Senate Bill sb0314er

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  1                                 

  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 legislative findings; providing

  7         grounds for termination; providing powers and

  8         duties of the board of administration of the

  9         association; waiving certain notice

10         requirements following natural disasters;

11         providing requirements for a plan of

12         termination; providing for the allocation of

13         proceeds from the sale of condominium property;

14         providing powers and duties of a termination

15         trustee; providing notice requirements;

16         providing a procedure for contesting a plan of

17         termination; providing for award or recovery of

18         attorney's fees and costs; providing rules for

19         the distribution of property and sale proceeds;

20         providing for the association's status

21         following termination; allowing the creation of

22         another condominium by the trustee; specifying

23         an exclusion; providing an effective date.

24  

25  Be It Enacted by the Legislature of the State of Florida:

26  

27         Section 1.  Section 718.117, Florida Statutes, is

28  amended to read:

29         (Substantial rewording of section. See

30         s. 718.117, F.S., for present text.)

31         718.117  Termination of condominium.--


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 1         (1)  LEGISLATIVE FINDINGS.--The Legislature finds that

 2  condominiums are created as authorized by statute. In

 3  circumstances that may create economic waste, areas of

 4  disrepair, or obsolescence of a condominium property for its

 5  intended use and thereby lower property tax values, the

 6  Legislature further finds that it is the public policy of this

 7  state to provide by statute a method to preserve the value of

 8  the property interests and the rights of alienation thereof

 9  that owners have in the condominium property before and after

10  termination. The Legislature further finds that it is contrary

11  to the public policy of this state to require the continued

12  operation of a condominium when to do so constitutes economic

13  waste or when the ability to do so is made impossible by law

14  or regulation. This section applies to all condominiums in

15  this state in existence on or after July 1, 2007.

16         (2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR

17  IMPOSSIBILITY.--

18         (a)  Notwithstanding any provision to the contrary in

19  the declaration, the condominium form of ownership of a

20  property may be terminated by a plan of termination approved

21  by the lesser of the lowest percentage of voting interests

22  necessary to amend the declaration or as otherwise provided in

23  the declaration for approval of termination when:

24         1.  The total estimated cost of repairs necessary to

25  restore the improvements to their former condition or bring

26  them into compliance with applicable laws or regulations

27  exceeds the combined fair market value of all units in the

28  condominium after completion of the repairs; or

29         2.  It becomes impossible to operate or reconstruct a

30  condominium in its prior physical configuration because of

31  land-use laws or regulations.


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 1         (b)  Notwithstanding paragraph (a), a condominium in

 2  which 75 percent or more of the units are timeshare units may

 3  be terminated only pursuant to a plan of termination approved

 4  by 80 percent of the total voting interests of the association

 5  and the holders of 80 percent of the original principal amount

 6  of outstanding recorded mortgage liens of timeshare estates in

 7  the condominium, unless the declaration provides for a lower

 8  voting percentage.

 9         (3)  OPTIONAL TERMINATION.--Except as provided in

10  subsection (2) or unless the declaration provides for a lower

11  percentage, the condominium form of ownership of the property

12  may be terminated pursuant to a plan of termination approved

13  by at least 80 percent of the total voting interests of the

14  condominium if not more than 10 percent of the total voting

15  interests of the condominium have rejected the plan of

16  termination by negative vote or by providing written

17  objections thereto. This subsection does not apply to

18  condominiums in which 75 percent or more of the units are

19  timeshare units.

20         (4)  EXEMPTION.--A plan of termination is not an

21  amendment subject to s. 718.110(4).

22         (5)  MORTGAGE LIENHOLDERS.--Notwithstanding any

23  provision to the contrary in the declaration or this chapter,

24  approval of a plan of termination by the holder of a recorded

25  mortgage lien affecting a condominium parcel in which fewer

26  than 75 percent of the units are timeshare units is not

27  required unless the plan of termination will result in less

28  than the full satisfaction of the mortgage lien affecting the

29  condominium parcel. If such approval is required and not

30  given, a holder of a recorded mortgage lien who objects to the

31  plan of termination may contest the plan as provided in


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 1  subsection (16). At the time of sale, the lien shall be

 2  transferred to the proportionate share of the proceeds

 3  assigned to the condominium parcel in the plan of termination

 4  or as subsequently modified by the court.

