Why It Matters More in Florida
Every state tells LLC owners to write an operating agreement. Florida means it. This state’s LLC law gives a mistreated minority owner no oppression remedy, gives a departing member no right to be bought out, and gives nobody a right to a distribution the company has not chosen to declare. What it gives instead is contractual freedom. Nearly every protection the statute withholds can be created by the written agreement, and since 2020 an agreement’s deadlock-sale clause can even displace a court’s power to dissolve the company. The legislature’s message is unambiguous. Paper your deal, because we will enforce your paper, not your expectations.
We spend half this practice inside partner disputes, and the pattern is monotonous. The fight is rarely about what the agreement says. It is about what the agreement never said.
The Defaults If You Never Wrote One
No agreement does not mean no rules; it means the statute’s rules, and they contain traps that catch real companies weekly.
- Your profit split depends on records you never kept. By default, profits and distributions are shared based on the agreed value of each member’s contributions as stated in the company’s records. Handshake companies rarely record contributions at all, and sweat, credit, and “I’ll run it, you fund it” never make it into a ledger. When the money finally matters, the split becomes a lawsuit about what was agreed years earlier.
- Nobody owes you a distribution. A member has a right to a distribution only if the company decides to make one. A profitable company that writes zero checks is acting lawfully by default, and that is the engine of most freeze-outs.
- Majority in interest runs everything; amendments need everyone. Votes track profit shares, a bare majority in interest decides company action, and changing the articles or agreement requires unanimity. A 60 percent owner needs no one; a 50/50 company deadlocks on its first real disagreement; and the paper that could fix either can be amended only if all agree, which mid-dispute means never.
- Any member can sign. In a member-managed company, each member is an agent who can generally bind the business in its ordinary course. Four owners means four pens, whether or not the other three approve; the tradeoffs are covered in our guide to member-managed versus manager-managed LLCs.
The Clauses That Decide Fights
A short list of provisions accounts for most of the disputes on this site, almost always by their absence.
- A deadlock-sale clause. The tie-breaker Florida law now lets outrank judicial dissolution, whether a forced buy-sell, a governance change, or a sale, triggered by defined deadlock. Essential in any 50/50 company, and the centerpiece of a proper 50/50 partnership agreement.
- Expulsion with a priced buyout. Florida honors an agreement’s removal mechanism; without one, removal means unanimity or a judge. The clause must pair removal with a buyout formula, or you expel the vote and keep the shareholder.
- A tax-distribution floor. Pass-through owners are taxed on profits whether or not cash is distributed. One sentence obligating the company to distribute enough to cover each owner’s tax prevents the phantom-income squeeze entirely.
- Real exits. Put and call rights, price formulas, and payment terms, because Florida supplies no exit of its own, and a minority owner without a contractual one is simply stuck.
- Consent rights. The short list of moves requiring more than a bare majority covers insider transactions, new debt, new members, compensation changes, and selling the business.
- Transfer and buy-sell machinery. Death, divorce, disability, bankruptcy, and departure, coordinated with the owners’ estate plans; the buy-sell agreement is its own discipline, and what the default rules do at an owner’s death is the case for getting this clause right.
- Vesting and contribution records. For the partner earning in with work (a silent partner’s mirror image), vesting terms and properly recorded contributions, so the default rules above can never rewrite the deal.
