SB 2360 Relating to Condominiums |
Last Action: 05/06/2005 S Died in Committee on Judiciary S 2360
GENERAL BILL by Senator Geller
CODING: Words
2 An act relating to condominiums; amending s. 3 718.117, F.S.; substantially revising 4 provisions relating to the termination of the 5 condominium form of ownership of a property; 6 providing grounds; providing powers and duties 7 of the board of administration of the 8 association; waiving certain notice 9 requirements following natural disasters; 10 providing requirements for a plan of 11 termination; providing for the allocation of 12 proceeds from the sale of condominium property; 13 providing powers and duties of a termination 14 trustee; providing notice requirements; 15 providing a procedure for contesting a plan of 16 termination; providing rules for the 17 distribution of property and sale proceeds; 18 providing for the association's status 19 following termination; allowing the creation of 20 another condominium by the trustee; providing 21 an effective date. 22 23 Be It Enacted by the Legislature of the State of Florida: 24 25 Section 1. Section 718.117, Florida Statutes, is 26 amended to read: 27 (Substantial rewording of section. See 28 s. 718.117, F.S., for present text.) 29 718.117 Termination of condominium.-- 30 (1) TERMINATION BECAUSE OF ECONOMIC WASTE OR 31 IMPOSSIBILITY.--Notwithstanding any provision to the contrary
Page 1 1 in the declaration, the condominium form of ownership of a 2 property may be terminated by a plan of termination approved 3 by the lesser of a majority of the total voting interests or 4 as otherwise provided in the declaration for approval of 5 termination, in the following circumstances: 6 (a) When the total estimated cost of repairs necessary 7 to restore the improvements to their former condition or bring 8 them into compliance with applicable laws or regulations 9 exceeds the combined fair market value of all units in the 10 condominium after completion of the repairs; or 11 (b) When it becomes impossible to operate a 12 condominium in its prior physical configuration because of 13 land-use laws or regulations. 14 (2) OPTIONAL TERMINATION.--Except as provided in 15 subsection (1) and unless otherwise provided in the 16 declaration, the condominium form of ownership of the property 17 may be terminated pursuant to a plan of termination approved 18 by at least 80 percent of the total voting interests of the 19 condominium. If the plan is not approved and less than 20 20 percent of the total voting interests vote to disapprove a 21 plan of termination, the condominium may be terminated 22 pursuant to the same plan at a meeting conducted within 6 23 months after the prior vote, if the meeting is attended in 24 person or by proxy of at least 60 percent of the voting 25 interests and at least 85 percent of those voting approve the 26 plan. 27 (3) EXEMPTION.--A plan of termination is not an 28 amendment subject to s. 718.110(4). 29 (4) MORTGAGE LIENHOLDERS.--Notwithstanding any 30 provision to the contrary in the declaration or this chapter, 31 approval of a plan of termination by the holder of a recorded PAGE 2 1 mortgage lien affecting a condominium parcel is not required 2 unless the plan of termination will result in less than the 3 full satisfaction of the mortgage lien affecting the parcel. 4 (5) POWERS IN CONNECTION WITH TERMINATION.--The 5 association shall continue in existence following approval of 6 the plan of termination, with all powers it had before 7 approval of the plan. Notwithstanding any contrary provision 8 in the declaration or bylaws, after approval of the plan, the 9 board has the power and duty: 10 (a) To employ directors, agents, attorneys, and other 11 professionals to liquidate or conclude its affairs. 12 (b) To conduct the affairs of the association as 13 necessary for the liquidation or termination. 14 (c) To carry out contracts and collect, pay, and 15 settle debts and claims for and against the association. 16 (d) To defend suits brought against the association. 17 (e) To sue in the name of the association for all sums 18 due or owed to the association or to recover any of its 19 property. 20 (f) To perform any act necessary to maintain, repair, 21 or demolish unsafe or uninhabitable improvements or other 22 condominium property in compliance with applicable codes. 23 (g) To sell at public or private sale or to exchange, 24 convey, or otherwise dispose of assets of the association for 25 an amount deemed to be in the best interest of the 26 association, and to execute bills of sale and deeds of 27 conveyance in the name of the association. 28 (h) To collect and receive rents, profits, accounts 29 receivable, income, maintenance fees, special assessments, or 30 insurance proceeds for the association. 31 PAGE 3 1 (i) To contract and do anything in the name of the 2 association which is proper or convenient to terminate the 3 affairs of the association. 4 (6) NATURAL DISASTERS.