HB 0543CS

CHAMBER ACTION



1The Business Regulation 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
29s. 718.117, F.S., for present text.)
30     718.117  Termination of condominium.--
31     (1)  LEGISLATIVE FINDINGS.--The Legislature finds that
32condominiums are created as authorized by statute. In
33circumstances that may create economic waste, areas of blight,
34or obsolescence of the condominium property for its intended use
35and thereby lower property tax values, the Legislature further
36finds that it is the public policy of this state to provide by
37statute a method to preserve the value of the property interests
38and the rights of alienation thereof that owners have in the
39condominium property both before and after termination. The
40Legislature further finds that it is contrary to the public
41policy of this state to require the continued operation of a
42condominium when to do so would constitute economic waste or
43when the ability to do so is made impossible by law or
44regulation. The provisions of this section shall apply to all
45condominiums in this state in existence on or after the
46effective date of this act.
47     (2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
48IMPOSSIBILITY.--
49     (a)  Notwithstanding any provision to the contrary in the
50declaration, the condominium form of ownership of a property may
51be terminated by a plan of termination approved by the lesser of
52a majority of the total voting interests or as otherwise
53provided in the declaration for approval of termination, in the
54following circumstances:
55     1.  When the total estimated cost of repairs necessary to
56restore the improvements to their former condition or bring them
57into compliance with applicable laws or regulations exceeds the
58combined fair market value of all units in the condominium after
59completion of the repairs; or
60     2.  When it becomes impossible to operate or reconstruct a
61condominium in its prior physical configuration because of land-
62use laws or regulations.
63     (b)  Notwithstanding paragraph (a), a condominium in which
6475 percent or more of the units are timeshare units may only be
65terminated pursuant to a plan of termination approved by 80
66percent of the total voting interests of the association and the
67holders of 80 percent of the original principal amount of
68outstanding recorded mortgage liens of timeshare estates in the
69condominium, unless the declaration provides for a lower voting
70percentage.
71     (3)  OPTIONAL TERMINATION.--Except as provided in
72subsections (2) and (4) or unless the declaration provides for a
73lower percentage, the condominium form of ownership of the
74property may be terminated pursuant to a plan of termination
75approved by at least 80 percent of the total voting interests of
76the condominium. This subsection does not apply to condominiums
77in which 75 percent or more of the units are timeshare units.
78     (4)  JURISDICTION.--
79     (a)  If 80 percent of the total voting interests fail to
80approve the plan of termination but fewer than 20 percent of the
81total voting interests vote to disapprove of the plan, the
82circuit court shall have jurisdiction to entertain a petition by
83the association or by one or more unit owners and approve the
84plan of termination, and the action may be a class action.
85     (b)  All unit owners and the association must be parties to
86the action. The action may be brought against the nonconsenting
87unit owners as a class action. Service of process on unit owners
88may be by publication, but the plaintiff must furnish each unit
89owner not personally served with process a copy of the petition
90and plan of termination, and after entry of judgment, a copy of
91the final decree of the court, by mail at the owner's last known
92address.
93     (c)  After the consideration of whether the rights and
94interests of unit owners are equitably set forth in the plan of
95termination as required by this section, the plan of termination
96may be approved or rejected by the court. Consistent with the
97provisions of this section, the court may also modify the plan
98of termination to provide for an equitable distribution of the
99interests of unit owners prior to approving the plan of
100termination.
101     (d)  This subsection does not apply to condominiums in
102which 75 percent or more of the units are timeshare units.
103     (5)  EXEMPTION.--A plan of termination is not an amendment
104subject to s. 718.110(4).
105     (6)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
106to the contrary in the declaration or this chapter, approval of
107a plan of termination by the holder of a recorded mortgage lien
108affecting a condominium parcel in which fewer than 75 percent of
109the units are timeshare units is not required unless the plan of
110termination will result in less than the full satisfaction of
111the mortgage lien affecting the condominium parcel. Should such
112approval be required and not given, and should the holder of a
113recorded mortgage lien object to the plan of termination, such
114lienor may contest the plan as provided in subsection (16). At
115the time of sale, the lien shall be transferred to the
116proportionate share of the proceeds assigned to the condominium
117parcel in the plan of termination or as subsequently modified by
118the court.
119     (7)  POWERS IN CONNECTION WITH TERMINATION.--The
120association shall continue in existence following approval of
121the plan of termination, with all powers it had before approval
122of the plan. Notwithstanding any contrary provision in the
123declaration or bylaws, after approval of the plan, the board has
124the power and duty:
125     (a)  To employ directors, agents, attorneys, and other
126professionals to liquidate or conclude its affairs.