 5         (6)  POWERS IN CONNECTION WITH TERMINATION.--The

 6  approval of the plan of termination does not terminate the

 7  association. It shall continue in existence following approval

 8  of the plan of termination with all powers and duties it had

 9  before approval of the plan. Notwithstanding any provision to

10  the contrary in the declaration or bylaws, after approval of

11  the plan the board shall:

12         (a)  Employ directors, agents, attorneys, and other

13  professionals to liquidate or conclude its affairs.

14         (b)  Conduct the affairs of the association as

15  necessary for the liquidation or termination.

16         (c)  Carry out contracts and collect, pay, and settle

17  debts and claims for and against the association.

18         (d)  Defend suits brought against the association.

19         (e)  Sue in the name of the association for all sums

20  due or owed to the association or to recover any of its

21  property.

22         (f)  Perform any act necessary to maintain, repair, or

23  demolish unsafe or uninhabitable improvements or other

24  condominium property in compliance with applicable codes.

25         (g)  Sell at public or private sale or exchange,

26  convey, or otherwise dispose of assets of the association for

27  an amount deemed to be in the best interests of the

28  association, and execute bills of sale and deeds of conveyance

29  in the name of the association.

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 1         (h)  Collect and receive rents, profits, accounts

 2  receivable, income, maintenance fees, special assessments, or

 3  insurance proceeds for the association.

 4         (i)  Contract and do anything in the name of the

 5  association which is proper or convenient to terminate the

 6  affairs of the association.

 7         (7)  NATURAL DISASTERS.--

 8         (a)  If, after a natural disaster, the identity of the

 9  directors or their right to hold office is in doubt, if they

10  are deceased or unable to act, if they fail or refuse to act,

11  or if they cannot be located, any interested person may

12  petition the circuit court to determine the identity of the

13  directors or, if found to be in the best interests of the unit

14  owners, to appoint a receiver to conclude the affairs of the

15  association after a hearing following notice to such persons

16  as the court directs. Lienholders shall be given notice of the

17  petition and have the right to propose persons for the

18  consideration by the court as receiver.

19         (b)  The receiver shall have all powers given to the

20  board pursuant to the declaration, bylaws, and subsection (6),

21  and any other powers that are necessary to conclude the

22  affairs of the association and are set forth in the order of

23  appointment. The appointment of the receiver is subject to the

24  bonding requirements of such order. The order shall also

25  provide for the payment of a reasonable fee to the receiver

26  from the sources identified in the order, which may include

27  rents, profits, incomes, maintenance fees, or special

28  assessments collected from the condominium property.

29         (8)  REPORTS AND REPLACEMENT OF RECEIVER.--

30         (a)  The association, receiver, or termination trustee

31  shall prepare reports each quarter following the approval of


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 1  the plan of termination setting forth the status and progress

 2  of the termination, costs and fees incurred, the date the

 3  termination is expected to be completed, and the current

 4  financial condition of the association, receivership, or

 5  trusteeship and provide copies of the report by regular mail

 6  to the unit owners and lienors at the mailing address provided

 7  to the association by the unit owners and the lienors.

 8         (b)  The unit owners of an association in termination

 9  may recall or remove members of the board of administration

10  with or without cause at any time as provided in s.

11  718.112(2)(j).

12         (c)  The lienors of an association in termination

13  representing at least 50 percent of the outstanding amount of

14  liens may petition the court for the appointment of a

15  termination trustee, which shall be granted upon good cause

16  shown.

17         (9)  PLAN OF TERMINATION.--The plan of termination must

18  be a written document executed in the same manner as a deed by

19  unit owners having the requisite percentage of voting

20  interests to approve the plan and by the termination trustee.

