CS for SB 1520                                   First Engrossed
    1                        A bill to be entitled                      
    2         An act relating to termination of a condominium
    3         association; amending s. 718.117, F.S.; revising
    4         legislative findings; requiring a plan of termination
    5         to be approved by the Division of Florida
    6         Condominiums, Timeshares, and Mobile Homes of the
    7         Department of Business and Professional Regulation and
    8         meet specified requirements for a condominium form of
    9         ownership to be terminated for all or a portion of the
   10         condominium property under certain circumstances;
   11         revising voting requirements for the rejection of a
   12         plan of termination; revising the amount of time
   13         before a new plan of termination may be considered
   14         after a previous rejection under certain conditions;
   15         revising the requirements to qualify for payment as a
   16         homestead owner; revising and providing notice
   17         requirements; requiring the division to examine a plan
   18         of termination and provide specified notice within a
   19         certain timeframe; providing applicability; specifying
   20         that a plan of termination is presumed to be accepted
   21         if notice is not provided within the specified
   22         timeframe; providing an appropriation and authorizing
   23         a position; providing an effective date.
   25  Be It Enacted by the Legislature of the State of Florida:
   27         Section 1. Subsections (1) and (3) of section 718.117,
   28  Florida Statutes, are amended, and subsection (21) is added to
   29  that section, to read:
   30         718.117 Termination of condominium.—
   31         (1) LEGISLATIVE FINDINGS.—The Legislature finds that:
   32         (a) Condominiums are created as authorized by statute and
   33  are subject to covenants that encumber the land and restrict the
   34  use of real property.
   35         (b) In some circumstances, the continued enforcement of
   36  those covenants that may create economic waste and, areas of
   37  disrepair which threaten the safety and welfare of the public,
   38  or cause obsolescence of the a condominium property for its
   39  intended use and thereby lower property tax values, and the
   40  Legislature further finds that it is the public policy of this
   41  state to provide by statute a method to preserve the value of
   42  the property interests and the rights of alienation thereof that
   43  owners have in the condominium property before and after
   44  termination.
   45         (c)The Legislature further finds that It is contrary to
   46  the public policy of this state to require the continued
   47  operation of a condominium when to do so constitutes economic
   48  waste or when the ability to do so is made impossible by law or
   49  regulation.
   50         (d)It is in the best interest of the state to provide for
   51  termination of the covenants of a declaration of condominium in
   52  certain circumstances in order to:
   53         1.Ensure the continued maintenance, management, and repair
   54  of stormwater management systems, conservation areas, and
   55  conservation easements.
   56         2.Avoid transferring the expense of maintaining
   57  infrastructure serving the condominium property, including, but
   58  not limited to, stormwater systems and conservation areas, to
   59  the general tax bases of the state and local governments.
   60         3.Prevent covenants from impairing the continued
   61  productive use of the property.
   62         4.Protect state residents from health and safety hazards
   63  created by derelict, damaged, obsolete, or abandoned condominium
   64  properties.
   65         5.Provide fair treatment and just compensation for
   66  individuals and preserve property values and the local property
   67  tax base.
   68         6.Preserve the state’s long history of protecting
   69  homestead property and homestead property rights by ensuring
   70  that such protection is extended to homestead property owners in
   71  the context of a termination of the covenants of a declaration
   72  of condominium This section applies to all condominiums in this
   73  state in existence on or after July 1, 2007.
   74         (3) OPTIONAL TERMINATION.—Except as provided in subsection
   75  (2) or unless the declaration provides for a lower percentage,
   76  The condominium form of ownership may be terminated for all or a
   77  portion of the condominium property pursuant to a plan of
   78  termination meeting the requirements of this section and
   79  approved by the division. Before a residential association
   80  submits a plan to the division, the plan must be approved by at
   81  least 80 percent of the total voting interests of the
   82  condominium. However, if 5 10 percent or more of the total
   83  voting interests of the condominium have rejected the plan of
   84  termination by negative vote or by providing written objections,
   85  the plan of termination may not proceed.
   86         (a) The termination of the condominium form of ownership is
   87  subject to the following conditions:
   88         1. The total voting interests of the condominium must
   89  include all voting interests for the purpose of considering a
   90  plan of termination. A voting interest of the condominium may
   91  not be suspended for any reason when voting on termination
   92  pursuant to this subsection.
   93         2. If 5 10 percent or more of the total voting interests of
   94  the condominium reject a plan of termination, a subsequent plan
   95  of termination pursuant to this subsection may not be considered
   96  for 24 18 months after the date of the rejection.
   97         (b) This subsection does not apply to any condominium
   98  created pursuant to part VI of this chapter until 5 years after
   99  the recording of the declaration of condominium, unless there is
  100  no objection to the plan of termination.
  101         (c) For purposes of this subsection, the term “bulk owner”
  102  means the single holder of such voting interests or an owner
  103  together with a related entity or entities that would be
  104  considered an insider, as defined in s. 726.102, holding such
  105  voting interests. If the condominium association is a
  106  residential association proposed for termination pursuant to
  107  this section and, at the time of recording the plan of
  108  termination, at least 80 percent of the total voting interests
  109  are owned by a bulk owner, the plan of termination is subject to
  110  the following conditions and limitations:
  111         1. If the former condominium units are offered for lease to
  112  the public after the termination, each unit owner in occupancy
  113  immediately before the date of recording of the plan of
  114  termination may lease his or her former unit and remain in
  115  possession of the unit for 12 months after the effective date of
  116  the termination on the same terms as similar unit types within
  117  the property are being offered to the public. In order to obtain
  118  a lease and exercise the right to retain exclusive possession of
  119  the unit owner’s former unit, the unit owner must make a written
  120  request to the termination trustee to rent the former unit
  121  within 90 days after the date the plan of termination is
  122  recorded. Any unit owner who fails to timely make such written
  123  request and sign a lease within 15 days after being presented
  124  with a lease is deemed to have waived his or her right to retain
  125  possession of his or her former unit and shall be required to
  126  vacate the former unit upon the effective date of the
  127  termination, unless otherwise provided in the plan of
  128  termination.
