HB 0543CS

CHAMBER ACTION



1The Civil Justice Committee recommends the following:
2
3     Council/Committee Substitute
4     Remove the entire bill and insert:
5
A bill to be entitled
6An act relating to condominiums; amending s. 718.117,
7F.S.; substantially revising provisions relating to the
8termination of the condominium form of ownership of a
9property; providing legislative findings; providing
10grounds; providing powers and duties of the board of
11administration of the association; waiving certain notice
12requirements following natural disasters; providing
13requirements for a plan of termination; providing for the
14allocation of proceeds from the sale of condominium
15property; providing powers and duties of a termination
16trustee; providing notice requirements; providing a
17procedure for contesting a plan of termination; providing
18rules for the distribution of property and sale proceeds;
19providing for the association's status following
20termination; allowing the creation of another condominium
21by the trustee; specifying an exclusion; providing an
22effective date.
23
24Be It Enacted by the Legislature of the State of Florida:
25
26     Section 1.  Section 718.117, Florida Statutes, is amended
27to read:
28     (Substantial rewording of section. See
29     s. 718.117, F.S., for present text.)
30     718.117  Termination of condominium.--
31     (1)  LEGISLATIVE FINDINGS.--The Legislature finds that it
32is contrary to the public policy of this state to require the
33continued operation of a condominium when to do so would
34constitute economic waste or when the ability to do so is made
35impossible by law or regulation. The provisions of this section
36shall apply to all condominiums in this state in existence on or
37after the effective date of this act.
38     (2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
39IMPOSSIBILITY.--
40     (a)  Notwithstanding any provision to the contrary in the
41declaration, the condominium form of ownership of a property may
42be terminated by a plan of termination approved by the lesser of
43a majority of the total voting interests or as otherwise
44provided in the declaration for approval of termination, in the
45following circumstances:
46     1.  When the total estimated cost of repairs necessary to
47restore the improvements to their former condition or bring them
48into compliance with applicable laws or regulations exceeds the
49combined fair market value of all units in the condominium after
50completion of the repairs; or
51     2.  When it becomes impossible to operate or reconstruct a
52condominium in its prior physical configuration because of land-
53use laws or regulations.
54     (b)  Notwithstanding paragraph (a), a condominium in which
5575 percent or more of the units are timeshare units may only be
56terminated pursuant to a plan of termination approved by 80
57percent of the total voting interests of the association and the
58holders of 80 percent of the original principal amount of
59outstanding recorded mortgage liens of timeshare estates in the
60condominium, unless the declaration provides for a lower voting
61percentage.
62     (3)  OPTIONAL TERMINATION.--Except as provided in
63subsections (2) and (4) or unless the declaration provides for a
64lower percentage, the condominium form of ownership of the
65property may be terminated pursuant to a plan of termination
66approved by at least 80 percent of the total voting interests of
67the condominium. This subsection does not apply to condominiums
68in which 75 percent or more of the units are timeshare units.
69     (4)  JURISDICTION.--
70     (a)  If 80 percent of the total voting interests fail to
71approve the plan of termination but fewer than 20 percent of the
72total voting interests vote to disapprove of the plan, the
73circuit court shall have jurisdiction to entertain a petition by
74the association or by one or more unit owners and approve the
75plan of termination, and the action may be a class action.
76     (b)  All unit owners and the association must be parties to
77the action. The action may be brought against the nonconsenting
78unit owners as a class action. Service of process on unit owners
79may be by publication, but the plaintiff must furnish each unit
80owner not personally served with process a copy of the petition
81and plan of termination, and after entry of judgment, a copy of
82the final decree of the court, by mail at the owner's last known
83address.
84     (c)  After the consideration of whether the rights and
85interests of unit owners are equitably set forth in the plan of
86termination as required by this section, the plan of termination
87may be approved or rejected by the court. Consistent with the
88provisions of this section, the court may also modify the plan
89of termination to provide for an equitable distribution of the
90interests of unit owners prior to approving the plan of
91termination.
92     (d)  This subsection does not apply to condominiums in
93which 75 percent or more of the units are timeshare units.
94     (5)  EXEMPTION.--A plan of termination is not an amendment
95subject to s. 718.110(4).
96     (6)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
97to the contrary in the declaration or this chapter, approval of
98a plan of termination by the holder of a recorded mortgage lien
99affecting a condominium parcel in which fewer than 75 percent of
100the units are timeshare units is not required unless the plan of
101termination will result in less than the full satisfaction of
102the mortgage lien affecting the parcel.