21  A copy of the proposed plan of termination shall be given to

22  all unit owners, in the same manner as for notice of an annual

23  meeting, at least 14 days prior to the meeting at which the

24  plan of termination is to be voted upon or prior to or

25  simultaneously with the distribution of the solicitation

26  seeking execution of the plan of termination or written

27  consent to or joinder in the plan. A unit owner may document

28  assent to the plan by executing the plan or by consent to or

29  joinder in the plan in the manner of a deed. A plan of

30  termination and the consents or joinders of unit owners and,

31  if required, consents or joinders of mortgagees must be


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 1  recorded in the public records of each county in which any

 2  portion of the condominium is located. The plan is effective

 3  only upon recordation or at a later date specified in the

 4  plan.

 5         (10)  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 interests 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, unless otherwise provided

16  in the declaration.

17         (d)  The interests of the respective unit owners in any

18  proceeds from the sale of the condominium property. The plan

19  of termination may apportion those proceeds pursuant to any

20  method prescribed in subsection (12). If, pursuant to the plan

21  of termination, condominium property or real property owned by

22  the association is to be sold following termination, the plan

23  must provide for the sale and may establish any minimum sale

24  terms.

25         (e)  Any interests of the respective unit owners in

26  insurance proceeds or condemnation proceeds that are not used

27  for repair or reconstruction at the time of termination.

28  Unless the declaration expressly addresses the distribution of

29  insurance proceeds or condemnation proceeds, the plan of

30  termination may apportion those proceeds pursuant to any

31  method prescribed in subsection (12).


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 1         (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS;

 2  CONDITIONAL TERMINATION.--

 3         (a)  The plan of termination may provide that each unit

 4  owner retains the exclusive right of possession to the portion

 5  of the real estate that formerly constituted the unit, in

 6  which case the plan must specify the conditions of possession.

 7         (b)  In a conditional termination, the plan must

 8  specify the conditions for termination. A conditional plan

 9  does not vest title in the termination trustee until the plan

10  and a certificate executed by the association with the

11  formalities of a deed, confirming that the conditions in the

12  conditional plan have been satisfied or waived by the

13  requisite percentage of the voting interests, have been

14  recorded.

15         (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM

16  PROPERTY.--

17         (a)  Unless the declaration expressly provides for the

18  allocation of the proceeds of sale of condominium property,

19  the plan of termination must first apportion the proceeds

20  between the aggregate value of all units and the value of the

21  common elements, based on their respective fair-market values

22  immediately before the termination, as determined by one or

23  more independent appraisers selected by the association or

24  termination trustee.

25         (b)  The portion of proceeds allocated to the units

26  shall be further apportioned among the individual units. The

27  apportionment is deemed fair and reasonable if it is so

28  determined by the unit owners, who may approve the plan of

29  termination by any of the following methods:

30         1.  The respective values of the units based on the

31  fair-market values of the units immediately before the


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 1  termination, as determined by one or more independent

 2  appraisers selected by the association or termination trustee;

 3         2.  The respective values of the units based on the

 4  most recent market value of the units before the termination,

 5  as provided in the county property appraiser's records; or

 6         3.  The respective interests of the units in the common

 7  elements specified in the declaration immediately before the

 8  termination.

 9         (c)  The methods of apportionment in paragraph (b) do

10  not prohibit any other method of apportioning the proceeds of

11  sale allocated to the units agreed upon in the plan of

12  termination. The portion of the proceeds allocated to the

13  common elements shall be apportioned among the units based

14  upon their respective interests in the common elements as

15  provided in the declaration.

16         (d)  Liens that encumber a unit shall be transferred to

17  the proceeds of sale of the condominium property and the

18  proceeds of sale or other distribution of association

19  property, common surplus, or other association assets

20  attributable to such unit in their same priority. The proceeds

21  of any sale of condominium property pursuant to a plan of

22  termination may not be deemed to be common surplus or

23  association property.

