Article
Courtesy of JDSupra
Published March 25, 2018
The legislative session ended with a photo-finish,
last-hours-of-the-session maneuvering, resulting in the passage of HB 841,
which among (many) other unrelated matters also removes the “sunset”
provision of the Distressed Condominium Relief Act (“DCRA”).
The DCRA was set to expire on July 1, 2018. More specifically, effective
July 1, 2018, acquirers of distressed condominium units would no longer be
eligible for the “bulk buyer” or “bulk assignee” classifications.
As a reminder, each of these classifications explicitly protect the acquirer
(whether a lender enforcing its loan rights or a third party investor)
against some significant liabilities which could be inherited from the
original developer (a.k.a. "successor developer" liabilities), while
allowing the new owner to retain certain useful and valuable rights with
respect to the development, operations, and eventual disposition of the
asset.
The passage of HB 841 is not quite the end of the line, however. There is
still a possibility of a gubernatorial veto, which has indeed happened in
the past with a different “vehicle” bill for this very DCRA sunset removal.
HB 841, in its final “enrolled” form, was presented to the Governor on
Wednesday, March 21, 2018 at 4:17 PM. The Governor has until April 5 to
either sign or veto the bill – failure to do either will result in the bill
becoming law.
Even with the sunset removal, which appears likely at this stage, there have
been a number of administrative and judicial interpretations of the DCRA
sometimes severely limiting its applicability to certain distressed
condominiums. It is important to review (and if necessary or advisable
modify) existing condominium documents so as to fully take advantage of the
DCRA.
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