103     (7)  POWERS IN CONNECTION WITH TERMINATION.--The
104association shall continue in existence following approval of
105the plan of termination, with all powers it had before approval
106of the plan. Notwithstanding any contrary provision in the
107declaration or bylaws, after approval of the plan, the board has
108the power and duty:
109     (a)  To employ directors, agents, attorneys, and other
110professionals to liquidate or conclude its affairs.
111     (b)  To conduct the affairs of the association as necessary
112for the liquidation or termination.
113     (c)  To carry out contracts and collect, pay, and settle
114debts and claims for and against the association.
115     (d)  To defend suits brought against the association.
116     (e)  To sue in the name of the association for all sums due
117or owed to the association or to recover any of its property.
118     (f)  To perform any act necessary to maintain, repair, or
119demolish unsafe or uninhabitable improvements or other
120condominium property in compliance with applicable codes.
121     (g)  To sell at public or private sale or to exchange,
122convey, or otherwise dispose of assets of the association for an
123amount deemed to be in the best interests of the association,
124and to execute bills of sale and deeds of conveyance in the name
125of the association.
126     (h)  To collect and receive rents, profits, accounts
127receivable, income, maintenance fees, special assessments, or
128insurance proceeds for the association.
129     (i)  To contract and do anything in the name of the
130association which is proper or convenient to terminate the
131affairs of the association.
132     (8)  NATURAL DISASTERS.--
133     (a)  If, after a natural disaster, the identity of the
134directors or their right to hold office is in doubt, if they are
135deceased or unable to act, if they fail or refuse to act, or if
136they cannot be located, any interested person may petition the
137circuit court to determine the identity of the directors or, if
138found to be in the best interests of the unit owners, to appoint
139a receiver to conclude the affairs of the association after a
140hearing following notice to such persons as the court directs.
141     (b)  The receiver shall have all powers given to the board
142pursuant to the declaration, bylaws, and subsection (7), and any
143other powers that are necessary to conclude the affairs of the
144association and are set forth in the order of appointment. The
145appointment of the receiver is subject to the bonding
146requirements of such order. The order shall also provide for the
147payment of a reasonable fee to the receiver from the sources
148identified in the order, which may include rents, profits,
149incomes, maintenance fees, or special assessments collected from
150the condominium property.
151     (9)  PLAN OF TERMINATION.--The plan of termination must be
152a written document executed in the same manner as a deed by unit
153owners having the requisite percentage of voting interests to
154approve the plan and by the termination trustee. A copy of the
155proposed plan of termination shall be given to all unit owners,
156in the same manner as for notice of an annual meeting, at least
15714 days prior to the meeting at which the plan of termination is
158to be voted upon or prior to or simultaneously with the
159distribution of the solicitation seeking execution of the plan
160of termination or written consent to or joinder in the plan. A
161unit owner may document assent to the plan of termination by
162executing the plan or by consent to or joinder in the plan in
163the manner of a deed. A plan of termination and the consents or
164joinders of unit owners and, if required, consents or joinders
165of mortgagees must be recorded in the public records of each
166county in which any portion of the condominium is located. The
167plan of termination is effective only upon recordation or at a
168later date specified in the plan.
169     (10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
170of termination must specify:
171     (a)  The name, address, and powers of the termination
172trustee.
173     (b)  A date after which the plan of termination is void if
174it has not been recorded.
175     (c)  The interests of the respective unit owners in the
176association property, common surplus, and other assets of the
177association, which shall be the same as the respective interests
178of the unit owners in the common elements immediately before the
179termination, unless otherwise provided in the declaration.
180     (d)  The interests of the respective unit owners in any
181proceeds from any sale of the condominium property. The plan of
182termination may apportion those proceeds pursuant to any of the
183methods prescribed in subsection (12). If, pursuant to the plan
184of termination, condominium property or real property owned by
185the association is to be sold following termination, the plan
186must provide for the sale and may establish any minimum sale
187terms.
188     (e)  Any interests of the respective unit owners in any
189insurance proceeds or condemnation proceeds that are not used
190for repair or reconstruction at the time of termination. Unless
191the declaration expressly addresses the distribution of
192insurance proceeds or condemnation proceeds, the plan of
193termination may apportion those proceeds pursuant to any of the
194methods prescribed in subsection (12).
195     (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
196TERMINATION.--
197     (a)  The plan of termination may provide that each unit
198owner retains the exclusive right of possession to the portion
199of the real estate that formerly constituted the unit, in which
200case the plan must specify the conditions of possession.
201     (b)  In the case of a conditional termination, the plan
202must specify the conditions for termination. A conditional plan
203will not vest title in the termination trustee until the plan
204and a certificate executed by the association with the
205formalities of a deed, confirming that the conditions in the
206conditional plan have been satisfied or waived by the requisite
207percentage of the voting interests, have been recorded.