24         (13)  TERMINATION TRUSTEE.--The association shall serve

25  as termination trustee unless another person is appointed in

26  the plan of termination. If the association is unable,

27  unwilling, or fails to act as trustee, any unit owner may

28  petition the court to appoint a trustee. Upon the date of the

29  recording or at a later date specified in the plan, title to

30  the condominium property vests in the trustee. Unless

31  prohibited by the plan, the termination trustee shall be


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 1  vested with the powers given to the board pursuant to the

 2  declaration, bylaws, and subsection (6). If the association is

 3  not the termination trustee, the trustee's powers shall be

 4  coextensive with those of the association to the extent not

 5  prohibited in the plan of termination or the order of

 6  appointment. If the association is not the termination

 7  trustee, the association shall transfer any association

 8  property to the trustee. If the association is dissolved, the

 9  trustee shall also have such other powers necessary to

10  conclude the affairs of the association.

11         (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If

12  termination is pursuant to a plan of termination under

13  subsection (2) or subsection (3), the unit owners' rights and

14  title as tenants in common in undivided interests in the

15  condominium property vest in the termination trustee when the

16  plan is recorded or at a later date specified in the plan. The

17  unit owners thereafter become the beneficiaries of the

18  proceeds realized from the plan of termination. The

19  termination trustee may deal with the condominium property or

20  any interest therein if the plan confers on the trustee the

21  authority to protect, conserve, manage, sell, or dispose of

22  the condominium property. The trustee, on behalf of the unit

23  owners, may contract for the sale of real property, but the

24  contract is not binding on the unit owners until the plan is

25  approved pursuant to subsection (2) or subsection (3).

26         (15)  NOTICE.--

27         (a)  Within 30 days after a plan of termination has

28  been recorded, the termination trustee shall deliver by

29  certified mail, return receipt requested, notice to all unit

30  owners, lienors of the condominium property, and lienors of

31  all units at their last known addresses that a plan of


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 1  termination has been recorded. The notice must include the

 2  book and page number of the public records in which the plan

 3  was recorded, notice that a copy of the plan shall be

 4  furnished upon written request, and notice that the unit owner

 5  or lienor has the right to contest the fairness of the plan.

 6         (b)  The trustee, within 90 days after the effective

 7  date of the plan, shall provide to the division a certified

 8  copy of the recorded plan, the date the plan was recorded, and

 9  the county, book, and page number of the public records in

10  which the plan is recorded.

11         (16)  RIGHT TO CONTEST.--A unit owner or lienor may

12  contest a plan of termination by initiating a summary

13  procedure pursuant to s. 51.011 within 90 days after the date

14  the plan is recorded. A unit owner or lienor who does not

15  contest the plan within the 90-day period is barred from

16  asserting or prosecuting a claim against the association, the

17  termination trustee, any unit owner, or any successor in

18  interest to the condominium property. In an action contesting

19  a plan of termination, the person contesting the plan has the

20  burden of pleading and proving that the apportionment of the

21  proceeds from the sale among the unit owners was not fair and

22  reasonable. The apportionment of sale proceeds is presumed

23  fair and reasonable if it was determined pursuant to the

24  methods prescribed in subsection (12). The court shall

25  determine the rights and interests of the parties and order

26  the plan of termination to be implemented if it is fair and

27  reasonable. If the court determines that the plan of

28  termination is not fair and reasonable, the court may void the

29  plan or may modify the plan to apportion the proceeds in a

30  fair and reasonable manner pursuant to this section based upon

31  the proceedings and order the modified plan of termination to


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 1  be implemented. In such action, the prevailing party shall

 2  recover reasonable attorney's fees and costs.

 3         (17)  DISTRIBUTION.--

 4         (a)  Following termination of the condominium, the

 5  condominium property, association property, common surplus,

 6  and other assets of the association shall be held by the

 7  termination trustee, as trustee for unit owners and holders of

 8  liens on the units, in their order of priority.

