Terminating a Condominium Association
Although large scale property development has made a gradual comeback in recent years, in many instances, it is still more profitable for a developer who owns a majority of condominium units to terminate the association and sell the property for convergence to rentals. Unfortunately, this process can be complicated and does not always serve the best needs of all of the owners and occupants.
A new bill, recently signed into law by Governor Rick Scott, formerly known as House Bill 643, works to address some of these issues by revising the Florida statute outlining the legal requirements involved in the optional termination of condominium associations.
The bill revises current Florida law to address concerns that bulk condo owners were forcing holders of minority voting interests to sell at unreasonably low prices. The revised law now works to address this by requiring that a condo association termination plan be approved by at least 80% of the total voting interests.
Furthermore, if 10% or more of the voting interests initially reject termination, then another plan cannot be considered for at least 18 months, thus providing more protection for those owners who may object to dissolution of the association. Further protections for unit owners include a provision disallowing the practice of barring unit owners who are behind on their condo fees from voting on a termination plan, as well as a requirement that any disputes about terminating the association must undergo non-binding arbitration before beginning litigation.
Legal Requirements for Terminating a Condominium Association
The amendments require that once certain disclosures are made, specific procedures for the actual termination of the association must be followed. The procedures include the following:
After a timely request, unit owners must be permitted to keep possession of their units and lease them for 12 months if offered to the public;
The bulk owner must ensure that every first mortgage is fully satisfied when the termination plan is implemented;
In the event that a unit owner votes against the termination plan, the bulk owner must agree to pay no less than 100% of the fair market value of the unit;
If a dissenting unit owner was an original purchaser, he or she must be paid a minimum of the original purchase price of the unit; and
Any unit owner who was granted a homestead exemption can still be forced to move, but is entitled to a relocation payment equal to 1% of the unit’s value, at least 90 days before the date of termination.
Contact the Law Offices of Larry E. Bray
Although the new amendments clarify some of the more complicated aspects of the law regulating condominium association terminations, it remains a complicated legal issue. Having an experienced real estate attorney to advise and help you navigate the new laws will work to benefit you in the long run. If you have any questions about a proposed condominium association termination involving your interests, please contact the Boca Raton real estate Law Offices of Larry E. Bray for a free initial consultation.