H543    GENERAL BILL by Dudley Goodlette  (S1556 -- identical) 

CO-SPONSORS: John Stargel
Condominiums; substantially revises provisions re termination of condominium form of ownership of property; waives certain notice requirements following natural disasters; provides requirements for plan of termination; provides powers & duties of termination trustee; provides procedure for contesting plan of termination; provides rules for distribution of property & sale proceeds; allows creation of another condominium by trustee, etc. Amends 718.117. EFFECTIVE DATE: 07/01/2006.

• 12/19/05 HOUSE Filed

• Civil Justice Committee -- 01/25/06 HOUSE Favorable with CS amendment by Civil Justice (JC); YEAS 6 -- NAYS 0

• Business Regulation Committee -- 02/21/06 HOUSE Favorable with CS amendment by Business Regulation (CC); YEAS 14 NAYS 0 --Preliminary

• Justice Council 

CODING: Words stricken are deletions; words underlined are additions. 

1	The Civil Justice Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to condominiums; amending s. 718.117,
7	F.S.; substantially revising provisions relating to the
8	termination of the condominium form of ownership of a
9	property; providing legislative findings; providing
10	grounds; providing powers and duties of the board of
11	administration of the association; waiving certain notice
12	requirements following natural disasters; providing
13	requirements for a plan of termination; providing for the
14	allocation of proceeds from the sale of condominium
15	property; providing powers and duties of a termination
16	trustee; providing notice requirements; providing a
17	procedure for contesting a plan of termination; providing
18	rules for the distribution of property and sale proceeds;
19	providing for the association's status following
20	termination; allowing the creation of another condominium
21	by the trustee; specifying an exclusion; providing an
22	effective date.
23
24	Be It Enacted by the Legislature of the State of Florida:
25
26	Section 1.  Section 718.117, Florida Statutes, is amended
27	to read:
28	(Substantial rewording of section. See
29	s. 718.117, F.S., for present text.)
30	718.117  Termination of condominium.--
31	(1)  LEGISLATIVE FINDINGS.--The Legislature finds that it
32	is contrary to the public policy of this state to require the
33	continued operation of a condominium when to do so would
34	constitute economic waste or when the ability to do so is made
35	impossible by law or regulation. The provisions of this section
36	shall apply to all condominiums in this state in existence on or
37	after the effective date of this act.
38	(2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
39	IMPOSSIBILITY.--
40	(a)  Notwithstanding any provision to the contrary in the
41	declaration, the condominium form of ownership of a property may
42	be terminated by a plan of termination approved by the lesser of
43	a majority of the total voting interests or as otherwise
44	provided in the declaration for approval of termination, in the
45	following circumstances:
46	1.  When the total estimated cost of repairs necessary to
47	restore the improvements to their former condition or bring them
48	into compliance with applicable laws or regulations exceeds the
49	combined fair market value of all units in the condominium after
50	completion of the repairs; or
51	2.  When it becomes impossible to operate or reconstruct a
52	condominium in its prior physical configuration because of land-
53	use laws or regulations.
54	(b)  Notwithstanding paragraph (a), a condominium in which
55	75 percent or more of the units are timeshare units may only be
56	terminated pursuant to a plan of termination approved by 80
57	percent of the total voting interests of the association and the
58	holders of 80 percent of the original principal amount of
59	outstanding recorded mortgage liens of timeshare estates in the
60	condominium, unless the declaration provides for a lower voting
61	percentage.
62	(3)  OPTIONAL TERMINATION.--Except as provided in
63	subsections (2) and (4) or unless the declaration provides for a
64	lower percentage, the condominium form of ownership of the
65	property may be terminated pursuant to a plan of termination
66	approved by at least 80 percent of the total voting interests of
67	the condominium. This subsection does not apply to condominiums
68	in which 75 percent or more of the units are timeshare units.