The Rest of a Real Agreement
Beyond the fight-deciding clauses, a working agreement handles the machinery that templates skim and real deals need. Member loans, papered. When an owner puts in money beyond their contribution, the agreement should say whether it is a loan or capital, how it is repaid, and where it sits in the payment order; “I’ll just cover it this month” is how six-figure classification fights start. Manager succession and removal. If a named manager dies, dissolves, or fails, who steps in, and can the members ever remove one? Agreements that appoint a manager with no removal or succession mechanism have married the company to a single point of failure. Self-dealing rules. Some agreements pre-authorize affiliate transactions wholesale; that clause deserves eyes-open negotiation, because it disarms the fiduciary claims a passive owner may someday need. Member restrictive covenants. What a departing member may do next, and to whom, belongs in the agreement rather than in a lawsuit; Florida enforces well-drafted non-competes and non-solicits more readily than almost any state, but only when the paperwork earns it. Dispute resolution, chosen on purpose. Whether member fights go to court or into private arbitration is a drafting decision with real consequences for cost, speed, and appeal rights, not a boilerplate paragraph to skim. Transfer and pledge mechanics. Family and trust transfers for estate planning (so your interest can move into a trust without unanimous consent), what happens when an interest is pledged as loan collateral, and a record-holder rule so the company knows who it answers to. Housekeeping that ages. Tax boilerplate drifts out of date as the law changes, and a stale term is a reliable tell that nobody has reviewed the document in a decade; the review that catches it usually catches bigger things too.
Running a company on a template, or a handshake?
The repair is a flat fee. The fight it prevents is not. Book a free 30-minute consult and we will tell you what your agreement actually says.
Book your free consultWhat the Agreement Cannot Do
Florida’s contractual freedom has walls, and an agreement drafted into them becomes unenforceable exactly where it matters. The statute forbids, among other things, unreasonably restricting a member’s records and information rights, and unreasonably restricting a member’s right to bring the direct and derivative actions the law provides; core duties of loyalty and care can be shaped and specific conduct authorized, but good faith cannot be drafted away wholesale. Part of professional drafting is aggression calibrated to the enforceable, because an agreement that overreaches invites a court to disregard its most important clause at the worst moment.
Drafted by a Litigator
Most operating agreements are assembled by lawyers who will never see one cross-examined. Kevin litigates partner disputes in Florida courts, deadlocks, freeze-outs, expulsions, buyout fights, which means the clauses in our agreements are the ones that have survived contact with real litigation, and the silences that lose cases are the first things we fill. He began his career as a Miami-Dade prosecutor; the drafting is done by someone whose starting question is what the document looks like as Exhibit A.
Drafting, Review, and What It Costs
Three engagements, all flat-fee and quoted up front at the consult. New agreements, for companies forming now or deals being struck, structure, waterfall, and protections drawn as one design. Repairs, replacing the template running your company with an agreement that matches your actual deal, adopted before anyone is angry. Buy-side review, reading an agreement through the minority owner’s eyes before you sign or fund, and negotiating what is missing while you still hold leverage. We work statewide and remotely, for Florida companies and their owners wherever they live. The 30-minute consult is free, and we will tell you plainly which engagement, if any, your situation needs.
Frequently Asked Questions
What Is an Operating Agreement?
It is the contract among an LLC’s members (and the company) that sets how the business is owned and run, covering who manages, how profits and distributions flow, how decisions are made, how owners get in and out, and what happens on death, divorce, deadlock, or departure. Florida does not require you to have one, and that is precisely the trap. Without one, the statute’s default rules govern, and they were not written with your deal in mind.
Does Florida Require an Operating Agreement?
No, and an oral or implied one can even count. But in Florida the stakes of skipping it are unusually high, because the statute fills the silence with defaults that surprise people. Your share of profits follows the contributions recorded in company records (records informal companies rarely keep), nobody has a right to a distribution unless the company declares one, ordinary decisions go to a majority in interest, and in a member-managed company each member can generally bind the business. Every one of those defaults has produced litigation we have seen up close.
How Much Does an Operating Agreement Cost?
Less than the fight it prevents, and the honest range is wide because the document should match the deal. A template costs almost nothing and usually restates the statute's defaults, which is exactly what you were trying to escape. Attorney-drafted agreements are priced by what the deal needs, including how many members, how capital and profits split, vesting for a working partner, buyout and deadlock mechanics, and death and divorce provisions. We quote a flat fee at the consult once we hear the deal, so the price is fixed before any drafting starts.
What Should an Operating Agreement Include?
