Partnership arrangements in the real estate industry are unique. Typically, a portfolio of commercial properties is owned by a parent company through separate business entities known as special purpose vehicles (SPVs). Limited liability companies (LLCs) are generally a preferred form for parent companies and SPVs. This separate company structure between the parent company and SPV serves as a method of isolating the risks of activities between the two entities and allows SPVs to have their own balance sheet. Internal disputes relating to entities in the business of real estate generally revolve around appraisal rights, voting and control of management.

To avoid deadlocks and threat of judicial dissolution of a parent company or an SPV, the operating agreements of both entities should be carefully negotiated so that there are common terms that can be used to efficiently resolve disputes. If partners do not have clear terms to avoid a deadlock, Florida courts may appoint a receiver or a custodian, or alternatively, order the purchase of the petitioning partner’s interest as an alternative to judicial dissolution. Some or all of the key provisions discussed below can be negotiated or incorporated in the operating agreements to assist with a business-oriented resolution.