Two owners of an LLC can hit a standoff. One wants to sell the company, the other wants to keep running it, and nothing moves.
Yes, a Florida court can order an LLC dissolved in some deadlock cases. But it isn’t automatic, and the operating agreement usually comes first. Often it settles the stalemate before a judge is ever asked to step in.
Can a Florida LLC Be Dissolved Over a Deadlock?
A member can ask a Florida circuit court to dissolve an LLC when the members or managers are deadlocked, cannot break the deadlock, and the company faces irreparable injury, unless the operating agreement has a deadlock sale provision that was initiated before the court finds the grounds exist, in which case that provision applies instead. Fla. Stat. § 605.0702 describes that rule. A court may enter a dissolution decree only after a hearing finds the grounds exist. Fla. Stat. § 605.0705
Every dispute turns on its own facts and documents, so the details of a particular matter matter. A typical case involves a two-member LLC owned 50-50, where neither side can win a vote on a sale, a major contract, or the company’s direction. The statute also lists other grounds, such as unlawful or fraudulent conduct by the people in control.
Eduardo A. Maura is the responsible lawyer for this page. The firm’s only office is at 1646 W Snow Ave, Tampa, FL; this page serves businesses in Tampa and Hillsborough County. Our team serves businesses in Tampa and Hillsborough County, and this page gives general information about Florida LLC law.
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Why the Operating Agreement Comes First
The operating agreement usually governs the deadlock first. Fla. Stat. § 605.0105 says, except as otherwise provided in subsections (3) and (4), the agreement governs relations among the members as members and between the members and the company. Where the agreement is silent, the statute’s default rules fill the gap.
Look for these terms in your agreement:
- Voting thresholds and who can act for the company.
- Escalation or mediation steps before a member can file.
- A buy-sell or deadlock sale clause, such as a purchase of one member’s interest or a sale of the company.
- Events that trigger dissolution or a member’s exit.
A deadlock sale clause carries the most weight.
Default rules matter too. Fla. Stat. § 605.04073
A common mistake is assuming the default votes apply when the agreement says something different. Check the agreement before you count votes.
When Can a Florida Court Order Judicial Dissolution?
A court can order judicial dissolution after a hearing, and the other owners may get a chance to buy the filing member out first. If a member files under the member-petition grounds, the company or other members can elect to buy that member’s entire interest at fair value. Fla. Stat. § 605.0706
The election must be filed within 90 days after the petition, unless the court allows more time. Once filed, it is irrevocable unless the court finds it equitable to set it aside. When equity requires, the court can allow payment in installments and require security for payment.
Fla. Stat. § 605.0703 For a company with its principal office in Hillsborough County, that means the Hillsborough County circuit court.
While a case is pending, the court can issue injunctions, appoint a receiver or custodian, and keep the business running until a full hearing. Whether your deadlock meets these grounds depends on the facts.
What Are the Options Short of Dissolution?
Several paths can end a deadlock without a dissolution order. Most of them need both owners to agree, unless the operating agreement already sets the steps.
- Negotiated buyout. One member buys the other’s interest at a price and terms both sides accept.
- This works when the agreement allows it and the members agree, but once an election to purchase is filed, the petitioning member may not sell or otherwise dispose of its interest unless the court determines that it would be equitable to the company and the members, other than the petitioner, or the sale is under a deadlock sale provision.
- Governance change. The members agree on who decides what. Amending the agreement requires every member’s consent.
- Dissolution by consent. All members can agree to dissolve the company, which then moves into winding up. Fla. Stat. § 605.0701
- Mediation. If the dispute includes a lawsuit for money damages, a court generally must send it to mediation when one party asks, provided that party is willing and able to pay the costs of mediation or the costs can be equitably divided between the parties, unless a listed exception applies. Fla. Stat. § 44.102
Waiting while the company drifts can make a later fight harder. Act on the timelines your agreement sets.
What Should You Gather Before Acting on a Deadlock?
Gather the operating agreement, the company’s records, and a dated timeline before you raise the deadlock in writing or file anything.
- Governing documents. Collect the operating agreement, all amendments, and the articles of organization. Check state records for the principal office, which sets venue; if there is or was no principal office in Florida, venue is set by the county where the registered office is or was last located. The Florida Division of Corporations FAQs explain member-managed and manager-managed LLCs.
- A timeline. List votes, proposals, rejected offers, notices, and the deadlines the agreement sets.
- Financial records. In a member-managed LLC, the company must give members information that is material to their rights, without being asked, unless the member already knows it. Fla. Stat. § 605.0410
- Written communications. Keep emails, texts, and notices. Side promises made out loud still need the basics of a contract: an offer, acceptance, consideration, and specific essential terms. St. Joe Corp. v. McIver
Talk Through Your Deadlock With Ayala Law PA
When two owners are stuck over a sale or a management decision, the operating agreement is the first document to review. The answer turns on the agreement’s exact wording and on the steps each owner has already taken.
If you and your co-owner are stuck over a sale or over who runs the company, call (305) 570-2208 or send us a note through our contact page, and we can talk through your operating agreement.
Our business litigation practice covers shareholder, contract, and commercial disputes in Florida courts and arbitration.
Can a Florida court dissolve an LLC if the two members cannot agree?
Sometimes. A court can order dissolution after a hearing finds the statutory grounds, including a deadlock the members cannot break and irreparable injury to the company is threatened or being suffered, unless a deadlock sale provision was initiated first.
Who can ask a Florida court to dissolve an LLC?
Under s. 605.0702, a manager or member can bring the case on the grounds that statute lists. Those grounds include deadlock and unlawful conduct; fraud is also a ground, where the managers or members in control have acted, are acting, or are reasonably expected to act in a manner that is illegal or fraudulent.
Can the other member buy out the member who filed?
The company or the other members can elect to buy that member’s interest at fair value. The election is generally due within 90 days after the petition, unless the court allows more time.