208     (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
209PROPERTY.--
210     (a)  Unless the declaration expressly provides for the
211allocation of the proceeds of sale of condominium property, the
212plan of termination must first apportion the proceeds between
213the aggregate value of all units and the value of the common
214elements, based on their respective fair-market values
215immediately before the termination, as determined by one or more
216independent appraisers selected by the association or
217termination trustee.
218     (b)  The portion of proceeds allocated to the units shall
219be further apportioned among the individual units. The
220apportionment is deemed fair and reasonable if it is determined
221by the unit owners approving the plan of termination by any of
222the following methods:
223     1.  The respective values of the units based on the fair-
224market values of the units immediately before the termination,
225as determined by one or more independent appraisers selected by
226the association or termination trustee;
227     2.  The respective values of the units based on the most
228recent market value of the units before the termination, as
229provided in the county property appraiser's records; or
230     3.  The respective interests of the units in the common
231elements specified in the declaration immediately before the
232termination.
233     (c)  The methods of apportionment in paragraph (b) do not
234prohibit any other method of apportioning the proceeds of sale
235allocated to the units agreed upon in the plan of termination.
236The portion of the proceeds allocated to the common elements
237shall be apportioned among the units based upon their respective
238interests in the common elements as provided in the declaration.
239     (d)  Liens that encumber a unit shall be transferred to the
240proceeds of sale of the condominium property and the proceeds of
241sale or other distribution of association property, common
242surplus, or other association assets attributable to such unit
243in their same priority. The proceeds of any sale of condominium
244property pursuant to a plan of termination may not be deemed to
245be common surplus or association property.
246     (13)  TERMINATION TRUSTEE.--The association shall serve as
247termination trustee unless another person is appointed in the
248plan of termination. If the association is unable, unwilling, or
249fails to act as trustee, any unit owner may petition the court
250to appoint a trustee. Upon recording or at a later date
251specified in the plan, title to the condominium property vests
252in the trustee. Unless prohibited by the plan, the termination
253trustee shall be vested with the powers given to the board
254pursuant to the declaration, bylaws, and subsection (7). If the
255association is not the termination trustee, the trustee's powers
256shall be coextensive with those of the association to the extent
257not prohibited in the plan of termination or the order of
258appointment. If the association is not the termination trustee,
259the association shall transfer any association property to the
260trustee. If the association is dissolved, the trustee shall also
261have such other powers necessary to conclude the affairs of the
262association.
263     (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
264is pursuant to a plan of termination under subsection (2) or
265subsection (3), the unit owners' rights and title as tenants in
266common in undivided interests in the condominium property vest
267in the termination trustee when the plan is recorded or at a
268later date specified in the plan. The unit owners thereafter
269become the beneficiaries of the proceeds realized from the plan
270of termination. The termination trustee may deal with the
271condominium property or any interest therein if the plan confers
272on the trustee the authority to protect, conserve, manage, sell,
273or dispose of the condominium property. The trustee, on behalf
274of the unit owners, may contract for the sale of real property,
275but the contract is not binding on the unit owners until the
276plan is approved pursuant to subsection (2) or subsection (3).
277     (15)  NOTICE.--
278     (a)  Within 30 days after a plan of termination has been
279recorded, the termination trustee shall deliver by certified
280mail, return receipt requested, notice to all unit owners,
281lienors of the condominium property, and lienors of all units at
282their last known addresses that a plan of termination has been
283recorded. The notice shall include the book and page number of
284the public records in which the plan was recorded, notice that a
285copy of the plan shall be furnished upon written request, and
286notice that the unit owner or lienor has the right to contest
287the fairness of the plan.
288     (b)  The trustee, within 90 days after the effective date
289of the plan, shall provide to the division a certified copy of
290the recorded plan, the date the plan was recorded, and the
291county, book, and page number of the public records in which the
292plan was recorded.
293     (16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
294a plan of termination by initiating a summary procedure pursuant
295to s. 51.011 within 90 days after the date the plan is recorded.
296A unit owner or lienor who does not contest the plan within such
29790-day period is barred from asserting or prosecuting a claim
298against the association, the termination trustee, any unit
299owner, or any successor in interest to the condominium property.
