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