-- 5 (a) If, after a natural disaster, the identity of the 6 directors or their right to hold office is in doubt, if they 7 are deceased or unable to act, if they fail or refuse to act, 8 or if they cannot be located, any interested person may 9 petition the circuit court to determine the identity of the 10 directors or, if found to be in the best interest of the unit 11 owners, to appoint a receiver to conclude the affairs of the 12 association after a hearing following notice to such persons 13 as the court directs. 14 (b) The receiver shall have all powers given to the 15 board pursuant to the declaration, bylaws, or subsection (5), 16 and any other powers that are necessary to conclude the 17 affairs of the association and are set forth in the order of 18 appointment. The appointment of the receiver is subject to 19 the bonding requirements of such order. The order shall also 20 provide for the payment of a reasonable fee to the receiver 21 from the sources identified in the order, which may include 22 rents, profits, incomes, maintenance fees, or special 23 assessments collected from the condominium property. 24 (7) PLAN OF TERMINATION.--The plan of termination must 25 be a written document executed in the same manner as a deed by 26 unit owners having the requisite percentage of voting 27 interests to approve the plan and by the termination trustee. 28 A unit owner may document assent to the plan of termination by 29 executing the plan or consent to or joinder in the plan in the 30 manner of a deed. A plan of termination and the consents or 31 joinders of unit owners and, if required, consents or joinders PAGE 4 1 of mortgagees must be recorded in the public records of each 2 county in which any portion of the condominium is located. 3 The plan of termination is effective only upon recordation or 4 at a later date specified in the plan. 5 (8) PLAN OF TERMINATION; REQUIRED PROVISIONS.--The 6 plan of termination must specify: 7 (a) The name, address, and powers of the termination 8 trustee; 9 (b) A date after which the plan of termination is void 10 if it has not been recorded; 11 (c) The interest of the respective unit owners in the 12 association property, common surplus, and other assets of the 13 association, which shall be the same as the respective 14 interests of the unit owners in the common elements 15 immediately before the termination; 16 (d) The interests of the respective unit owners in any 17 proceeds from any sale of the condominium property. If, 18 pursuant to the plan of termination, condominium property or 19 real property owned by the association is to be sold following 20 termination, the plan must provide for the sale and may 21 establish any minimum sale terms; and 22 (e) Any interests of the respective unit owners in any 23 insurance proceeds or condemnation proceeds that are not used 24 for repair or reconstruction. Unless the declaration 25 expressly addresses the distribution of insurance proceeds or 26 condemnation proceeds, the plan of termination may apportion 27 those proceeds pursuant to the methods prescribed in 28 subsection (10). 29 (9) PLAN OF TERMINATION; OPTIONAL PROVISIONS.--The 30 plan of termination may provide: 31 PAGE 5 1 (a) That each unit owner retains the exclusive right 2 of possession to the portion of the real estate that formerly 3 constituted the unit, in which case the plan must specify the 4 conditions of possession. 5 (b) In the case of a conditional termination, the plan 6 must specify the conditions for termination. A conditional 7 plan will not vest title in the termination trustee until the 8 plan and a certificate executed by the association with the 9 formalities of a deed, confirming that the conditions in the 10 conditional plan have been satisfied or waived by the 11 requisite percentage of the voting interests, has been 12 recorded. 13 (10) ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM 14 PROPERTY.-- 15 (a) Unless the declaration expressly provides for the 16 allocation of the proceeds of sale of condominium property, 17 the plan of termination must first apportion the proceeds 18 between the aggregate value of all units and the value of the 19 common elements, based on their respective fair-market values 20 immediately before the termination, as determined by one or 21 more independent appraisers selected by the association or 22 termination trustee. 23 (b) The portion of proceeds allocated to the units 24 shall be further apportioned among the individual units. The 25 apportionment is deemed fair and reasonable if it is 26 determined by any of the following methods: 27 1. The respective value of the units based on the 28 fair-market values of the units immediately before the 29 termination, as determined by one or more independent 30 appraisers selected by the association or termination trustee; 31 PAGE 6 1 2. The respective value of the units based on the most 2 recent market value of the units before the termination, as 3 provided in the county property appraiser's records; or 4 3. The respective interests of the units in the common 5 elements specified in the declaration immediately before the 6 termination. 