Potential Problems in Condominium Terminations

In 2007, the Florida Bar was asked to make it easier to end condo agreements. They made a proposal to change the law, which was then expanded to include older condos. The new law made it easier to end condo agreements and has helped end many condo projects that weren’t working out. The steps to end a condo agreement are now clearly explained in the law. When a condominium association wants to end and sell the property, they make a plan for termination. This plan is recorded in the county’s public records and notice is sent to all owners and lienholders. Owners and mortgage lienholders have 90 days to challenge the plan. Then, a termination trustee sells the property and distributes the money according to the plan. However, there have been problems with mortgage lenders accepting payment and responding to the plan. When dealing with lenders during property termination, there are practical issues like getting information on the unpaid amount and loan identification. Lenders may not respond to requests for information or payments. Also, satisfying mortgage liens can be tricky as lenders may not provide a satisfaction when a lien is paid in full through termination. Some title companies may not insure the acquisition of title from a termination trustee because they cannot confirm proper notice and payments were made to owners and lienholders. This can lead to legal action to clear the title. Sometimes, a lender may start foreclosure proceedings before the termination is recorded, which can complicate the process even more. A problem can happen if a condominium termination plan is recorded but the sale of the property doesn’t go through. It’s not clear in the law how to restart the condominium if this happens. It might be a good idea to only use a plan that takes effect 90 days after it’s recorded, so there’s time to make sure the sale will happen. The law says the value of the units and common areas should be determined separately when selling the property. But it’s hard to do this in practice, especially for things like the building lobby. If the termination trustee isn’t the condo association, there might be issues with paying for the property’s expenses while things get sorted out. So it might be best to have the association as the trustee, or make sure the trustee has enough money to cover expenses. When a lot of units in a property are bought by one buyer, it can cause problems when it comes to ending the property. The law for ending the property is being looked at again because of these problems. Before using this law, it’s a good idea to talk to a title company to make sure the property can be sold later. To teach its members about their responsibilities to the public, to make the justice system better, and to improve the study of law.

Source: https://www.floridabar.org/the-florida-bar-journal/potential-problems-in-condominium-terminations/