Co-Owner Disputes in Your Florida Business

Co-Owner Dispute Florida Business: Your Options Before a Lawsuit

Most co-owner disputes in a Florida business turn on one document: the operating agreement, bylaws, or partnership agreement. That document often decides who votes, who gets paid, how an owner exits, and what records each owner can see. When it’s silent, Florida’s default statutes fill the gap. This guide explains how these disputes work and which steps usually come before a lawsuit. KEW Legal is a Florida business law firm with offices in Coral Gables and Sunny Isles Beach, serving Miami-Dade, Broward, and South Florida.

Start With the Governing Document

Start with the governing document, because it sets the basic rules for your business. For an LLC, the operating agreement governs relations among the members and between the members and the company. Florida LLC operating agreement statute states this rule directly.

Pull these records first: the operating agreement or partnership agreement, bylaws, every amendment, any buy-sell terms, and capital account records. Use the signed version, not a draft someone emailed you. Then check who is listed as an owner or manager in the entity’s state filing with the Florida Division of Corporations.

Gaps matter. If the document says nothing about a question, the default statute applies. Silence can help one owner and hurt another, so read the document before you send any letter.

What Counts as a Co-Owner Dispute

A co-owner dispute is a disagreement between two or more people who own a business or property together. The owners may be members of an LLC, shareholders of a corporation, general or limited partners, or co-owners of real estate held through a company. Most conflicts fall into five categories: control, money, exit, records, and contracts.

Control covers who makes decisions and who can sign. Money covers distributions, capital contributions, and unpaid capital calls. Exit covers one owner wanting out, or pushing a sale. Records covers access to the books. Contracts covers deals signed without the other owners’ approval.

One fight often crosses several categories. An owner who stops approving payments may also hold back distributions and refuse to share financial statements. Each category can point to a different rule, so you need to sort them out early.

The Florida Framework: Chapters 605, 607, and 620

Florida sorts business entities into separate chapters of its statutes, and the chapter for your entity sets the default rules. Under Fla. Stat. § 620.8103, relations among partners and between partners and a partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, the statute governs those relations.

The governing document can change many of those default rules. It cannot change everything. An operating agreement may not relieve a person from liability for bad faith, willful or intentional misconduct, or a knowing violation of law. That limit comes from Florida’s operating agreement statute.

Statutory defaults are general. The same facts can lead to different results depending on the document and the entity type. Don’t apply a rule from one chapter to a different kind of business.

Control Disputes: Management, Votes, and Removal

A control dispute asks who gets to decide and how many votes a decision needs. Common examples include deadlock, one owner acting alone, a change in signing authority, and an owner shut out of management.

An LLC is member-managed unless its operating agreement or articles say otherwise. A member-managed LLC statute places management in the members. Under the LLC voting rules statute, each member’s vote follows that member’s share of profits. Unless the operating agreement provides otherwise, a majority-in-interest vote is required for an act, and the default rule requiring every member’s consent to amend the operating agreement can be changed by the agreement itself, for example to allow majority amendment.

In a manager-managed LLC, the manager decides ordinary matters. Acts outside the ordinary course need a majority-in-interest vote of the members.

Can a co-owner be removed? The answer depends on the document. Removal is not a general power, so check for expulsion or buyout clauses first. If a member is harmed directly, that member may bring a direct action, but must show the injury is not solely the company’s injury.

When owners deadlock, a LLC dissolution statute allows a circuit court to step in. That path requires proof that the owners cannot break the deadlock and that irreparable injury is threatened. A deadlock sale provision in the agreement may resolve the impasse first.

Money Disputes: Distributions, Capital Calls, and Accounting

Money disputes ask whether each owner got a fair share and whether the company can afford a payment. Common conflicts involve unequal distributions, disputed capital contributions, and capital calls one owner never paid.

Florida law limits when an LLC can pay out money. An LLC may not make a distribution if, afterward, it could not pay its debts as they come due. The same bar applies if its total assets would fall below its total liabilities plus what’s needed for senior preferred claims upon winding up. The LLC distribution limits statute sets out this test.

Before you send a demand, ask for an accounting in writing. Gather bank statements, tax filings, capital account records, and recent financial statements. Under the LLC member records statute, an LLC must keep its financial statements for the three most recent years if any have been prepared.

A written request creates a clear record. It also shows the other owner what you asked for and when.

Exit and Buyout Disputes

An exit dispute asks how an owner leaves and what that owner gets paid. One owner may want out, while the others disagree on price. Or one owner may push to force a sale of the whole business.