127     (b)  To conduct the affairs of the association as necessary
128for the liquidation or termination.
129     (c)  To carry out contracts and collect, pay, and settle
130debts and claims for and against the association.
131     (d)  To defend suits brought against the association.
132     (e)  To sue in the name of the association for all sums due
133or owed to the association or to recover any of its property.
134     (f)  To perform any act necessary to maintain, repair, or
135demolish unsafe or uninhabitable improvements or other
136condominium property in compliance with applicable codes.
137     (g)  To sell at public or private sale or to exchange,
138convey, or otherwise dispose of assets of the association for an
139amount deemed to be in the best interests of the association,
140and to execute bills of sale and deeds of conveyance in the name
141of the association.
142     (h)  To collect and receive rents, profits, accounts
143receivable, income, maintenance fees, special assessments, or
144insurance proceeds for the association.
145     (i)  To contract and do anything in the name of the
146association which is proper or convenient to terminate the
147affairs of the association.
148     (8)  NATURAL DISASTERS.--
149     (a)  If, after a natural disaster, the identity of the
150directors or their right to hold office is in doubt, if they are
151deceased or unable to act, if they fail or refuse to act, or if
152they cannot be located, any interested person may petition the
153circuit court to determine the identity of the directors or, if
154found to be in the best interests of the unit owners, to appoint
155a receiver to conclude the affairs of the association after a
156hearing following notice to such persons as the court directs.
157     (b)  The receiver shall have all powers given to the board
158pursuant to the declaration, bylaws, and subsection (7), and any
159other powers that are necessary to conclude the affairs of the
160association and are set forth in the order of appointment. The
161appointment of the receiver is subject to the bonding
162requirements of such order. The order shall also provide for the
163payment of a reasonable fee to the receiver from the sources
164identified in the order, which may include rents, profits,
165incomes, maintenance fees, or special assessments collected from
166the condominium property.
167     (9)  PLAN OF TERMINATION.--The plan of termination must be
168a written document executed in the same manner as a deed by unit
169owners having the requisite percentage of voting interests to
170approve the plan and by the termination trustee. A copy of the
171proposed plan of termination shall be given to all unit owners,
172in the same manner as for notice of an annual meeting, at least
17314 days prior to the meeting at which the plan of termination is
174to be voted upon or prior to or simultaneously with the
175distribution of the solicitation seeking execution of the plan
176of termination or written consent to or joinder in the plan. A
177unit owner may document assent to the plan of termination by
178executing the plan or by consent to or joinder in the plan in
179the manner of a deed. A plan of termination and the consents or
180joinders of unit owners and, if required, consents or joinders
181of mortgagees must be recorded in the public records of each
182county in which any portion of the condominium is located. The
183plan of termination is effective only upon recordation or at a
184later date specified in the plan.
185     (10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
186of termination must specify:
187     (a)  The name, address, and powers of the termination
188trustee.
189     (b)  A date after which the plan of termination is void if
190it has not been recorded.
191     (c)  The interests of the respective unit owners in the
192association property, common surplus, and other assets of the
193association, which shall be the same as the respective interests
194of the unit owners in the common elements immediately before the
195termination, unless otherwise provided in the declaration.
196     (d)  The interests of the respective unit owners in any
197proceeds from any sale of the condominium property. The plan of
198termination may apportion those proceeds pursuant to any of the
199methods prescribed in subsection (12). If, pursuant to the plan
200of termination, condominium property or real property owned by
201the association is to be sold following termination, the plan
202must provide for the sale and may establish any minimum sale
203terms.
204     (e)  Any interests of the respective unit owners in any
205insurance proceeds or condemnation proceeds that are not used
206for repair or reconstruction at the time of termination. Unless
207the declaration expressly addresses the distribution of
208insurance proceeds or condemnation proceeds, the plan of
209termination may apportion those proceeds pursuant to any of the
210methods prescribed in subsection (12).
211     (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
212TERMINATION.--
213     (a)  The plan of termination may provide that each unit
214owner retains the exclusive right of possession to the portion
215of the real estate that formerly constituted the unit, in which
216case the plan must specify the conditions of possession.
217     (b)  In the case of a conditional termination, the plan
218must specify the conditions for termination. A conditional plan
219will not vest title in the termination trustee until the plan
220and a certificate executed by the association with the
221formalities of a deed, confirming that the conditions in the
222conditional plan have been satisfied or waived by the requisite
223percentage of the voting interests, have been recorded.
