Florida Senate - 2009                        COMMITTEE AMENDMENT
       Bill No. CS for SB 880
       
       
       
       
       
       
                                Barcode 588372                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: FAV            .                                
                  04/14/2009           .                                
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       The Committee on Community Affairs (Deutch) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Between lines 909 and 910
    4  insert:
    5         Section 7. Subsection (16) of section 718.103, Florida
    6  Statutes, is amended to read:
    7         718.103 Definitions.—As used in this chapter, the term:
    8         (16) “Developer” means a person who creates a condominium
    9  or offers condominium parcels for sale or lease in the ordinary
   10  course of business, but does not include:
   11         (a) An owner or lessee of a condominium or cooperative unit
   12  who has acquired the unit for his or her own occupancy;, nor
   13  does it include
   14         (b) A cooperative association which creates a condominium
   15  by conversion of an existing residential cooperative after
   16  control of the association has been transferred to the unit
   17  owners if, following the conversion, the unit owners will be the
   18  same persons who were unit owners of the cooperative and no
   19  units are offered for sale or lease to the public as part of the
   20  plan of conversion;.
   21         (c)A bulk assignee or bulk buyer as defined in s. 718.703;
   22  or
   23         (d) A state, county, or municipal entity is not a developer
   24  for any purposes under this act when it is acting as a lessor
   25  and not otherwise named as a developer in the declaration of
   26  condominium association.
   27         Section 8. Subsection (1) of section 718.301, Florida
   28  Statutes, is amended to read:
   29         718.301 Transfer of association control; claims of defect
   30  by association.—
   31         (1) When unit owners other than the developer own 15
   32  percent or more of the units in a condominium that will be
   33  operated ultimately by an association, the unit owners other
   34  than the developer shall be entitled to elect no less than one
   35  third of the members of the board of administration of the
   36  association. Unit owners other than the developer are entitled
   37  to elect not less than a majority of the members of the board of
   38  administration of an association:
   39         (a) Three years after 50 percent of the units that will be
   40  operated ultimately by the association have been conveyed to
   41  purchasers;
   42         (b) Three months after 90 percent of the units that will be
   43  operated ultimately by the association have been conveyed to
   44  purchasers;
   45         (c) When all the units that will be operated ultimately by
   46  the association have been completed, some of them have been
   47  conveyed to purchasers, and none of the others are being offered
   48  for sale by the developer in the ordinary course of business;
   49         (d) When some of the units have been conveyed to purchasers
   50  and none of the others are being constructed or offered for sale
   51  by the developer in the ordinary course of business;
   52         (e) When the developer files a petition seeking protection
   53  in bankruptcy;
   54         (f) When a receiver for the developer is appointed by a
   55  circuit court and is not discharged within 30 days after such
   56  appointment, unless the court determines within 30 days after
   57  appointment of the receiver that transfer of control would be
   58  detrimental to the association or its members; or
   59         (g) Seven years after recordation of the declaration of
   60  condominium; or, in the case of an association which may
   61  ultimately operate more than one condominium, 7 years after
   62  recordation of the declaration for the first condominium it
   63  operates; or, in the case of an association operating a phase
   64  condominium created pursuant to s. 718.403, 7 years after
   65  recordation of the declaration creating the initial phase,
   66  whichever occurs first. The developer is entitled to elect at
   67  least one member of the board of administration of an
   68  association as long as the developer holds for sale in the
   69  ordinary course of business at least 5 percent, in condominiums
   70  with fewer than 500 units, and 2 percent, in condominiums with
   71  more than 500 units, of the units in a condominium operated by
   72  the association. Following the time the developer relinquishes
   73  control of the association, the developer may exercise the right
   74  to vote any developer-owned units in the same manner as any
   75  other unit owner except for purposes of reacquiring control of
   76  the association or selecting the majority members of the board
   77  of administration.
   78         Section 9. Part VII of chapter 718, Florida Statutes,
   79  consisting of sections 718.701, 718.702, 718.703, 718.704,
   80  718.705, 718.706, 718.707, and 718.708, is created to read:
   81         718.701Short title.—This part may be cited as the
   82  “Distressed Condominium Relief Act.”
   83         718.702Legislative intent.—
   84         (1)The Legislature acknowledges the massive downturn in
   85  the condominium market which has transpired throughout the state
   86  and the impact of such downturn on developers, lenders, unit
   87  owners, and condominium associations. Numerous condominium
   88  projects have either failed or are in the process of failing,
   89  whereby the condominium has a small percentage of third-party
   90  unit owners as compared to the unsold inventory of units. As a
   91  result of the inability to find purchasers for this inventory of
   92  units, which results in part from the devaluing of real estate
   93  in this state, developers are unable to satisfy the requirements
   94  of their lenders, leading to defaults on mortgages.
