TALLAHASSEE, Fla. – May 5, 2015 – Florida’s condominium owners gained protections from being forced out during corporate takeovers this legislative session, but some attorneys worry the provisions go too far.
Lawmakers approved House Bill 643 to amend the state’s condo termination law, which outlines how a community can be dissolved if 80 percent or more of unit owners vote to sack their ownership rights and sell out to a bulk buyer or developer.
Under current law, owners were forced to sell at fair market value, leaving those who bought at the height of the real estate market on the hook to pay off the remainder of their upside down mortgage.
Under the new law, owners still would be paid at least fair market value, but those who reject the termination plan, and whose units are homesteaded, would have to be paid their original purchase price.
“The owners didn’t really have a choice. They weren’t being allowed to wait out the market,” said Yeline Goin, an attorney with the South Florida law firm Becker & Poliakoff, who monitored the legislation this year. “Not only were they being kicked out, they were left with a mortgage they were still responsible for.”
The law goes into effect 15 days after it is presented to the governor or when he signs it.
Other provisions include:
Homesteaded owners would be paid a relocation fee.
If the units are offered for lease after termination, a previous owner can rent their unit for one year.
The bulk buyer must disclose its identity and reveal how much it is paying for each of the units.
No owners’ right to vote can be suspended on a vote for termination.
Since 2007, there have been 279 condo terminations statewide, according to the Florida Department of Business and Professional Regulation.
Florida’s Condominium Act was amended in 2007 to make it easier to terminate a condominium. The idea was to create a rescue mechanism for owners living in deteriorating communities they can no longer afford to maintain.
“No one anticipated when this was designed that there would be an economic collapse and people wouldn’t have any equity in their homes,” said Michael Gelfand, a West Palm Beach-based attorney who focuses on association law.
Some attorneys fear bulk buyers will now steer clear of condo terminations, leaving owners with fewer options.
Attorney Jennifer Drake, a shareholder with Becker & Poliakoff, said the biggest problem for a bulk buyer will likely be paying a homesteaded unit owner their purchase price.
“This is the only class of purchasers in the recession that have been protected like this,” Drake said. “Worse comes to worse, developers just won’t do it and the condos will remain languishing.”
Copyright © 2015 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by Tribune Content Agency, LLC.