69	(4)  JURISDICTION.--
70	(a)  If 80 percent of the total voting interests fail to
71	approve the plan of termination but fewer than 20 percent of the
72	total voting interests vote to disapprove of the plan, the
73	circuit court shall have jurisdiction to entertain a petition by
74	the association or by one or more unit owners and approve the
75	plan of termination, and the action may be a class action.
76	(b)  All unit owners and the association must be parties to
77	the action. The action may be brought against the nonconsenting
78	unit owners as a class action. Service of process on unit owners
79	may be by publication, but the plaintiff must furnish each unit
80	owner not personally served with process a copy of the petition
81	and plan of termination, and after entry of judgment, a copy of
82	the final decree of the court, by mail at the owner's last known
83	address.
84	(c)  After the consideration of whether the rights and
85	interests of unit owners are equitably set forth in the plan of
86	termination as required by this section, the plan of termination
87	may be approved or rejected by the court. Consistent with the
88	provisions of this section, the court may also modify the plan
89	of termination to provide for an equitable distribution of the
90	interests of unit owners prior to approving the plan of
91	termination.
92	(d)  This subsection does not apply to condominiums in
93	which 75 percent or more of the units are timeshare units.
94	(5)  EXEMPTION.--A plan of termination is not an amendment
95	subject to s. 718.110(4).
96	(6)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
97	to the contrary in the declaration or this chapter, approval of
98	a plan of termination by the holder of a recorded mortgage lien
99	affecting a condominium parcel in which fewer than 75 percent of
100	the units are timeshare units is not required unless the plan of
101	termination will result in less than the full satisfaction of
102	the mortgage lien affecting the parcel.
103	(7)  POWERS IN CONNECTION WITH TERMINATION.--The
104	association shall continue in existence following approval of
105	the plan of termination, with all powers it had before approval
106	of the plan. Notwithstanding any contrary provision in the
107	declaration or bylaws, after approval of the plan, the board has
108	the power and duty:
109	(a)  To employ directors, agents, attorneys, and other
110	professionals to liquidate or conclude its affairs.
111	(b)  To conduct the affairs of the association as necessary
112	for the liquidation or termination.
113	(c)  To carry out contracts and collect, pay, and settle
114	debts and claims for and against the association.
115	(d)  To defend suits brought against the association.
116	(e)  To sue in the name of the association for all sums due
117	or owed to the association or to recover any of its property.
118	(f)  To perform any act necessary to maintain, repair, or
119	demolish unsafe or uninhabitable improvements or other
120	condominium property in compliance with applicable codes.
121	(g)  To sell at public or private sale or to exchange,
122	convey, or otherwise dispose of assets of the association for an
123	amount deemed to be in the best interests of the association,
124	and to execute bills of sale and deeds of conveyance in the name
125	of the association.
126	(h)  To collect and receive rents, profits, accounts
127	receivable, income, maintenance fees, special assessments, or
128	insurance proceeds for the association.
129	(i)  To contract and do anything in the name of the
130	association which is proper or convenient to terminate the
131	affairs of the association.
132	(8)  NATURAL DISASTERS.--
133	(a)  If, after a natural disaster, the identity of the
134	directors or their right to hold office is in doubt, if they are
135	deceased or unable to act, if they fail or refuse to act, or if
136	they cannot be located, any interested person may petition the
137	circuit court to determine the identity of the directors or, if
138	found to be in the best interests of the unit owners, to appoint
139	a receiver to conclude the affairs of the association after a
140	hearing following notice to such persons as the court directs.
141	(b)  The receiver shall have all powers given to the board
142	pursuant to the declaration, bylaws, and subsection (7), and any
143	other powers that are necessary to conclude the affairs of the
144	association and are set forth in the order of appointment. The
145	appointment of the receiver is subject to the bonding
146	requirements of such order. The order shall also provide for the
147	payment of a reasonable fee to the receiver from the sources
148	identified in the order, which may include rents, profits,
149	incomes, maintenance fees, or special assessments collected from
150	the condominium property.