7 (c) The methods of apportionment in paragraph (b) do 8 not prohibit any other method of apportioning the proceeds of 9 sale allocated to the units agreed upon in the plan of 10 termination. The portion of the proceeds allocated to the 11 common elements shall be apportioned among the units based 12 upon their respective interests in the common elements as 13 provided in the declaration. 14 (d) Liens that encumber a unit shall be transferred to 15 the proceeds of sale of the condominium property attributable 16 to such unit in their same priority. The proceeds of any sale 17 of condominium property pursuant to a plan of termination may 18 not be deemed to be common surplus or association property. 19 (11) TERMINATION TRUSTEE.--The association shall serve 20 as termination trustee unless another person is appointed in 21 the plan of termination. If the association is unable, 22 unwilling, or fails to act as trustee, any unit owner may 23 petition the court to appoint a trustee. Upon recording or at 24 a later date specified in the plan, title to the condominium 25 property vests in the trustee. Unless prohibited by the plan, 26 the trustee shall be vested with the powers given to the board 27 pursuant to the declaration, bylaws, and subsection (5). If 28 the association is not the termination trustee, the trustee's 29 powers shall be co-extensive with those of the association to 30 the extent not prohibited in the plan of termination or the 31 order of appointment. If the association is not the trustee, PAGE 7 1 the association shall transfer any association property to the 2 trustee. If the association is dissolved, the trustee shall 3 also have such other powers necessary to conclude the affairs 4 of the association. 5 (12) TITLE VESTED IN TERMINATION TRUSTEE.--If 6 termination is pursuant to a plan of termination under 7 subsection (1) or subsection (2), the unit owners' rights as 8 tenants in common in undivided interests in the condominium 9 property vest in the termination trustee when the plan is 10 recorded or at a later date specified in the plan. The unit 11 owners thereafter become the beneficiaries of proceeds 12 realized from any plan of termination. The termination 13 trustee may deal with the condominium property or any interest 14 therein if the plan confers to the trustee the authority to 15 protect, conserve, manage, sell, or dispose of the condominium 16 property. The trustee, on behalf of the unit owners, may 17 contract for the sale of real property, but the contract is 18 not binding on the unit owners until the plan is approved 19 pursuant to subsection (1) or subsection (2). 20 (13) NOTICE.-- 21 (a) Within 30 days after a plan of termination has 22 been recorded, the termination trustee shall deliver by 23 certified mail, return receipt requested, notice to all unit 24 owners, lienors of the condominium property, and lienors of 25 all units at their last known addresses that a plan of 26 termination has been recorded. The notice shall include the 27 book and page number of the public records where the plan is 28 recorded, notice that a copy of the plan shall be furnished 29 upon written request, and notice that the unit owner or lienor 30 has the right to contest the fairness of the plan. 31 PAGE 8 1 (b) The trustee, within 30 days after the effective 2 date of the plan, shall provide to the division a certified 3 copy of the recorded plan, the date the plan was recorded, and 4 the county, book, and page number of the public records where 5 it was recorded. 6 (14) RIGHT TO CONTEST.--A unit owner or lienor may 7 contest a plan of termination by initiating a summary 8 procedure pursuant to s. 51.011 within 90 days after the date 9 the plan is recorded. A unit owner or lienor who does not 10 contest the plan is barred from asserting or prosecuting a 11 claim against the association, the termination trustee, any 12 unit owner, or any successor in interest to the condominium 13 property. In an action contesting a plan of termination, the 14 person contesting the plan has the burden of pleading and 15 proving that the apportionment of the proceeds from the sale 16 among the unit owners was not fair and reasonable. The 17 apportionment of sale proceeds is presumed fair and reasonable 18 if it was determined pursuant to the methods prescribed in 19 subsection (10). The court shall adjudge the rights and 20 interests of the parties and order the plan of termination to 21 be implemented if it is fair and reasonable. The court shall 22 void a plan that is determined not to be fair and reasonable. 23 In such action the prevailing party may recover reasonable 24 attorney's fees and costs. 25 (15) DISTRIBUTION.--Following termination of the 26 condominium, the condominium property, association property, 27 common surplus, and other assets of the association shall be 28 held by the termination trustee, as trustee for unit owners 29 and holders of liens on the units, in their order of priority. 