 9         (b)  Not less than 30 days before the first

10  distribution, the termination trustee shall deliver by

11  certified mail, return receipt requested, a notice of the

12  estimated distribution to all unit owners, lienors of the

13  condominium property, and lienors of each unit at their last

14  known addresses stating a good-faith estimate of the amount of

15  the distributions to each class and the procedures and

16  deadline for notifying the termination trustee of any

17  objections to the amount. The deadline must be at least 15

18  days after the date the notice was mailed. The notice may be

19  sent with or after the notice required by subsection (15). If

20  a unit owner or lienor files a timely objection with the

21  termination trustee, the trustee need not distribute the funds

22  and property allocated to the respective unit owner or lienor

23  until the trustee has had a reasonable time to determine the

24  validity of the adverse claim. In the alternative, the trustee

25  may interplead the unit owner, lienor, and any other person

26  claiming an interest in the unit and deposit the funds

27  allocated to the unit in the court registry, at which time the

28  condominium property, association property, common surplus,

29  and other assets of the association are free of all claims and

30  liens of the parties to the suit. In an interpleader action,

31  


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 1  the trustee and prevailing party may recover reasonable

 2  attorney's fees and costs.

 3         (c)  The proceeds from any sale of condominium property

 4  or association property and any remaining condominium property

 5  or association property, common surplus, and other assets

 6  shall be distributed in the following priority:

 7         1.  To pay the reasonable termination trustee's fees

 8  and costs and accounting fees and costs.

 9         2.  To lienholders of liens recorded prior to the

10  recording of the declaration.

11         3.  To purchase-money lienholders on units to the

12  extent necessary to satisfy their liens.

13         4.  To lienholders of liens of the association which

14  have been consented to under s. 718.121(1).

15         5.  To creditors of the association, as their interests

16  appear.

17         6.  To unit owners, the proceeds of any sale of

18  condominium property subject to satisfaction of liens on each

19  unit in their order of priority, in shares specified in the

20  plan of termination, unless objected to by a unit owner or

21  lienor as provided in paragraph (b).

22         7.  To unit owners, the remaining condominium property,

23  subject to satisfaction of liens on each unit in their order

24  of priority, in shares specified in the plan of termination,

25  unless objected to by a unit owner or a lienor as provided in

26  paragraph (b).

27         8.  To unit owners, the proceeds of any sale of

28  association property, the remaining association property,

29  common surplus, and other assets of the association, subject

30  to satisfaction of liens on each unit in their order of

31  priority, in shares specified in the plan of termination,


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 1  unless objected to by a unit owner or a lienor as provided in

 2  paragraph (b).

 3         (d)  After determining that all known debts and

 4  liabilities of an association in the process of termination

 5  have been paid or adequately provided for, the termination

 6  trustee shall distribute the remaining assets pursuant to the

 7  plan of termination. If the termination is by court proceeding

 8  or subject to court supervision, the distribution may not be

 9  made until any period for the presentation of claims ordered

10  by the court has elapsed.

11         (e)  Assets held by an association upon a valid

12  condition requiring return, transfer, or conveyance, which

13  condition has occurred or will occur, shall be returned,

14  transferred, or conveyed in accordance with the condition. The

15  remaining association assets shall be distributed pursuant to

16  paragraph (c).

17         (f)  Distribution may be made in money, property, or

18  securities and in installments or as a lump sum, if it can be

19  done fairly and ratably and in conformity with the plan of

20  termination. Distribution shall be made as soon as is

21  reasonably consistent with the beneficial liquidation of the

22  assets.

23         (18)  ASSOCIATION STATUS.--The termination of a

24  condominium does not change the corporate status of the

25  association that operated the condominium property. The

26  association continues to exist to conclude its affairs,

27  prosecute and defend actions by or against it, collect and

28  discharge obligations, dispose of and convey its property, and

29  collect and divide its assets, but not to act except as

30  necessary to conclude its affairs.

31  


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 1         (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination

 2  of a condominium does not bar the creation by the termination

 3  trustee of another condominium affecting any portion of the

 4  same property.

 5         (20)  EXCLUSION.--This section does not apply to the

 6  termination of a condominium incident to a merger of that

 7  condominium with one or more other condominiums under s.

 8  718.110(7).

 9         Section 2.  This act shall take effect July 1, 2007.

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