224     (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
225PROPERTY.--
226     (a)  Unless the declaration expressly provides for the
227allocation of the proceeds of sale of condominium property, the
228plan of termination must first apportion the proceeds between
229the aggregate value of all units and the value of the common
230elements, based on their respective fair-market values
231immediately before the termination, as determined by one or more
232independent appraisers selected by the association or
233termination trustee.
234     (b)  The portion of proceeds allocated to the units shall
235be further apportioned among the individual units. The
236apportionment is deemed fair and reasonable if it is determined
237by the unit owners approving the plan of termination by any of
238the following methods:
239     1.  The respective values of the units based on the fair-
240market values of the units immediately before the termination,
241as determined by one or more independent appraisers selected by
242the association or termination trustee;
243     2.  The respective values of the units based on the most
244recent market value of the units before the termination, as
245provided in the county property appraiser's records; or
246     3.  The respective interests of the units in the common
247elements specified in the declaration immediately before the
248termination.
249     (c)  The methods of apportionment in paragraph (b) do not
250prohibit any other method of apportioning the proceeds of sale
251allocated to the units agreed upon in the plan of termination.
252The portion of the proceeds allocated to the common elements
253shall be apportioned among the units based upon their respective
254interests in the common elements as provided in the declaration.
255     (d)  Liens that encumber a unit shall be transferred to the
256proceeds of sale of the condominium property and the proceeds of
257sale or other distribution of association property, common
258surplus, or other association assets attributable to such unit
259in their same priority. The proceeds of any sale of condominium
260property pursuant to a plan of termination may not be deemed to
261be common surplus or association property.
262     (13)  TERMINATION TRUSTEE.--The association shall serve as
263termination trustee unless another person is appointed in the
264plan of termination. If the association is unable, unwilling, or
265fails to act as trustee, any unit owner may petition the court
266to appoint a trustee. Upon recording or at a later date
267specified in the plan, title to the condominium property vests
268in the trustee. Unless prohibited by the plan, the termination
269trustee shall be vested with the powers given to the board
270pursuant to the declaration, bylaws, and subsection (7). If the
271association is not the termination trustee, the trustee's powers
272shall be coextensive with those of the association to the extent
273not prohibited in the plan of termination or the order of
274appointment. If the association is not the termination trustee,
275the association shall transfer any association property to the
276trustee. If the association is dissolved, the trustee shall also
277have such other powers necessary to conclude the affairs of the
278association.
279     (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
280is pursuant to a plan of termination under subsection (2) or
281subsection (3), the unit owners' rights and title as tenants in
282common in undivided interests in the condominium property vest
283in the termination trustee when the plan is recorded or at a
284later date specified in the plan. The unit owners thereafter
285become the beneficiaries of the proceeds realized from the plan
286of termination. The termination trustee may deal with the
287condominium property or any interest therein if the plan confers
288on the trustee the authority to protect, conserve, manage, sell,
289or dispose of the condominium property. The trustee, on behalf
290of the unit owners, may contract for the sale of real property,
291but the contract is not binding on the unit owners until the
292plan is approved pursuant to subsection (2) or subsection (3).
293     (15)  NOTICE.--
294     (a)  Within 30 days after a plan of termination has been
295recorded, the termination trustee shall deliver by certified
296mail, return receipt requested, notice to all unit owners,
297lienors of the condominium property, and lienors of all units at
298their last known addresses that a plan of termination has been
299recorded. The notice shall include the book and page number of
300the public records in which the plan was recorded, notice that a
301copy of the plan shall be furnished upon written request, and
302notice that the unit owner or lienor has the right to contest
303the fairness of the plan.
304     (b)  The trustee, within 90 days after the effective date
305of the plan, shall provide to the division a certified copy of
306the recorded plan, the date the plan was recorded, and the
307county, book, and page number of the public records in which the
308plan was recorded.
309     (16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
310a plan of termination by initiating a summary procedure pursuant
311to s. 51.011 within 90 days after the date the plan is recorded.
312A unit owner or lienor who does not contest the plan within such
31390-day period is barred from asserting or prosecuting a claim
314against the association, the termination trustee, any unit
315owner, or any successor in interest to the condominium property.
316In an action contesting a plan of termination, the person
317contesting the plan has the burden of pleading and proving that
318the apportionment of the proceeds from the sale among the unit
319owners was not fair and reasonable. The apportionment of sale
320proceeds is presumed fair and reasonable if it was determined
321pursuant to the methods prescribed in subsection (12). The court
322shall adjudge the rights and interests of the parties and order
323the plan of termination to be implemented if it is fair and
324reasonable. The court may modify the plan to apportion the
325proceeds in a fair and reasonable manner as required by this
326section based upon the proceedings and order the modified plan
327of termination to be implemented. The court shall void a plan
328that is determined not to be fair and reasonable. In such
329action, the prevailing party may recover reasonable attorney's
330fees and costs.
