Termination of Condominium Associations: Converting Condos Back to Apartment Units

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Termination of Condominium Associations: Converting Condos Back to Apartment Units

On July 1, 2017, House Bill 653 will become law. There are many important changes to Florida law contained within House Bill 653. One such change pertains to a little known and often upsetting process for unit owners in which condominium associations in the State of Florida can be terminated.

Why?

Condominium termination can occur for many reasons. Originally, the statute was enacted to help in situations in which condominium property was severely damaged by natural disasters or largely abandoned by their respective owners or when the condominiums fell into other conditions of substantial disrepair. Lately, however, the statute is being utilized in many cases by developers to seize condominium property and convert the complex into rental housing. The idea, of course, is that condominium termination results in the property being put to its “highest and best use.”

It is no secret that the recession has now left Central Florida specifically with a lack of adequate housing inventory. Therefore, rental rates in the Orlando Metropolitan area have risen substantially. Developers from all regions of the nation have noticed the trend, as it is occurring in many other parts of the country as well, and have utilized Florida’s condominium termination statute to their benefit.

The Changes:

The good news for many unit owners subject to a termination is that new law is now more favorable than ever to unit owners with these changes. Below are just a few of the important changes to the statute:

  • Only five percent (5%) of unit owners are required to reject a plan of termination. (Down from the previous 10%)
  • After rejection, another plan of termination cannot then be considered by the association for twenty-four (24) months. (Up from the previous 18 months)
  • All Homesteaded owners are now entitled to at least the original purchase price paid for their unit in addition to a relocation payment in an amount equal to one percent (1%) of the termination proceeds allocated to the owner’s former unit. (Previously, only homesteaded owners who purchased from the original developer were entitled to at least the full purchase price paid for the unit.)

It is important to note that the statute has not changed in one key way: If the unit or property is not homesteaded, unit owners are only entitled to the fair market value of the unit regardless of the original purchase price paid. This leaves many unit owners who purchased prior to the recession taking huge losses.

If you need legal advice concerning a termination of condominium, have questions about your specific situation or other changes to this Florida Statute or others, please call us at 407-423-1700 to schedule a consultation or email info@BarryMillerLaw.com.

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