The core items are management structure and signing authority; how profits, losses, and distributions flow, including a tax-distribution floor; a deadlock-breaking mechanism; expulsion and exit provisions with a price or formula; transfer restrictions and buy-sell triggers for death, divorce, and departure; consent rights over major decisions; information rights; vesting for anyone earning equity with work; and dispute-resolution terms. The right agreement is shorter than a template and says more, because it is written for your actual deal.
What Is a Deadlock-Sale Provision?
It is a clause that breaks a tie among owners without a courtroom, whether by a forced buy-sell between the deadlocked sides, a governance change, or a sale of the company, triggered when a defined deadlock occurs. Florida law now gives these clauses remarkable power. Once properly initiated, an operating agreement’s deadlock-sale mechanism displaces the court’s own dissolution process. For any 50/50 company, this is arguably the single most valuable paragraph in the document.
Can We Kick Out a Member If the Agreement Allows It?
Yes, and only comfortably then. Florida permits expulsion under a mechanism the operating agreement provides; without one, removing a member requires unanimous consent in narrow situations or a judge finding serious misconduct. Just as important is what your clause pairs with the expulsion, a buyout at a stated price or formula. Expelling someone without buying them out leaves them holding an economic interest forever, an outcome that satisfies nobody.
We Downloaded a Template. Is That Good Enough?
Sometimes it is worse than nothing, because it answers the easy questions and silently botches the hard ones, with waterfalls that contradict the members’ actual deal, no deadlock clause, no tax distributions, transfer language that fails at death, and boilerplate imported from a state whose law does not match. A review is a modest flat-fee engagement, and what it most often finds is that the document running your company does not say what you think it says.
Do You Review Agreements for People Buying Into an LLC?
Yes, and this is the one thing to take from this page. Never buy into a Florida LLC without reading the operating agreement through the minority owner’s eyes. Florida will not protect you from a bad one. We review the agreement, flag what is missing (distribution rights, exit rights, vetoes, antidilution), and negotiate the terms while you still have the leverage of your unsigned check.
What Does It Cost?
Drafting and review are flat-fee, quoted up front at the consult once we understand the company, the owners, and the deal; the price depends on complexity, not on hours. It is a fraction of what any single one of the disputes on this site costs to litigate. The 30-minute consult is free, and we will tell you honestly whether you need a full agreement, a repair, or nothing.
Common Situations
The 50/50 company with the missing paragraph. Two founders, equal owners, a downloaded agreement with no deadlock clause. When they split over an acquisition offer, nothing can be decided, signed, or sold. A one-paragraph deadlock-sale provision, adopted in year one when they agreed on everything, would have priced and resolved the standoff without a courtroom.
The contribution nobody recorded. One partner funded the company; the other built it. Nothing was written, so the statutory default sends profits according to recorded contributions, and the records show only the funder’s wire. The working partner’s years of sweat are legally invisible until a court reconstructs the deal, at deposition prices.
The buyer who read it first. An investor about to wire six figures for 20 percent brings us the agreement. It gives her no distribution rights, no exit, no vetoes, and lets the majority issue new interests freely. Two weeks of negotiation later she signs a different document, and every protection in it cost her nothing but the asking.
Sources of Law
- Florida Revised Limited Liability Company Act, ch. 605: §605.0105 (scope of the operating agreement and its limits, including that records rights and member actions may not be unreasonably restricted), §605.0404 (default sharing per contributions as stated in company records; no right to undeclared distributions), §605.04073 (voting: majority-in-interest action, unanimous amendments), §605.04074 (member agency in a member-managed company), §605.0602(4) to (6) (expulsion mechanisms), §605.0702(2) (deadlock-sale provisions displacing judicial dissolution, added 2020). Retrieved 2026-08-07.
Updated on August 12, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. General information about Florida law, not legal advice, and no attorney-client relationship is created. Outcomes depend on the specific facts; past results do not guarantee a similar outcome. Do not send confidential information until we have agreed to represent you.