331     (17)  DISTRIBUTION.--
332     (a)  Following termination of the condominium, the
333condominium property, association property, common surplus, and
334other assets of the association shall be held by the termination
335trustee, as trustee for unit owners and holders of liens on the
336units, in their order of priority.
337     (b)  Not less than 30 days prior to the first distribution,
338the termination trustee shall deliver by certified mail, return
339receipt requested, a notice of the estimated distribution to all
340unit owners, lienors of the condominium property, and lienors of
341each unit at their last known addresses stating a good-faith
342estimate of the amount of the distributions to each class and
343the procedures and deadline for notifying the termination
344trustee of any objections to the amount. The deadline must be at
345least 15 days after the date the notice was mailed. The notice
346may be sent with or after the notice required by subsection
347(15). If a unit owner or lienor files a timely objection with
348the termination trustee, the trustee does not have to distribute
349the funds and property allocated to the respective unit owner or
350lienor until the trustee has had a reasonable time to determine
351the validity of the adverse claim. In the alternative, the
352trustee may interplead the unit owner, lienor, and any other
353person claiming an interest in the unit and deposit the funds
354allocated to the unit in the court registry, at which time the
355condominium property, association property, common surplus, and
356other assets of the association are free of all claims and liens
357of the parties to the suit. In an interpleader action, the
358trustee and prevailing party may recover reasonable attorney's
359fees and costs and court costs.
360     (c)  The proceeds of any sale of condominium property or
361association property and any remaining condominium property or
362association property, common surplus, and other assets shall be
363distributed in the following priority:
364     1.  To pay the costs of implementing the plan of
365termination, including demolition, removal, and disposal fees,
366termination trustee's fees and costs, accounting fees and costs,
367and attorney's fees and costs.
368     2.  To lienholders of liens recorded prior to the recording
369of the declaration.
370     3.  To lienholders of liens of the association which have
371been consented to under s. 718.121(1).
372     4.  To creditors of the association, as their interests
373appear.
374     5.  To unit owners, the proceeds of any sale of condominium
375property subject to satisfaction of liens on each unit in their
376order of priority, in shares specified in the plan of
377termination, unless objected to by a unit owner or lienor.
378     6.  To unit owners, the remaining condominium property,
379subject to satisfaction of liens on each unit in their order of
380priority, in shares specified in the plan of termination, unless
381objected to by a unit owner or a lienor as provided in paragraph
382(b).
383     7.  To unit owners, the proceeds of any sale of association
384property, the remaining association property, common surplus,
385and other assets of the association, subject to satisfaction of
386liens on each unit in their order of priority, in shares
387specified in the plan of termination, unless objected to by a
388unit owner or a lienor as provided in paragraph (b).
389     (d)  After determining that all known debts and liabilities
390of an association in the process of termination have been paid
391or adequately provided for, the termination trustee shall
392distribute the remaining assets pursuant to the plan of
393termination. If the termination is by court proceeding or
394subject to court supervision, the distribution may not be made
395until any period for the presentation of claims ordered by the
396court has elapsed.
397     (e)  Assets held by an association upon a valid condition
398requiring return, transfer, or conveyance, which condition has
399occurred or will occur, shall be returned, transferred, or
400conveyed in accordance with the condition. The remaining
401association assets shall be distributed pursuant to paragraph
402(c).
403     (f)  Distribution may be made in money, property, or
404securities and in installments or as a lump sum, if it can be
405done fairly and ratably and in conformity with the plan of
406termination. Distribution shall be made as soon as is reasonably
407consistent with the beneficial liquidation of the assets.
408     (18)  ASSOCIATION STATUS.--The termination of a condominium
409does not change the corporate status of the association that
410operated the condominium property. The association continues to
411exist to conclude its affairs, prosecute and defend actions by
412or against it, collect and discharge obligations, dispose of and
413convey its property, and collect and divide its assets, but not
414to act except as necessary to conclude its affairs.
415     (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
416a condominium does not bar the creation, by the termination
417trustee, of another condominium affecting any portion of the
418same property.
419     (20)  EXCLUSION.--This section does not apply to the
420termination of a condominium incident to a merger of that
421condominium with one or more other condominiums under s.
422718.110(7).
423     Section 2.  This act shall take effect July 1, 2006.


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