151	(9)  PLAN OF TERMINATION.--The plan of termination must be
152	a written document executed in the same manner as a deed by unit
153	owners having the requisite percentage of voting interests to
154	approve the plan and by the termination trustee. A copy of the
155	proposed plan of termination shall be given to all unit owners,
156	in the same manner as for notice of an annual meeting, at least
157	14 days prior to the meeting at which the plan of termination is
158	to be voted upon or prior to or simultaneously with the
159	distribution of the solicitation seeking execution of the plan
160	of termination or written consent to or joinder in the plan. A
161	unit owner may document assent to the plan of termination by
162	executing the plan or by consent to or joinder in the plan in
163	the manner of a deed. A plan of termination and the consents or
164	joinders of unit owners and, if required, consents or joinders
165	of mortgagees must be recorded in the public records of each
166	county in which any portion of the condominium is located. The
167	plan of termination is effective only upon recordation or at a
168	later date specified in the plan.
169	(10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
170	of termination must specify:
171	(a)  The name, address, and powers of the termination
172	trustee.
173	(b)  A date after which the plan of termination is void if
174	it has not been recorded.
175	(c)  The interests of the respective unit owners in the
176	association property, common surplus, and other assets of the
177	association, which shall be the same as the respective interests
178	of the unit owners in the common elements immediately before the
179	termination, unless otherwise provided in the declaration.
180	(d)  The interests of the respective unit owners in any
181	proceeds from any sale of the condominium property. The plan of
182	termination may apportion those proceeds pursuant to any of the
183	methods prescribed in subsection (12). If, pursuant to the plan
184	of termination, condominium property or real property owned by
185	the association is to be sold following termination, the plan
186	must provide for the sale and may establish any minimum sale
187	terms.
188	(e)  Any interests of the respective unit owners in any
189	insurance proceeds or condemnation proceeds that are not used
190	for repair or reconstruction at the time of termination. Unless
191	the declaration expressly addresses the distribution of
192	insurance proceeds or condemnation proceeds, the plan of
193	termination may apportion those proceeds pursuant to any of the
194	methods prescribed in subsection (12).
195	(11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
196	TERMINATION.--
197	(a)  The plan of termination may provide that each unit
198	owner retains the exclusive right of possession to the portion
199	of the real estate that formerly constituted the unit, in which
200	case the plan must specify the conditions of possession.
201	(b)  In the case of a conditional termination, the plan
202	must specify the conditions for termination. A conditional plan
203	will not vest title in the termination trustee until the plan
204	and a certificate executed by the association with the
205	formalities of a deed, confirming that the conditions in the
206	conditional plan have been satisfied or waived by the requisite
207	percentage of the voting interests, have been recorded.
208	(12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
209	PROPERTY.--
210	(a)  Unless the declaration expressly provides for the
211	allocation of the proceeds of sale of condominium property, the
212	plan of termination must first apportion the proceeds between
213	the aggregate value of all units and the value of the common
214	elements, based on their respective fair-market values
215	immediately before the termination, as determined by one or more
216	independent appraisers selected by the association or
217	termination trustee.
218	(b)  The portion of proceeds allocated to the units shall
219	be further apportioned among the individual units. The
220	apportionment is deemed fair and reasonable if it is determined
221	by the unit owners approving the plan of termination by any of
222	the following methods:
223	1.  The respective values of the units based on the fair-
224	market values of the units immediately before the termination,
225	as determined by one or more independent appraisers selected by
226	the association or termination trustee;
227	2.  The respective values of the units based on the most
228	recent market value of the units before the termination, as
229	provided in the county property appraiser's records; or
230	3.  The respective interests of the units in the common
231	elements specified in the declaration immediately before the
232	termination.
233	(c)  The methods of apportionment in paragraph (b) do not
234	prohibit any other method of apportioning the proceeds of sale
235	allocated to the units agreed upon in the plan of termination.
236	The portion of the proceeds allocated to the common elements
237	shall be apportioned among the units based upon their respective
238	interests in the common elements as provided in the declaration.
