Termination of Condominium Terminations?

Condominiums in Florida can get old and expensive to repair, especially the ones near the ocean. In 2007, a new law made it easier for 80% of condo owners to agree to sell the building, even if 10% of owners disagreed. This was meant to help older buildings that needed a lot of repairs. In 2007, the real estate market was really good, but then it went downhill. People were buying condos to make a quick profit, and builders were changing apartments into condos to meet the high demand. In 2008, the housing market crashed and many condo projects failed. Investment groups bought up failed condo units and turned them back into rental apartments. This helped prevent a long recession in Florida’s real estate. However, some people who lived in these condos lost their homes and still owed money on their mortgages. This caused some panic, but it was mostly limited to the Tampa Bay area. The Madison Oaks Condominium in Tampa Bay faced termination by a bulk purchaser, causing fear among homeowners about losing their homes. This led to negative media coverage and changes to Florida’s termination statute. However, the case was based on misinformation, as the condominium’s declaration allowed termination by 80% of owners and had no blocking mechanism. Although a judge initially ruled against applying the termination statute retroactively, the case was eventually resolved without a final decision. In the end, the case actually showed the benefits of the termination statute by allowing owners with more than 10% of the units to block the termination. The new law, called CS/CS/CS/HB 643, was passed in 2015 to make changes to the rules about terminating a condominium. It includes a 5-year waiting period for a majority owner to terminate a condo, which is meant to protect the rights of individual owners. There are also rules for what happens if a termination plan doesn’t get enough votes. These changes are meant to make it harder for big owners to take over and sell a condo against the wishes of the other owners. All owners must get the full value of their units when a property is terminated. But it’s unclear how fair market value is determined if all similar units were sold at distressed prices. If an owner has homestead status, they get 1 percent of the purchase price as a relocation payment and the price for their unit can’t be less than what they paid for it. Owners who are current on their payments can have their mortgages paid off with the proceeds from the termination, even if they owe more than the unit is worth. This could be a problem for older mortgages though. If the owner is living in their condo when the building is being terminated, they have the right to lease it for 12 months if the new owner is renting out units. The termination plan needs to include the names of people who control the unit owner or own at least 20% of the building, the dates when units were bought, and any relationships between board members and the new owner. It’s not clear why all this information needs to be recorded publicly. In simpler terms, the new law regarding the termination of condominiums has some unclear and potentially problematic parts. It requires that nonbulk unit owners have a say in electing board members before a termination plan can be approved. It also replaces a quick court process with a longer and more expensive arbitration process for resolving certain disputes. Overall, it seems like the new law may not be as helpful as intended and could make things more complicated for condo owners. The law about buying condos can have a big impact on the housing market. It may seem like a good idea, but it could actually make things worse in the long run. So, even though it looks good now, it might hurt the housing market later.

Source: https://www.floridabar.org/the-florida-bar-journal/termination-of-condominium-terminations/