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Florida Real Estate Transactions

Copyright 2014, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART II THE DEED

APP 14-1 FLORIDA TITLE STANDARDS
CHAPTER 4 CORPORATIONS

1-14.1 Florida Real Estate Transactions Standard 4.2

Standard 4.2 Conveyance of All or Substantially All Property and Assets of a Corporation

Unless the record affirmatively shows that a corporate deed in the chain of title constituted a conveyance of all
or substantially all of the property and assets of the corporation, an examiner may assume that the transaction
did not require authorization by a majority of the stockholders for a sale of all or substantially all of the
corporate property and assets.

Problem 1:
Appearing in the chain of title is a properly executed deed of a corporation conveying one or more
parcels of land. Nothing on the record shows that the property conveyed constituted all or substantially
all of the property and assets of the corporation. Must an examiner make independent inquiry as to
whether the conveyance was a conveyance of all or substantially all of the property and assets of the
corporation and whether the corporation had the authorization of a majority of the stockholders to make
the sale?

Answer:
No.

Problem 2:
The deed of the corporation recites, or the record shows, that the deed was a conveyance of all or
substantially all of the property and assets of the corporation. Must the examiner make an independent
inquiry as to whether the corporation had shareholder authorization?

Answer:
Yes. However, if the conveyance was made after July 1, 1990, the effective date of§ 607.1201, Fla. Stat.,
shareholder approval is not necessary for conveyances of all or substantially all of the property and assets
of the corporation, when such conveyances are made in the usual and regular course of business, unless
the corporation's articles of incorporation require otherwise.

Authorities & References:

§§ 607.1201, 607.1202, Fla. Stat.; ATIF TN 11.01.01.
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1-14.1 Florida Real Estate Transactions Standard 4.2

Comment:
In 1990, the Florida legislature repealed§ 607.241, Fla. Stat., which required shareholder authorization
for a conveyance of all, or substantially all, of the property and assets of a corporation. The Florida
Business Corporation Act now provides that a corporation may dispose of all, or substantially all, of its
property in the usual and regular course of business without shareholder authorization unless the articles
of incorporation provide otherwise.§ 607.1201, Fla. Stat. However, if the disposition of property is not in
the usual and regular course of business, the corporation's board of directors must obtain shareholder
authorization of the disposition.§ 607.1202, Fla. Stat.

A disposition of corporate assets may be considered a sale of "substantially all" of those assets if the sale
substantially limits the corporation's business or serves to destroy the fundamental purpose for which the
corporation was organized. Schwadel v. Uchitel, 455 So. 2d 401 (Fla. 3d DCA 1984) ; see also South
End Improvement Group, Inc. v. Mulliken, 602 So. 2d 1327 (Fla. 4th DCA 1992) (the test is whether the
disposition's quantitative or qualitative impact, or both would fundamentally change the nature of the
corporation); BSF Co. v. Philadelphia Nat'l Bank, 204 A. 2d 746 (Del. 1964) ; National Bank of
Commerce v. United States, 158 F. Supp. 887 (E.D. Va. 1958) ; Union-May Stern Co. v. Industrial
Commission, 273 S.W. 2d 766 (Mo. Ct. App. 1954) ; Florida Corporate Practice § 10.46 (CLE 4th ed.
2002). Effective July 1, 1991, as to corporations not for profit, the applicable statutes are §§ 617.1201,
1202, Fla. Stat. See also Lensa Corp. v. Poinciana Gardens Ass n., 765 So. 2d 296 (Fla. 4th CAS 2000) .

When taking a deed or other instrument transferring title to realty, consideration must be given to Title Standard 4.2-1.
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