   95  Consequently, lenders are faced with the task of finding a
   96  solution to the problem in order to be paid for their
   97  investments.
   98         (2)The Legislature recognizes that all of the factors
   99  listed in this section lead to condominiums becoming distressed,
  100  resulting in detriment to the unit owners and the condominium
  101  association on account of the resulting shortage of assessment
  102  moneys available to support the financial requirements for
  103  proper maintenance of the condominium. Such shortage and the
  104  resulting lack of proper maintenance further erodes property
  105  values. The Legislature finds that individuals and entities
  106  within Florida and in other states have expressed interest in
  107  purchasing unsold inventory in one or more condominium projects,
  108  but are reticent to do so because of accompanying liabilities
  109  inherited from the original developer, which are by definition
  110  imputed to the successor purchaser, including a foreclosing
  111  mortgagee. This results in the potential purchaser having
  112  unknown and unquantifiable risks, and potential successor
  113  purchasers are unwilling to accept such risks. The result is
  114  that condominium projects stagnate, leaving all parties involved
  115  at an impasse without the ability to find a solution.
  116         (3)The Legislature finds and declares that it is the
  117  public policy of this state to protect the interests of
  118  developers, lenders, unit owners, and condominium associations
  119  with regard to distressed condominiums, and that there is a need
  120  for relief from certain provisions of the Florida Condominium
  121  Act geared toward enabling economic opportunities within these
  122  condominiums for successor purchasers, including foreclosing
  123  mortgagees. Such relief would benefit existing unit owners and
  124  condominium associations. The Legislature further finds and
  125  declares that this situation cannot be open-ended without
  126  potentially prejudicing the rights of unit owners and
  127  condominium associations, and thereby declares that the
  128  provisions of this part shall be used by purchasers of
  129  condominium inventory for a specific and defined period.
  130         718.703Definitions.—As used in this part, the term:
  131         (1)“Bulk assignee” means a person who:
  132         (a)Acquires more than seven condominium parcels as set
  133  forth in s. 718.707; and
  134         (b)Receives an assignment of some or all of the rights of
  135  the developer as are set forth in the declaration of condominium
  136  or in this chapter by a written instrument recorded as an
  137  exhibit to the deed or as a separate instrument in the public
  138  records of the county in which the condominium is located.
  139         (2)“Bulk buyer” means a person who acquires more than
  140  seven condominium parcels as set forth in s. 718.707 but who
  141  does not receive an assignment of any developer rights other
  142  than the right to conduct sales, leasing, and marketing
  143  activities within the condominium.
  144         718.704Assignment and assumption of developer rights by
  145  bulk assignee; bulk buyer.—
  146         (1)A bulk assignee shall be deemed to have assumed and is
  147  liable for all duties and responsibilities of the developer
  148  under the declaration and this chapter, except:
  149         (a)Warranties of the developer under s. 718.203(1) or s.
  150  718.618, except for design, construction, development, or repair
  151  work performed by or on behalf of such bulk assignee;
  152         (b)The obligation to:
  153         1.Fund converter reserves under s. 718.618 for a unit
  154  which was not acquired by the bulk assignee; or
  155         2.Provide converter warranties on any portion of the
  156  condominium property except as may be expressly provided by the
  157  bulk assignee in the contract for purchase and sale executed
  158  with a purchaser and pertaining to any design, construction,
  159  development, or repair work performed by or on behalf of the
  160  bulk assignee;
  161         (c)The requirement to provide the association with a
  162  cumulative audit of the association’s finances from the date of
  163  formation of the condominium association as required by s.
  164  718.301. However, the bulk assignee shall provide an audit for
  165  the period for which the bulk assignee elects a majority of the
  166  members of the board of administration;
  167         (d)Any liability arising out of or in connection with
  168  actions taken by the board of administration or the developer
  169  appointed directors before the bulk assignee elects a majority
  170  of the members of the board of administration; and
  171         (e)Any liability for or arising out of the developer’s
  172  failure to fund previous assessments or to resolve budgetary
  173  deficits in relation to a developer’s right to guarantee
  174  assessments, except as otherwise provided in subsection (2).
  175  
  176  Further, the bulk assignee is responsible for delivering
  177  documents and materials in accordance with s. 718.705(3). A bulk
  178  assignee may expressly assume some or all of the obligations of
  179  the developer described in paragraphs (a)-(e).