  129         2. Any former unit owner whose unit was granted homestead
  130  exemption status by the applicable county property appraiser as
  131  of the date of the recording of the plan of termination shall be
  132  paid a relocation payment in an amount equal to 1 percent of the
  133  termination proceeds allocated to the owner’s former unit. Any
  134  relocation payment payable under this subparagraph shall be paid
  135  by the single entity or related entities owning at least 80
  136  percent of the total voting interests. Such relocation payment
  137  shall be in addition to the termination proceeds for such
  138  owner’s former unit and shall be paid no later than 10 days
  139  after the former unit owner vacates his or her former unit.
  140         3. For their respective units, all unit owners other than
  141  the bulk owner must be compensated at least 100 percent of the
  142  fair market value of their units. The fair market value shall be
  143  determined as of a date that is no earlier than 90 days before
  144  the date that the plan of termination is recorded and shall be
  145  determined by an independent appraiser selected by the
  146  termination trustee. For a person an original purchaser from the
  147  developer who rejects the plan of termination and whose unit was
  148  granted homestead exemption status by the applicable county
  149  property appraiser, or was an owner-occupied operating business,
  150  as of the date that the plan of termination is recorded and who
  151  is current in payment of both assessments and other monetary
  152  obligations to the association and any mortgage encumbering the
  153  unit as of the date the plan of termination is recorded, the
  154  fair market value for the unit owner rejecting the plan shall be
  155  at least the original purchase price paid for the unit. For
  156  purposes of this subparagraph, the term “fair market value”
  157  means the price of a unit that a seller is willing to accept and
  158  a buyer is willing to pay on the open market in an arms-length
  159  transaction based on similar units sold in other condominiums,
  160  including units sold in bulk purchases but excluding units sold
  161  at wholesale or distressed prices. The purchase price of units
  162  acquired in bulk following a bankruptcy or foreclosure shall not
  163  be considered for purposes of determining fair market value.
  164         4. The plan of termination must provide for payment of a
  165  first mortgage encumbering a unit to the extent necessary to
  166  satisfy the lien, but the payment may not exceed the unit’s
  167  share of the proceeds of termination under the plan. If the unit
  168  owner is current in payment of both assessments and other
  169  monetary obligations to the association and any mortgage
  170  encumbering the unit as of the date the plan of termination is
  171  recorded, the receipt by the holder of the unit’s share of the
  172  proceeds of termination under the plan or the outstanding
  173  balance of the mortgage, whichever is less, shall be deemed to
  174  have satisfied the first mortgage in full.
  175         5. Before a plan of termination is presented to the unit
  176  owners for consideration pursuant to this paragraph, the plan
  177  must include the following written disclosures in a sworn
  178  statement:
  179         a. The identity of any person or entity that owns or
  180  controls 25 50 percent or more of the units in the condominium
  181  and, if the units are owned by an artificial entity or entities,
  182  a disclosure of the natural person or persons who, directly or
  183  indirectly, manage or control the entity or entities and the
  184  natural person or persons who, directly or indirectly, own or
  185  control 10 20 percent or more of the artificial entity or
  186  entities that constitute the bulk owner.
  187         b. The units acquired by any bulk owner, the date each unit
  188  was acquired, and the total amount of compensation paid to each
  189  prior unit owner by the bulk owner, regardless of whether
  190  attributed to the purchase price of the unit.
  191         c. The relationship of any board member to the bulk owner
  192  or any person or entity affiliated with the bulk owner subject
  193  to disclosure pursuant to this subparagraph.
  194         d.The factual circumstances that show that the plan
  195  complies with the requirements of this section and that the plan
  196  supports the expressed public policies of this section.
  197         (d) If the members of the board of administration are
  198  elected by the bulk owner, unit owners other than the bulk owner
  199  may elect at least one-third of the members of the board of
  200  administration before the approval of any plan of termination.
  201         (e)The division shall examine the plan of termination to
  202  determine its procedural sufficiency and, within 45 days after
  203  receipt of the initial filing, the division shall notify the
  204  association by mail of any procedural deficiencies or that the
  205  filing is accepted. If the notice is not given within 45 days
  206  after the receipt of the filing, the plan of termination is
  207  presumed to be accepted. If the division determines that the
  208  conditions required by this section have been met and that the
  209  plan complies with the procedural requirements of this section,
  210  the division shall authorize the termination, and the
  211  termination may proceed pursuant to this section.
  212         (f)Subsection (2) does not apply to optional termination
  213  pursuant to this subsection.
  214         (21)APPLICABILITY.—This section applies to all
  215  condominiums in this state in existence on or after July 1,
  216  2007.
  217         Section 2. The amendments made by this act to s. 718.117,
  218  Florida Statutes, are intended to clarify existing law, are
  219  remedial in nature and intended to address the rights and
  220  liabilities of the affected parties, and apply to all
  221  condominiums created under the Condominium Act.
  222         Section 3. For the 2017-2018 fiscal year, the sums of
  223  $85,006 in recurring funds and $4,046 in nonrecurring funds from
  224  the Division of Florida Condominiums, Timeshares, and Mobile
  225  Homes Trust Fund are appropriated to the Department of Business
  226  and Professional Regulation, and one full-time equivalent
  227  position with associated salary rate of 56,791 is authorized,
  228  for the purpose of implementing this act.
  229         Section 4. This act shall take effect July 1, 2017.