239	(d)  Liens that encumber a unit shall be transferred to the
240	proceeds of sale of the condominium property and the proceeds of
241	sale or other distribution of association property, common
242	surplus, or other association assets attributable to such unit
243	in their same priority. The proceeds of any sale of condominium
244	property pursuant to a plan of termination may not be deemed to
245	be common surplus or association property.
246	(13)  TERMINATION TRUSTEE.--The association shall serve as
247	termination trustee unless another person is appointed in the
248	plan of termination. If the association is unable, unwilling, or
249	fails to act as trustee, any unit owner may petition the court
250	to appoint a trustee. Upon recording or at a later date
251	specified in the plan, title to the condominium property vests
252	in the trustee. Unless prohibited by the plan, the termination
253	trustee shall be vested with the powers given to the board
254	pursuant to the declaration, bylaws, and subsection (7). If the
255	association is not the termination trustee, the trustee's powers
256	shall be coextensive with those of the association to the extent
257	not prohibited in the plan of termination or the order of
258	appointment. If the association is not the termination trustee,
259	the association shall transfer any association property to the
260	trustee. If the association is dissolved, the trustee shall also
261	have such other powers necessary to conclude the affairs of the
262	association.
263	(14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
264	is pursuant to a plan of termination under subsection (2) or
265	subsection (3), the unit owners' rights and title as tenants in
266	common in undivided interests in the condominium property vest
267	in the termination trustee when the plan is recorded or at a
268	later date specified in the plan. The unit owners thereafter
269	become the beneficiaries of the proceeds realized from the plan
270	of termination. The termination trustee may deal with the
271	condominium property or any interest therein if the plan confers
272	on the trustee the authority to protect, conserve, manage, sell,
273	or dispose of the condominium property. The trustee, on behalf
274	of the unit owners, may contract for the sale of real property,
275	but the contract is not binding on the unit owners until the
276	plan is approved pursuant to subsection (2) or subsection (3).
277	(15)  NOTICE.--
278	(a)  Within 30 days after a plan of termination has been
279	recorded, the termination trustee shall deliver by certified
280	mail, return receipt requested, notice to all unit owners,
281	lienors of the condominium property, and lienors of all units at
282	their last known addresses that a plan of termination has been
283	recorded. The notice shall include the book and page number of
284	the public records in which the plan was recorded, notice that a
285	copy of the plan shall be furnished upon written request, and
286	notice that the unit owner or lienor has the right to contest
287	the fairness of the plan.
288	(b)  The trustee, within 90 days after the effective date
289	of the plan, shall provide to the division a certified copy of
290	the recorded plan, the date the plan was recorded, and the
291	county, book, and page number of the public records in which the
292	plan was recorded.
293	(16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
294	a plan of termination by initiating a summary procedure pursuant
295	to s. 51.011 within 90 days after the date the plan is recorded.
296	A unit owner or lienor who does not contest the plan within such
297	90-day period is barred from asserting or prosecuting a claim
298	against the association, the termination trustee, any unit
299	owner, or any successor in interest to the condominium property.
300	In an action contesting a plan of termination, the person
301	contesting the plan has the burden of pleading and proving that
302	the apportionment of the proceeds from the sale among the unit
303	owners was not fair and reasonable. The apportionment of sale
304	proceeds is presumed fair and reasonable if it was determined
305	pursuant to the methods prescribed in subsection (12). The court
306	shall adjudge the rights and interests of the parties and order
307	the plan of termination to be implemented if it is fair and
308	reasonable. The court shall void a plan that is determined not
309	to be fair and reasonable. In such action, the prevailing party
310	may recover reasonable attorney's fees and costs.
311	(17)  DISTRIBUTION.--
312	(a)  Following termination of the condominium, the
313	condominium property, association property, common surplus, and
314	other assets of the association shall be held by the termination
315	trustee, as trustee for unit owners and holders of liens on the
316	units, in their order of priority.