30 (a) Not less than 30 days prior to the first 31 distribution, the termination trustee shall deliver by PAGE 9 1 certified mail, return receipt requested, a notice of the 2 estimated distribution to all unit owners, lienors of the 3 condominium property, and lienors of each unit at their last 4 known address stating a good-faith estimate of the amount of 5 the distributions to each class and the procedures and 6 deadline for notifying the termination trustee of any 7 objections to the amount. The deadline must be at least 15 8 days after the date the notice was mailed. The notice may be 9 sent with or after the notice required by subsection (13). If 10 a unit owner or lienor files an objection with the termination 11 trustee, the trustee does not have to distribute the funds and 12 property allocated to the respective unit owner and lienor 13 until the trustee has had a reasonable time to determine the 14 validity of the adverse claims. In the alternative, the 15 trustee may interplead the unit owner, lienor, and any other 16 person claiming an interest in the unit and deposit the funds 17 allocated to the unit in the court registry, at which time the 18 condominium property, association property, common surplus, 19 and other assets of the association are free of all claims and 20 liens of the parties to the suit. In an interpleader action, 21 the trustee and prevailing party may recover reasonable 22 attorney's fees and costs and court costs. 23 (b) The proceeds of any sale of condominium or 24 association property and any remaining condominium or 25 association property, common surplus, and other assets shall 26 be distributed in the following priority: 27 1. To pay the costs of implementing the plan of 28 termination, including demolition, removal, and disposal fees, 29 termination trustee's fees and costs, accounting fees and 30 costs, and attorney's fees and costs. 31 PAGE 10 1 2. To lienholders for liens recorded prior to the 2 recording of the declaration. 3 3. To lienholders for liens of the association which 4 have been consented to under s. 718.121. 5 4. To creditors of the association, as their interests 6 appear. 7 5. To unit owners, the proceeds of any sale of 8 condominium property subject to satisfaction of liens on each 9 unit in their order of priority, in shares specified in the 10 plan of termination, unless objected to by a unit owner or 11 lienor. 12 6. To unit owners, the remaining condominium property, 13 subject to satisfaction of liens on each unit in their order 14 of priority, in shares specified in the plan of termination, 15 unless objected to by a unit owner or a lienor. 16 7. To unit owners, the proceeds of any sale of 17 association property, the remaining association property, 18 common surplus, and other assets of the association, subject 19 to satisfaction of liens on each unit in their order of 20 priority, in shares specified in the plan of termination, 21 unless objected to by a unit owner or a lienor. 22 (c) After determining that all known debts and 23 liabilities of an association in the process of termination 24 have been paid or adequately provided for, the termination 25 trustee shall distribute the remaining assets pursuant to the 26 plan of termination. If the termination is by court 27 proceeding or subject to court supervision, the distribution 28 may not be made until any period for the presentation of 29 claims ordered by the court has passed. 30 (d) Assets held by an association upon a valid 31 condition requiring return, transfer, or conveyance, which PAGE 11 1 condition has occurred or will occur, shall be returned, 2 transferred, or conveyed in accordance with the condition. The 3 remaining association assets shall be distributed pursuant to 4 paragraph (b). 5 (e) Distribution may be made in money, property, or 6 securities and in installments or as a lump sum, if it can be 7 done fairly and ratably and in conformity with the plan of 8 termination. Distribution shall be made as soon as is 9 reasonably consistent with the beneficial liquidation of the 10 assets. 11 (16) ASSOCIATION STATUS.--The termination of a 12 condominium does not change the corporate status of the 13 association that operated the condominium property. The 14 association continues to exist to conclude its affairs, 15 prosecute and defend actions by or against it, collect and 16 discharge obligations, dispose of and convey its property, and 17 collect and divide its assets, but not to act except as 18 necessary to conclude its affairs. 19 (17) CREATION OF ANOTHER CONDOMINIUM.--The termination 20 of a condominium does not bar the creation, by the termination 21 trustee, of another condominium affecting any portion of the 22 same property. 23 (18) EXCLUSION.--This section does not apply to the 24 termination of a condominium incident to a merger of that 25 condominium with one or more other condominiums under s. 26 718.110(7). 27 Section 2. This act shall take effect July 1, 2005. 28 29 30 31 12
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