300In an action contesting a plan of termination, the person
301contesting the plan has the burden of pleading and proving that
302the apportionment of the proceeds from the sale among the unit
303owners was not fair and reasonable. The apportionment of sale
304proceeds is presumed fair and reasonable if it was determined
305pursuant to the methods prescribed in subsection (12). The court
306shall adjudge the rights and interests of the parties and order
307the plan of termination to be implemented if it is fair and
308reasonable. The court shall void a plan that is determined not
309to be fair and reasonable. In such action, the prevailing party
310may recover reasonable attorney's fees and costs.
311     (17)  DISTRIBUTION.--
312     (a)  Following termination of the condominium, the
313condominium property, association property, common surplus, and
314other assets of the association shall be held by the termination
315trustee, as trustee for unit owners and holders of liens on the
316units, in their order of priority.
317     (b)  Not less than 30 days prior to the first distribution,
318the termination trustee shall deliver by certified mail, return
319receipt requested, a notice of the estimated distribution to all
320unit owners, lienors of the condominium property, and lienors of
321each unit at their last known addresses stating a good-faith
322estimate of the amount of the distributions to each class and
323the procedures and deadline for notifying the termination
324trustee of any objections to the amount. The deadline must be at
325least 15 days after the date the notice was mailed. The notice
326may be sent with or after the notice required by subsection
327(15). If a unit owner or lienor files a timely objection with
328the termination trustee, the trustee does not have to distribute
329the funds and property allocated to the respective unit owner or
330lienor until the trustee has had a reasonable time to determine
331the validity of the adverse claim. In the alternative, the
332trustee may interplead the unit owner, lienor, and any other
333person claiming an interest in the unit and deposit the funds
334allocated to the unit in the court registry, at which time the
335condominium property, association property, common surplus, and
336other assets of the association are free of all claims and liens
337of the parties to the suit. In an interpleader action, the
338trustee and prevailing party may recover reasonable attorney's
339fees and costs and court costs.
340     (c)  The proceeds of any sale of condominium property or
341association property and any remaining condominium property or
342association property, common surplus, and other assets shall be
343distributed in the following priority:
344     1.  To pay the costs of implementing the plan of
345termination, including demolition, removal, and disposal fees,
346termination trustee's fees and costs, accounting fees and costs,
347and attorney's fees and costs.
348     2.  To lienholders of liens recorded prior to the recording
349of the declaration.
350     3.  To lienholders of liens of the association which have
351been consented to under s. 718.121(1).
352     4.  To creditors of the association, as their interests
353appear.
354     5.  To unit owners, the proceeds of any sale of condominium
355property subject to satisfaction of liens on each unit in their
356order of priority, in shares specified in the plan of
357termination, unless objected to by a unit owner or lienor.
358     6.  To unit owners, the remaining condominium property,
359subject to satisfaction of liens on each unit in their order of
360priority, in shares specified in the plan of termination, unless
361objected to by a unit owner or a lienor as provided in paragraph
362(b).
363     7.  To unit owners, the proceeds of any sale of association
364property, the remaining association property, common surplus,
365and other assets of the association, subject to satisfaction of
366liens on each unit in their order of priority, in shares
367specified in the plan of termination, unless objected to by a
368unit owner or a lienor as provided in paragraph (b).
369     (d)  After determining that all known debts and liabilities
370of an association in the process of termination have been paid
371or adequately provided for, the termination trustee shall
372distribute the remaining assets pursuant to the plan of
373termination. If the termination is by court proceeding or
374subject to court supervision, the distribution may not be made
375until any period for the presentation of claims ordered by the
376court has elapsed.
377     (e)  Assets held by an association upon a valid condition
378requiring return, transfer, or conveyance, which condition has
379occurred or will occur, shall be returned, transferred, or
380conveyed in accordance with the condition. The remaining
381association assets shall be distributed pursuant to paragraph
382(c).
383     (f)  Distribution may be made in money, property, or
384securities and in installments or as a lump sum, if it can be
385done fairly and ratably and in conformity with the plan of
386termination. Distribution shall be made as soon as is reasonably
387consistent with the beneficial liquidation of the assets.
388     (18)  ASSOCIATION STATUS.--The termination of a condominium
389does not change the corporate status of the association that
390operated the condominium property. The association continues to
391exist to conclude its affairs, prosecute and defend actions by
392or against it, collect and discharge obligations, dispose of and
393convey its property, and collect and divide its assets, but not
394to act except as necessary to conclude its affairs.
395     (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
396a condominium does not bar the creation, by the termination
397trustee, of another condominium affecting any portion of the
398same property.
399     (20)  EXCLUSION.--This section does not apply to the
400termination of a condominium incident to a merger of that
401condominium with one or more other condominiums under s.
402718.110(7).
403     Section 2.  This act shall take effect July 1, 2006.


CODING: Words stricken are deletions; words underlined are additions.