  180         (2)A bulk assignee receiving the assignment of the rights
  181  of the developer to guarantee the level of assessments and fund
  182  budgetary deficits pursuant to s. 718.116 shall be deemed to
  183  have assumed and is liable for all obligations of the developer
  184  with respect to such guarantee, including any applicable funding
  185  of reserves to the extent required by law, for as long as the
  186  guarantee remains in effect. A bulk assignee not receiving an
  187  assignment of the right of the developer to guarantee the level
  188  of assessments and fund budgetary deficits pursuant to s.
  189  718.116 or a bulk buyer is not deemed to have assumed and is not
  190  liable for the obligations of the developer with respect to such
  191  guarantee, but is responsible for payment of assessments in the
  192  same manner as all other owners of condominium parcels.
  193         (3)A bulk buyer is liable for the duties and
  194  responsibilities of the developer under the declaration and this
  195  chapter only to the extent provided in this part, together with
  196  any other duties or responsibilities of the developer expressly
  197  assumed in writing by the bulk buyer.
  198         (4)An acquirer of condominium parcels is not considered a
  199  bulk assignee or a bulk buyer if the transfer to such acquirer
  200  was made with the intent to hinder, delay, or defraud any
  201  purchaser, unit owner, or the association, or if the acquirer is
  202  a person who would constitute an insider under s. 726.102(7).
  203         (5)An assignment of developer rights to a bulk assignee
  204  may be made by the developer, a previous bulk assignee, or a
  205  court of competent jurisdiction acting on behalf of the
  206  developer or the previous bulk assignee. At any particular time,
  207  there may be no more than one bulk assignee within a
  208  condominium, but there may be more than one bulk buyer. If more
  209  than one acquirer of condominium parcels receives an assignment
  210  of developer rights from the same person, the bulk assignee is
  211  the acquirer whose instrument of assignment is recorded first in
  212  applicable public records.
  213         718.105Board of administration; transfer of control.—
  214         (1)For purposes of determining the timing for transfer of
  215  control of the board of administration of the association to
  216  unit owners other than the developer under ss. 718.301(1)(a) and
  217  (b), if a bulk assignee is entitled to elect a majority of the
  218  members of the board, a condominium parcel acquired by the bulk
  219  assignee shall not be deemed to be conveyed to a purchaser, or
  220  to be owned by an owner other than the developer, until such
  221  condominium parcel is conveyed to an owner who is not a bulk
  222  assignee.
  223         (2)Unless control of the board of administration of the
  224  association has already been relinquished pursuant to s.
  225  718.301(1), the bulk assignee is obligated to relinquish control
  226  of the association in accordance with s. 718.301 and this part.
  227         (3)When a bulk assignee relinquishes control of the board
  228  of administration as set forth in s. 718.301, the bulk assignee
  229  shall deliver all of those items required by s. 718.301(4).
  230  However, the bulk assignee is not required to deliver items and
  231  documents not in the possession of the bulk assignee during the
  232  period during which the bulk assignee was the owner of
  233  condominium parcels. In conjunction with acquisition of
  234  condominium parcels, a bulk assignee shall undertake a good
  235  faith effort to obtain the documents and materials required to
  236  be provided to the association pursuant to s. 718.301(4). To the
  237  extent the bulk assignee is not able to obtain all of such
  238  documents and materials, the bulk assignee shall certify in
  239  writing to the association the names or descriptions of the
  240  documents and materials that were not obtainable by the bulk
  241  assignee. Delivery of the certificate relieves the bulk assignee
  242  of responsibility for the delivery of the documents and
  243  materials referenced in the certificate as otherwise required
  244  under ss. 718.112 and 718.301 and this part. The responsibility
  245  of the bulk assignee for the audit required by s. 718.301(4)
  246  shall commence as of the date on which the bulk assignee elected
  247  a majority of the members of the board of administration.
  248         (4)If a conflict arises between the provisions or
  249  application of this section and s. 718.301, this section shall
  250  prevail.
  251         (5)Failure of a bulk assignee or bulk buyer to comply with
  252  all the requirements contained in this part shall result in the
  253  loss of any and all protections or exemptions provided under
  254  this part.
  255         718.706Specific provisions pertaining to offering of units
  256  by a bulk assignee or bulk buyer.—
  257         (1)Before offering any units for sale or for lease for a
  258  term exceeding 5 years, a bulk assignee or a bulk buyer shall
  259  file the following documents with the division and provide such
  260  documents to a prospective purchaser:
  261         (a)An updated prospectus or offering circular, or a
  262  supplement to the prospectus or offering circular, filed by the
  263  creating developer prepared in accordance with s. 718.504, which
  264  shall include the form of contract for purchase and sale in
  265  compliance with s. 718.503(2);
  266         (b)An updated Frequently Asked Questions and Answers
  267  sheet;
  268         (c)The executed escrow agreement if required under s.
