Article Courtesy of The South Florida Reporter
By Ruben Conitzer, ESQ.
Published December 23 , 2016
As Florida developers adapt to the lack of suitable development sites, some
are turning their focus to condominium communities that were built decades
ago for middle-income working families and retirees that are now located on
what would otherwise be prime development sites.
This is causing angst to some Florida condo owners about the future of their
homes and communities. To some condo owners, developers offer the
opportunity to cash out for a good price. But to others, condo buy-outs are
nothing more than a nightmare where developers force them out of their
homes, and in some cases in a way that forced homeowners to incur
significant losses.
The Legislative
Background to Condominium Terminations
In 2007, the Florida legislature enacted laws setting forth
the procedures for condo terminations, sometimes called
condo buy-outs. The law provided that a condominium could be
terminated if least 80 percent of the total voting interests
of the condominium approve of the termination, but only so
long as no more than 10 percent of the total voting
interests do not reject the plan by a negative vote or
written objection.
Because many communities required a unanimous vote to amend
the condominium’s governing documents in any manner, the
2007 legislation, requiring only an 80 percent vote to
terminate the community, was beneficial to many real estate
developers. Unfortunately for some developers, and perhaps
luckily for some homeowners, a recent appeals court decision
is restricting the new rule’s application. |
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The Courts Get Involved
In the recent case, a majority of unit owners favored terminating an
oceanfront condominium in order to make way for new development. But a few
owners objected to the proposal and voted against it. A Miami-Dade appeals
court ruled that the 80 percent rule set forth in the 2007 legislation
wasn’t applicable. Instead, the court ruled that in order for the
condominium to be properly terminated, 100 percent of the unit owners needed
to agree.
While this recent case may throw many planned condo terminations into doubt,
the decision has been heralded as a victory for homeowners scared of a
forced move. But developers say the decision could delay much needed
economic redevelopment to less affluent areas in the state. In either event
it illustrates some of the complexities surrounding condominium terminations
in Florida.
Our Condo is Terminating: What Happens To The Holdouts?
Many condo owners in Miami are fearful of a forced move – and not without
reason. Throughout the recession, stories of unit owners forced out of their
homes for prices below the amounts they owed on their mortgage started
appearing throughout the state. The condo owners faced the undesirable
situation of being forced to sell their homes while continuing to owe
significant sums on their mortgages.
Luckily, legislators realized the issue and amended the law to provide that
that mortgage deficiencies for those current with their monthly payments
would have to be forgiven by the mortgage lender. In addition, owners that
have the condo unit as their homestead are now entitled to receive a
relocation bonus equal to 1% of the proceeds allocated to their units.
Finally, if the developer intends to operate the building as a rental
property following the termination, the unit owners now have the right to
receive a one-year lease at the same terms that are offered to the general
public.
The issue of condo terminations is already causing for heated condominium
board meetings throughout the state and with natural land constrains and the
population in south Florida continuing to grow, we can be sure the issue
won’t disappear anytime soon.
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