317	(b)  Not less than 30 days prior to the first distribution,
318	the termination trustee shall deliver by certified mail, return
319	receipt requested, a notice of the estimated distribution to all
320	unit owners, lienors of the condominium property, and lienors of
321	each unit at their last known addresses stating a good-faith
322	estimate of the amount of the distributions to each class and
323	the procedures and deadline for notifying the termination
324	trustee of any objections to the amount. The deadline must be at
325	least 15 days after the date the notice was mailed. The notice
326	may be sent with or after the notice required by subsection
327	(15). If a unit owner or lienor files a timely objection with
328	the termination trustee, the trustee does not have to distribute
329	the funds and property allocated to the respective unit owner or
330	lienor until the trustee has had a reasonable time to determine
331	the validity of the adverse claim. In the alternative, the
332	trustee may interplead the unit owner, lienor, and any other
333	person claiming an interest in the unit and deposit the funds
334	allocated to the unit in the court registry, at which time the
335	condominium property, association property, common surplus, and
336	other assets of the association are free of all claims and liens
337	of the parties to the suit. In an interpleader action, the
338	trustee and prevailing party may recover reasonable attorney's
339	fees and costs and court costs.
340	(c)  The proceeds of any sale of condominium property or
341	association property and any remaining condominium property or
342	association property, common surplus, and other assets shall be
343	distributed in the following priority:
344	1.  To pay the costs of implementing the plan of
345	termination, including demolition, removal, and disposal fees,
346	termination trustee's fees and costs, accounting fees and costs,
347	and attorney's fees and costs.
348	2.  To lienholders of liens recorded prior to the recording
349	of the declaration.
350	3.  To lienholders of liens of the association which have
351	been consented to under s. 718.121(1).
352	4.  To creditors of the association, as their interests
353	appear.
354	5.  To unit owners, the proceeds of any sale of condominium
355	property subject to satisfaction of liens on each unit in their
356	order of priority, in shares specified in the plan of
357	termination, unless objected to by a unit owner or lienor.
358	6.  To unit owners, the remaining condominium property,
359	subject to satisfaction of liens on each unit in their order of
360	priority, in shares specified in the plan of termination, unless
361	objected to by a unit owner or a lienor as provided in paragraph
362	(b).
363	7.  To unit owners, the proceeds of any sale of association
364	property, the remaining association property, common surplus,
365	and other assets of the association, subject to satisfaction of
366	liens on each unit in their order of priority, in shares
367	specified in the plan of termination, unless objected to by a
368	unit owner or a lienor as provided in paragraph (b).
369	(d)  After determining that all known debts and liabilities
370	of an association in the process of termination have been paid
371	or adequately provided for, the termination trustee shall
372	distribute the remaining assets pursuant to the plan of
373	termination. If the termination is by court proceeding or
374	subject to court supervision, the distribution may not be made
375	until any period for the presentation of claims ordered by the
376	court has elapsed.
377	(e)  Assets held by an association upon a valid condition
378	requiring return, transfer, or conveyance, which condition has
379	occurred or will occur, shall be returned, transferred, or
380	conveyed in accordance with the condition. The remaining
381	association assets shall be distributed pursuant to paragraph
382	(c).
383	(f)  Distribution may be made in money, property, or
384	securities and in installments or as a lump sum, if it can be
385	done fairly and ratably and in conformity with the plan of
386	termination. Distribution shall be made as soon as is reasonably
387	consistent with the beneficial liquidation of the assets.
388	(18)  ASSOCIATION STATUS.--The termination of a condominium
389	does not change the corporate status of the association that
390	operated the condominium property. The association continues to
391	exist to conclude its affairs, prosecute and defend actions by
392	or against it, collect and discharge obligations, dispose of and
393	convey its property, and collect and divide its assets, but not
394	to act except as necessary to conclude its affairs.
395	(19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
396	a condominium does not bar the creation, by the termination
397	trustee, of another condominium affecting any portion of the
398	same property.
399	(20)  EXCLUSION.--This section does not apply to the
400	termination of a condominium incident to a merger of that
401	condominium with one or more other condominiums under s.
402	718.110(7).
403	Section 2.  This act shall take effect July 1, 2006.