In Florida, condominiums are considered as legal entities, just like corporations, with Boards of Directors and owners and creditors. When you decide to buy a home in a Florida condominium, you are becoming part of this legal entity as one of its unit owners.
This makes reading through all of the documents that create that condominium important for each buyer because he or she will be held to the terms found in them. It’s something that you accept as part of your decision to live the condo life style.
When and What is the Termination of a Florida Condominium?
One important factor that condo owners need to understand, along with fines and assessments and common area regulations, are the ways in which the condominium can end, or “terminate.” Just like companies, no condominium will last forever. Companies dissolve; condominiums terminate. As the Florida Legislature explains:
The Legislature finds that condominiums are created as authorized by statute. In circumstances that may create economic waste, areas of disrepair, or obsolescence of a condominium property for its intended use and thereby lower property tax values, the Legislature further finds that it is the public policy of this state to provide by statute a method to preserve the value of the property interests and the rights of alienation thereof that owners have in the condominium property before and after termination. The Legislature further finds that it is contrary to the public policy of this state to require the continued operation of a condominium when to do so constitutes economic waste or when the ability to do so is made impossible by law or regulation.
The Florida Condominium Termination Law
In 2007, Florida Statute 718.117 was passed as the new Florida Condominium Termination Law. In it, the Florida Legislature revised the old statute to deal with the problems brought about by all of the Foreclosure Fraud and the overall Real Estate crisis. Other issues that brought about the change related to older condominiums, particularly in South Florida, especially those condominiums that were considering terminating themselves. Under the old law, 100% of unit owners were required for approval of any termination. It was very hard for owners of an old condominium to terminate it even if it was the smart thing to do.
In the 2007 Statute, it is now easier for condo owners to gather together and terminate the condominium. However, it’s still a process filled with hurdles.
Changes to Florida Condo Termination Law
In Florida, now a condominium can be ended, or “terminated,” if 80% of the condo unit owners agree to dissolve it. This step is necessary if the unit owners want to sell the condo tower or complex for a profit, for instance. The new 2007 revision has increased the number of condominium terminations around the state. This isn’t necessarily good news for the real estate market or the condo owners.
In fact, since the passage of the 2007 Florida Condo Termination Law, there have been lots of problems here in Florida as some outside interests have forced condo owners to sell their properties. Unhappy home owners have been pressured to sell their condos. Sometimes, they’ve done so and still had to deal with deficiencies and leftover mortgage debt.
In 2015, Florida Governor Rick Scott will be looking to the Florida Department of Business and Professional Regulation for proposals on how to change the 2007 Termination Statute to better protect condo owners against being forced out of their homes via this law.
How Do You Terminate a Florida Condominium?
Until the Florida Legislature passes another revision to the statute, condos will continue to be terminated under the 2007 law. Under Florida Statute 718,117, the following steps are to be taken to terminate a condominium in Florida:
1. Condominium association drafts a plan to terminate the condominium which is finalized and then adopted by the association.
2. The Termination Plan must include a specific termination event. This can be termination of the condominium upon the filing of the Plan in the public records (”automatic termination”) or it can be tied to a specific event (”conditional termination”).
3. The Termination Plan identifies a “Termination Trustee” who will have title to the condominium property vested in him/her upon termination of the condominium.
4. The Condominium Termination Plan is filed in the public real estate records of the county where the condominium sits (its county of residence).
5. Notice of the recording is provided to anyone with a lien on the property. Lien-holders include mortgage holders.
6. Notice of the recording is provided to all condo unit owners.
7. Any lien-holder that does not expect to get full value of their lien has 90 days to challenge the Termination Plan.
8. After 90 days have passed from the date of recording, and/or all challenges to the Plan have been resolved, the Termination Trustee sells the property and distributes the sales proceeds as instructed in the Termination Plan.
9. Any liens regarding the condominium are discharged from the property itself with the termination; however, these liens attach to proceeds generated by the sale of the property by the Termination Trustee and they are paid first.
Are You Concerned About Condo Termination?
If you are a condo unit owner dealing with the possibility of termination of your condominium, it’s important to understand the ramifications of this action both to the condominium as a whole (your fellow owners) as well as your own financial interests. This is especially true if the unit owners are feeling pressure to sell or feeling vulnerable to outside interests. Legal guidance from a Florida condominium lawyer can be very helpful here.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at email@example.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.