  269  718.202; and
  270         (d)The financial information required by s. 718.111(13).
  271  However, if a financial information report does not exist for
  272  the fiscal year before acquisition of title by the bulk assignee
  273  or bulk buyer, or accounting records cannot be obtained in good
  274  faith by the bulk assignee or the bulk buyer which would permit
  275  preparation of the required financial information report, the
  276  bulk assignee or bulk buyer is excused from the requirement of
  277  this paragraph. However, the bulk assignee or bulk buyer must
  278  include in the purchase contract the following statement in
  279  conspicuous type:
  280         THE FINANCIAL INFORMATION REPORT REQUIRED UNDER S.
  281  718.111(13) FOR THE IMMEDIATELY PRECEDING FISCAL YEAR OF THE
  282  ASSOCIATION IS NOT AVAILABLE OR CANNOT BE CREATED BY THE SELLER
  283  AS A RESULT OF INSUFFICIENT ACCOUNTING RECORDS OF THE
  284  ASSOCIATION.
  285         (2)Before offering any units for sale or for lease for a
  286  term exceeding 5 years, a bulk assignee shall file with the
  287  division and provide to a prospective purchaser a disclosure
  288  statement that must include, but is not limited to:
  289         (a)A description to the purchaser of any rights of the
  290  developer which have been assigned to the bulk assignee;
  291         (b)The following statement in conspicuous type:
  292         SELLER IS NOT OBLIGATED FOR ANY WARRANTIES OF THE DEVELOPER
  293  UNDER S. 718.203(1) OR S. 718.618, AS APPLICABLE, EXCEPT FOR
  294  DESIGN, CONSTRUCTION, DEVELOPMENT, OR REPAIR WORK PERFORMED BY
  295  OR ON BEHALF OF SELLER; and
  296         (c)If the condominium is a conversion subject to part VI,
  297  the following statement in conspicuous type:
  298         SELLER HAS NO OBLIGATION TO FUND CONVERTER RESERVES OR TO
  299  PROVIDE CONVERTER WARRANTIES UNDER S. 718.618 ON ANY PORTION OF
  300  THE CONDOMINIUM PROPERTY EXCEPT AS MAY BE EXPRESSLY REQUIRED OF
  301  THE SELLER IN THE CONTRACT FOR PURCHASE AND SALE EXECUTED BY THE
  302  SELLER AND THE PREVIOUS DEVELOPER AND PERTAINING TO ANY DESIGN,
  303  CONSTRUCTION, DEVELOPMENT, OR REPAIR WORK PERFORMED BY OR ON
  304  BEHALF OF THE SELLER.
  305         (3)In addition to the requirements set forth in subsection
  306  (1), a bulk assignee or bulk buyer must comply with the
  307  nondeveloper disclosure requirements set forth in s. 718.503(2)
  308  before offering any units for sale or for lease for a term
  309  exceeding 5 years.
  310         (4)A bulk assignee, while it is in control of the board of
  311  administration of the association, may not authorize, on behalf
  312  of the association:
  313         (a)The waiver of reserves or the reduction of funding of
  314  the reserves in accordance with s. 718.112(2)(f)2., unless
  315  approved by a majority of the voting interests not controlled by
  316  the developer, bulk assignee, and bulk buyer; or
  317         (b)The use of reserve expenditures for other purposes in
  318  accordance with s. 718.112(2)(f)3., unless approved by a
  319  majority of the voting interests not controlled by the
  320  developer, bulk assignee, and bulk buyer.
  321         (5)A bulk assignee, while it is in control of the board of
  322  administration of the association, shall comply with the
  323  requirements imposed upon developers to transfer control of the
  324  association to the unit owners in accordance with s. 718.301.
  325         (6)A bulk assignee or a bulk buyer shall comply with all
  326  the requirements of s. 718.302 regarding any contracts entered
  327  into by the association during the period the bulk assignee or
  328  bulk buyer maintains control of the board of administration.
  329  Unit owners shall be afforded all the protections contained in
  330  s. 718.302 regarding agreements entered into by the association
  331  before unit owners other than the developer, bulk assignee, or
  332  bulk buyer elected a majority of the board of administration.