Start with the buy-sell terms and valuation method in the governing document. Those terms usually control when they are clear. Check whether the agreement sets a formula, an appraisal process, or a right of first refusal.

Partnership exits follow their own rule. When a partner leaves without ending the partnership, the partnership must buy that partner’s interest. The partner buyout statute provides that if no agreement is reached within 120 days after a written demand, the partnership must pay in cash its estimate of the buyout price plus accrued interest, unless the partnership agreement provides otherwise.

In an LLC, the company itself has the first right to elect to purchase a petitioning member’s interest, and other members may elect to purchase it only if the company does not. An election may be filed within 90 days after the petition, unless the court allows a later time. The LLC election to purchase statute sets out the process.

A negotiated buyout should be in writing. It should cover the price, the valuation method, payment terms, and the release each side gives. Our business acquisition and sale and business succession planning work covers these transfers.

Records and Information Rights

Records rights decide what you can see, and the answer depends on your entity type. A corporate shareholder who gives written notice at least 5 business days ahead may inspect and copy certain records. Under the corporate shareholder records statute, shareholders may inspect the records listed in § 607.1602(1), including annual financial statements, on 5 business days’ written notice without showing a purpose. The good-faith and proper-purpose requirement applies to the records listed in § 607.1602(2), such as accounting records, board and shareholder minutes, and the record of shareholders.

Partners have their own access rule. A partnership must give partners access to its books during ordinary business hours. It may charge a reasonable amount for copies, under the partnership records statute.

Fla. Stat. § 605.0410 sets different inspection procedures for member-managed and manager-managed LLCs, including demands made in a record and 10-day response periods. The company may set reasonable limits on use. If the limits are challenged, the company must prove they are reasonable.

A written request should name the specific records, the time period, and the reason. Vague requests invite refusals. Keep copies and dates. If the company declines, it must give its reasons. The governing document may expand or narrow these rights.

Non-Litigation Options: Review, Demand Letter, Negotiation, and Mediation

Most co-owner disputes start outside court. A few steps usually come first, and each fits a different stage.

Demand letter. This letter states your position, the action you want, and a date for a response. It puts the other owner on notice and creates a record.

Negotiated resolution. The parties may agree to a buyout, a standstill, or an amended agreement. By default, an LLC agreement requires all members’ consent to be amended, and the operating agreement may vary that rule.

Mediation. A neutral third party helps the parties talk. Mediation is usually voluntary, but a court may order it under Chapter 44, Florida Statutes, and governing documents may require it.

Timing matters. Some claims have deadlines. Under Fla. Stat. § 95.11, actions other than for recovery of real property are subject to time limits set by category, including twenty years for an action on a judgment or decree of a Florida court of record and five years for a legal or equitable action on a contract, obligation, or liability founded on a written instrument. No step promises a particular result, and the right path depends on the facts.

When Jointly Owned Real Estate Is Involved: Partition Basics

A partition action is a lawsuit where co-owners ask a court to divide or sell jointly owned property. Partition by sale means the property is sold and the proceeds are split. Partition in kind means the land itself is divided among the owners.

Partition is a different question from a dispute over a company’s management. If real estate is titled in an LLC, the LLC is the sole owner of the property. Members hold only a transferable interest in the company, not co-ownership of the property (Fla. Stat. § 605.0501), so partition among members generally does not apply. The operating agreement statute says the agreement governs member relations. Check the entity documents before you assume a partition case is the right path.

Real estate disputes can overlap with entity disputes. Our real estate investment attorney page covers jointly owned investment property in more detail.

Common Questions About Co-Owner Disputes

Most of these questions depend on the governing document and the facts, so the short answers below are a starting point.

Organizing Your Facts Before Speaking With Counsel

Good facts make the first conversation more useful. Start with a dated timeline of the conflict. Note each vote, payment, refused request, and key message.

Next, gather copies of the governing document, all amendments, and recent financial statements. Keep written communications with the co-owner, including texts and emails. Don’t delete anything, even messages that feel unhelpful.

Think about which issues the dispute touches. A fight over pay may involve employment law. A fight over a lease may involve a commercial lease. Listing these areas helps frame the review.

Talk to KEW Legal About Your Co-Owner Dispute

If a co-owner is blocking votes, holding back distributions, or pushing to sell the business or property, you need clear options before you act. KEW Legal is an outside general counsel and business law firm. Our Coral Gables office is responsible for this page, and we serve Miami-Dade, Broward, and South Florida.

Your next step is a conversation about your facts and your governing document. Schedule a consultation, call 305-990-2300, or send a message through our contact page. Any outcome depends on your facts and the documents that govern your business, and no result is promised.