Section 718.117 of the Florida Condominium Act received sweeping changes earlier this month. On June 16th Governor Rick Scott signed HB 643, which made optional terminations of a condominium more difficult.
This change comes in reaction to developers who, during the recent real estate downturn, planned to turn condos into rental apartments or sell the property to convert into rentals. Condo-owners claimed they were being forced out of their units and compensated with less than what they purchased the property for.
This new legislation makes it more difficult for developers who own a majority of the units in a condominium to terminate it by providing the following obstacles.
- 80% of the unit owners must agree to the termination. Every unit owner is entitled to a vote, even if they are not current on payments.
- If there is a “bulk owner,” all other unit owners must be paid 100% Fair Market Value of their units, which must be at least the original purchase price.
- Also in the case of a bulk owner, a plan of termination is not effective until the outstanding first mortgages of all unit owners are paid in full, before or in unison with the termination.
- If a unit owner is granted homestead exemption, the bulk owner must pay them one percent of the termination proceeds allocated to the unit as a relocation payment.
- If units from a terminated condominium are offered for lease. Unit owners must be offered a right to lease their former unit for 12 months on the same terms as are offered to the public.
- If a plan of termination is not approved, another plan cannot be proposed or considered for 18 months.
These changes will create extensive changes in the condominium real estate market. If you have questions about how these changes may affect you and or association, please call our offices today.