Potential problems in condominium terminations.

• Author: Schwartz, Martin A.
• Position: Real Property, Probate and Trust Law

In 2007, when the real estate market was still frothy, a legislative request was made to the Condominium and Planned Development Committee of the Real Property, Probate and Trust Law Section of The Florida Bar to try to make F.S. [section] 718.117 on condominium termination more workable. The committee was specifically asked to address casualty damage and economic obsolescence. The termination problem was created in large part by declarations of condominium requiring 100 percent unit-owner approval for termination, a threshold that was a practical impossibility for most condominium communities.

In response to this request, the committee provided technical assistance in drafting a proposed revision to the condominium act's termination provisions with the goal of protecting owners and lenders and providing a dispute resolution mechanism. The proposed revisions expanded F.S. [section] 718.117 from 1,159 words to 4,360, covering a variety of issues that might necessitate a termination; it set forth a detailed and balanced process for termination.

Although the proposal was prospective, applying only to condominiums created after the date of anticipated enactment, one impetus for the legislative request was to allow for termination of an aging stock of condominiums approaching the end of their useful lives. Termination would afford owners in these condominiums the ability to realize the value of the buildings' underlying land. The Florida Senate sponsor of the bill incorporating much of the condominium committee's proposed text, Steven Geller, whose constituency includes older beachfront condominiums in Hallandale Beach, expanded the scope of the bill to include existing condominiums, affording owners the benefits of the statute. This expanded bill became law. (1)

Termination Procedure

The revised statute has provided substantial assistance in effecting terminations of a number of condominium conversions that, in retrospect, probably should never have become condominiums and would not have in the absence of the conversion frenzy in the early 2000s. As an unintended consequence, many failed conversion projects provided fodder for evaluating the practicality of terminations by revealing problems that can create substantial headaches for an attorney handling a termination.

The steps to termination are clearly described in the statute.

1. The Association adopts a plan of termination ("Plan"). The Plan can require an automatic termination upon its...