering the use unlawful. Condemnation typically results in termination under lease provisions, with compensation payable by the condemning authority and allocated between landlord and tenant as agreed. Regulatory shutdowns are rare and do not typically create compensation rights absent a taking.

Landlords may pursue unpaid rent, future rent subject to mitigation, re‑letting costs and other contractual damages. Florida law requires landlords to mitigate damages unless waived by lease for certain commercial tenancies. Security deposits are commonly required and held as cash or letters of credit. Letters of credit are increasingly preferred for large or credit-risk tenants and are often drawable upon default.

Florida construction projects most commonly use fixed-price (lump sum), guaranteed maximum price (GMP), and cost-plus contracts. Fixed-price contracts are common for well-defined scopes, while GMP and cost-plus structures are used for complex or fast-track projects. Payment structures often include retainage, milestone payments and change-order mechanisms. Pricing structure is driven by risk allocation and project complexity.

Design-bid-build, design-build and construction management (at-risk or agency) are all widely used in Florida. In design-bid-build, design and construction responsibilities are separated. Design-build places responsibility with a single entity, often reducing co-ordination risk. Construction managers may provide pre-construction services and assume performance risk depending on the structure chosen. Allocation is largely project-driven.

Construction risk is managed through indemnities, insurance, performance warranties, limitations of liability and waivers of consequential damages. Standard contractual risk-shifting devices are enforceable, subject to statutory limits on indemnification in construction contracts. Builders’ risk insurance and contractual claims procedures are standard. Florida law restricts certain indemnities but generally permits negotiated risk allocation.

Schedule risk is commonly addressed through liquidated damages, milestone requirements and incentive provisions. Florida law permits liquidated damages if they reasonably estimate anticipated harm and are not punitive. Excusable and compensable delay provisions address force majeure and owner-caused delays. Contracts frequently include notice requirements and strict procedures for asserting time extensions.

Owners commonly require performance and payment bonds, especially on public projects. Letters of credit, parent guarantees and escrowed retainage are also used in private developments. Bonds are statutorily required in many public contracts but are also common in large private projects. The form and amount of security depend on contractor creditworthiness and project risk profile.

Contractors, subcontractors and suppliers may assert construction liens for unpaid work under Florida’s Construction Lien Law. Owners may remove liens by payment, bonding off, contesting the lien or filing a notice of contest or transfer. Strict notice and timing requirements apply, and failure to comply can invalidate lien rights. Lien waivers are commonly used during progress payments.

Before a project may be occupied or used, a certificate of occupancy or certificate of completion must be issued by the local authority having jurisdiction. This confirms compliance with building codes, zoning, life safety and inspection requirements. Temporary certificates may be issued for phased occupancy. Use without proper certification may result in fines, shutdowns or enforcement actions.

No sales tax, or other VAT equivalent, is charged on the sale or purchase of real estate in Florida.

In acquisitions of large Florida real estate portfolios, parties frequently use structuring techniques designed to lawfully reduce or defer documentary stamp and related transfer taxes, consistent with Chapter 201, Florida Statutes, and long-standing case law. One common method is a share deal structure, where the buyer acquires equity interests (LLC memberships or corporate stock) in property-owning entities rather than taking title by deed. Equity transfers are generally treated as transfers of personal property and are not subject to documentary stamp tax, provided the entity is not a “conduit entity” and the transaction does not fall within the three-year look-back rule under Fla. Stat. §201.02(1)(b).

Another widely used approach is careful entity formation and timing. Where real property is contributed to an entity at fair market value with documentary stamp tax paid upfront, future equity transfers can avoid conduit-entity exposure. Investors also rely on mergers or statutory conversions, which transfer real property by operation of law without deeds and therefore without stamp tax, so long as no separate conveyance instrument is recorded. In portfolio financings, parties may mitigate tax by limiting recorded mortgage amounts or using multi-state apportionment and maximum-lien language, reducing the stamp tax base on recorded security documents. All structures require careful planning to avoid unintended reassessment or look-back taxation under Florida law.

Florida counties and municipalities may levy a Local Business Tax (formerly called an occupational license tax) for the privilege of engaging in or managing a business, profession or occupation within their jurisdiction. This tax is authorised under Chapter 205, Florida Statutes, and is typically evidenced by a Local Business Tax Receipt (LBTR), which must be obtained annually for each business location, including offices, retail space and sometimes home-based operations.

The local business tax is not assessed based on rental value or square footage, but rather on business classification, gross receipts (in some jurisdictions), or a flat fee set by ordinance. Exemptions are expressly provided by statute, including exemptions (or partial exemptions) for certain charitable, religious and non-profit organisations, employees (as opposed to independent contractors), specified veterans and their spouses, certain low-income persons, disabled individuals, and businesses operating in designated enterprise zones, which may qualify for a partial exemption if adopted by local ordinance. Businesses regulated solely at the state level and not maintaining a permanent local presence may also be exempt in limited circumstances. Each municipality and county administers and enforces this tax independently, so rates and exemptions vary by location.

US federal tax law imposes significant income tax withholding on foreign investors in real estate. Rental income and gains from the sale of US real property are generally treated as effectively connected income, meaning they are subject to US tax withholding. When property is owned through a partnership, the partnership must withhold tax on income allocable to foreign partners at rates of up to 21% for foreign corporations and 37% for non-corporate investors.

Additionally, the disposition of US real estate, or interests treated as US real property interests, is subject to FIRPTA withholding. The standard FIRPTA withholding rate is 15% of the gross amount realised, not net gain, and the obligation to withhold typically falls on the buyer, who must remit the tax to the IRS. FIRPTA applies broadly and is intended to ensure tax collection at the time of sale.

There are several structuring tools that can be used to reduce or eliminate the withholdings described above. It is critical, however, to verify and implement the proper structure with counsel as early as possible.

US federal tax law provides several tax benefits associated with owning income-producing real estate, with depreciation deductions being one of the most significant. Depreciation allows owners of rental and commercial property to deduct the cost of the building (excluding land) over its statutory recovery period, reflecting wear and tear over time even if the property is appreciating in value. Under IRS rules, residential rental property is depreciated over 27.5 years and commercial property over 39 years, using the Modified Accelerated Cost Recovery System (MACRS).

In addition to depreciation, owners of income-producing real estate may deduct ordinary and necessary operating expenses, including property management fees, maintenance and repairs, insurance, utilities (if paid by the owner) and professional fees related to operating the property. Mortgage interest paid on loans used to acquire, improve or refinance rental or commercial property is also generally deductible, as are state and local real estate taxes, subject to applicable limits. These deductions apply only to income-producing property and differ from personal residence rules.

Beyond annual deductions, investors may also defer recognition of gain on the disposition of investment real estate by completing a like-kind exchange under IRC § 1031. A properly structured 1031 exchange allows the proceeds from the sale of qualifying real property held for investment or business use to be reinvested in other qualifying real property, with gain deferred rather than recognised, provided statutory timing and procedural requirements are satisfied.