Updated Bottom Line: This post supplements a post to this blog dated December 17, 2011, because the content below was inadvertently omitted. If you have not read Will a Florida Limited Liability Company Still Protect Real Estate?, please read it first and then this post.
Florida Single-Member Limited Liability Company
Florida Multi-Member Limited Liability Company
Florida statute §608.433 provides that a charging order is the only remedy that is available to a judgment creditor that has a court issued judgment against a member of a Florida limited liability company (“LLC”) if the LLC has more than one member (“MMLLC”). Following the Florida Supreme Court’s decision in the Olmstead case cited below, a court may order a judgment debtor, who is the only member of an LLC established under Florida business law, to surrender all of that member’s interest in the single member LLC (“SMLLC”) to the judgment creditor. In contrast to the Florida SMLLC, in a Florida MMLLC the only remedy available to a creditor is a charging order.
Discussion: The Florida Supreme Court, in Olmstead v. Federal Trade Comm’n, Case No. SC08-1009 (June 24, 2010), held that with respect to a SMLLC established under Florida law, a “charging order” is not the only remedy available to a creditor holding a judgment against a sole member of a Florida LLC. A charging order represents a lien entitling a judgment creditor to ONLY receive distributions from the SMLLC that otherwise would be payable to the member who is the judgment debtor. Much concern was expressed that the Olmstead case holding would not be limited to Florida SMLLCs. The Florida Legislature agreed that there was uncertainty in Florida’s business law due to the Olmstead case and thus businesses and investors in Florida might form LLCs in jurisdictions where charging orders are the only remedy available to judgment creditors of members of MMLLCs. The revision of §608.433, Florida Statutes, clarifies existing Florida law so that the holding in the Olmstead case does not extend to members of a MMLLC organized under Florida business law. The revised statute is applicable to all MMLLCs created before, on, or after its effective date, which was May 31, 2011.
If you would like a copy of the revised Florida Statute §608.433 forwarded to you via email…
please contact Howard Stross