  333         (7)A bulk buyer shall comply with the requirements
  334  contained in the declaration regarding any transfer of a unit,
  335  including sales, leases, and subleases. A bulk buyer is not
  336  entitled to any exemptions afforded a developer or successor
  337  developer under this chapter regarding any transfer of a unit,
  338  including sales, leases, or subleases.
  339         718.707Time limitation for classification as bulk assignee
  340  or bulk buyer.—A person acquiring condominium parcels may not be
  341  classified as a bulk assignee or bulk buyer unless the
  342  condominium parcels were acquired before July 1, 2011. The date
  343  of such acquisition shall be determined by the date of recording
  344  of a deed or other instrument of conveyance for such parcels in
  345  the public records of the county in which the condominium is
  346  located, or by the date of issuance of a certificate of title in
  347  a foreclosure proceeding with respect to such condominium
  348  parcels.
  349         718.708Liability of developers and others.—An assignment
  350  of developer rights to a bulk assignee or bulk buyer does not
  351  release the developer from any liabilities under the declaration
  352  or this chapter. This part does not limit the liability of the
  353  developer for claims brought by unit owners, bulk assignees, or
  354  bulk buyers for violations of this chapter by the developer,
  355  unless specifically excluded in this part. Nothing contained
  356  within this part waives, releases, compromises, or limits the
  357  liability of contractors, subcontractors, materialmen,
  358  manufacturers, architects, engineers, or any participant in the
  359  design or construction of a condominium for any claim brought by
  360  an association, unit owners, bulk assignees, or bulk buyers
  361  arising from the design of the condominium, construction
  362  defects, misrepresentations associated with condominium
  363  property, or violations of this chapter, unless specifically
  364  excluded in this part.
  365  
  366  
  367  ================= T I T L E  A M E N D M E N T ================
  368         And the title is amended as follows:
  369         Delete line 66
  370  and insert:
  371         days under certain circumstances; amending s. 718.103,
  372         F.S.; expanding the definition of “developer” to
  373         include a bulk assignee or bulk buyer; amending s.
  374         718.301, F.S.; revising conditions under which unit
  375         owners other than the developer may elect not less
  376         than a majority of the members of the board of
  377         administration of an association; creating part VII of
  378         ch. 718, F.S.; providing a short title; providing
  379         legislative findings and intent; defining the terms
  380         “bulk assignee” and “bulk buyer”; providing for the
  381         assignment of developer rights by a bulk assignee;
  382         specifying liabilities of bulk assignees and bulk
  383         buyers; providing exceptions; providing additional
  384         responsibilities of bulk assignees and bulk buyers;
  385         authorizing certain entities to assign developer
  386         rights to a bulk assignee; limiting the number of bulk
  387         assignees at any given time; providing for the
  388         transfer of control of a board of administration;
  389         providing effects of such transfer on parcels acquired
  390         by a bulk assignee; providing obligations of a bulk
  391         assignee upon the transfer of control of a board of
  392         administration; requiring that a bulk assignee certify
  393         certain information in writing; providing for the
  394         resolution of a conflict between specified provisions
  395         of state law; providing that the failure of a bulk
  396         assignee or bulk buyer to comply with specified
  397         provisions of state law results in the loss of certain
  398         protections and exemptions; requiring that a bulk
  399         assignee or bulk buyer file certain information with
  400         the Division of Florida Condominiums, Timeshares, and
  401         Mobile Homes of the Department of Business and
  402         Professional Regulation before offering any units for
  403         sale or lease in excess of a specified term; requiring
  404         that a copy of such information be provided to a
  405         prospective purchaser; requiring that certain
  406         contracts and disclosure statements contain specified
  407         statements; requiring that a bulk assignee or bulk
  408         buyer comply with certain disclosure requirements;
  409         prohibiting a bulk assignee from taking certain
  410         actions on behalf of an association while the bulk
  411         assignee is in control of the board of administration
  412         of the association and requiring that such bulk
  413         assignee comply with certain requirements; requiring
  414         that a bulk assignee or bulk buyer comply with certain
  415         requirements regarding certain contracts; providing
  416         unit owners with specified protections regarding
  417         certain contracts; requiring that a bulk buyer comply
  418         with certain requirements regarding the transfer of a
  419         unit; prohibiting a person from being classified as a
  420         bulk assignee or bulk buyer unless condominium parcels
  421         were acquired before a specified date; providing for
  422         the determination of the date of acquisition of a
  423         parcel; providing that the assignment of developer
  424         rights to a bulk assignee does not release a developer
  425         from certain liabilities; preserving certain
  426         liabilities for certain parties; amending s. 719.108,