Senate Bill sb2360

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    Florida Senate - 2005                                  SB 2360

    By Senator Geller





    31-1180-05

  1                      A bill to be entitled

  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 grounds; providing powers and duties

  7         of the board of administration of the

  8         association; waiving certain notice

  9         requirements following natural disasters;

10         providing requirements for a plan of

11         termination; providing for the allocation of

12         proceeds from the sale of condominium property;

13         providing powers and duties of a termination

14         trustee; providing notice requirements;

15         providing a procedure for contesting a plan of

16         termination; providing rules for the

17         distribution of property and sale proceeds;

18         providing for the association's status

19         following termination; allowing the creation of

20         another condominium by the trustee; providing

21         an effective date.

22  

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

24  

25         Section 1.  Section 718.117, Florida Statutes, is

26  amended to read:

27         (Substantial rewording of section. See

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

29         718.117  Termination of condominium.--

30         (1)  TERMINATION BECAUSE OF ECONOMIC WASTE OR

31  IMPOSSIBILITY.--Notwithstanding any provision to the contrary

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 1  in the declaration, the condominium form of ownership of a

 2  property may be terminated by a plan of termination approved

 3  by the lesser of a majority of the total voting interests or

 4  as otherwise provided in the declaration for approval of

 5  termination, in the following circumstances:

 6         (a)  When the total estimated cost of repairs necessary

 7  to restore the improvements to their former condition or bring

 8  them into compliance with applicable laws or regulations

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

10  condominium after completion of the repairs; or

11         (b)  When it becomes impossible to operate a

12  condominium in its prior physical configuration because of

13  land-use laws or regulations.

14         (2)  OPTIONAL TERMINATION.--Except as provided in

15  subsection (1) and unless otherwise provided in the

16  declaration, the condominium form of ownership of the property

17  may be terminated pursuant to a plan of termination approved

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

19  condominium. If the plan is not approved and less than 20

20  percent of the total voting interests vote to disapprove a

21  plan of termination, the condominium may be terminated

22  pursuant to the same plan at a meeting conducted within 6

23  months after the prior vote, if the meeting is attended in

24  person or by proxy of at least 60 percent of the voting

25  interests and at least 85 percent of those voting approve the

26  plan.

27         (3)  EXEMPTION.--A plan of termination is not an

28  amendment subject to s. 718.110(4).

29         (4)  MORTGAGE LIENHOLDERS.--Notwithstanding any

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

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

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 1  mortgage lien affecting a condominium parcel is not required

 2  unless the plan of termination will result in less than the

 3  full satisfaction of the mortgage lien affecting the parcel.

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

 5  association shall continue in existence following approval of

 6  the plan of termination, with all powers it had before

 7  approval of the plan. Notwithstanding any contrary provision

 8  in the declaration or bylaws, after approval of the plan, the

 9  board has the power and duty:

10         (a)  To employ directors, agents, attorneys, and other

11  professionals to liquidate or conclude its affairs.

12         (b)  To conduct the affairs of the association as

13  necessary for the liquidation or termination.

14         (c)  To carry out contracts and collect, pay, and

15  settle debts and claims for and against the association.

16         (d)  To defend suits brought against the association.

17         (e)  To sue in the name of the association for all sums

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

19  property.

20         (f)  To perform any act necessary to maintain, repair,

21  or demolish unsafe or uninhabitable improvements or other

22  condominium property in compliance with applicable codes.

23         (g)  To sell at public or private sale or to exchange,

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

25  an amount deemed to be in the best interest of the

26  association, and to execute bills of sale and deeds of

27  conveyance in the name of the association.

28         (h)  To collect and receive rents, profits, accounts

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

30  insurance proceeds for the association.

31  

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 1         (i)  To contract and do anything in the name of the

 2  association which is proper or convenient to terminate the

 3  affairs of the association.

 4         (6)  NATURAL DISASTERS.--

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

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

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

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

 9  petition the circuit court to determine the identity of the

10  directors or, if found to be in the best interest of the unit

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

12  association after a hearing following notice to such persons

13  as the court directs.

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

15  board pursuant to the declaration, bylaws, or subsection (5),

16  and any other powers that are necessary to conclude the

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

18  appointment.  The appointment of the receiver is subject to

19  the bonding requirements of such order.  The order shall also

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

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

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

23  assessments collected from the condominium property.

24         (7)  PLAN OF TERMINATION.--The plan of termination must

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

26  unit owners having the requisite percentage of voting

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

28  A unit owner may document assent to the plan of termination by

29  executing the plan or consent to or joinder in the plan in the

30  manner of a deed.  A plan of termination and the consents or

31  joinders of unit owners and, if required, consents or joinders

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 1  of mortgagees must be recorded in the public records of each

 2  county in which any portion of the condominium is located.

 3  The plan of termination is effective only upon recordation or

 4  at a later date specified in the plan.

 5         (8)  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 interest 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;

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

17  proceeds from any sale of the condominium property.  If,

18  pursuant to the plan of termination, condominium property or

19  real property owned by the association is to be sold following

20  termination, the plan must provide for the sale and may

21  establish any minimum sale terms; and

22         (e)  Any interests of the respective unit owners in any

23  insurance proceeds or condemnation proceeds that are not used

24  for repair or reconstruction.  Unless the declaration

25  expressly addresses the distribution of insurance proceeds or

26  condemnation proceeds, the plan of termination may apportion

27  those proceeds pursuant to the methods prescribed in

28  subsection (10).

29         (9)  PLAN OF TERMINATION; OPTIONAL PROVISIONS.--The

30  plan of termination may provide:

31  

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 1         (a)  That each unit owner retains the exclusive right

 2  of possession to the portion of the real estate that formerly

 3  constituted the unit, in which case the plan must specify the

 4  conditions of possession.

 5         (b)  In the case of a conditional termination, the plan

 6  must specify the conditions for termination. A conditional

 7  plan will not vest title in the termination trustee until the

 8  plan and a certificate executed by the association with the

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

10  conditional plan have been satisfied or waived by the

11  requisite percentage of the voting interests, has been

12  recorded.

13         (10)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM

14  PROPERTY.--

15         (a)  Unless the declaration expressly provides for the

16  allocation of the proceeds of sale of condominium property,

17  the plan of termination must first apportion the proceeds

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

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

20  immediately before the termination, as determined by one or

21  more independent appraisers selected by the association or

22  termination trustee.

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

24  shall be further apportioned among the individual units. The

25  apportionment is deemed fair and reasonable if it is

26  determined by any of the following methods:

27         1.  The respective value of the units based on the

28  fair-market values of the units immediately before the

29  termination, as determined by one or more independent

30  appraisers selected by the association or termination trustee;

31  

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 1         2.  The respective value of the units based on the most

 2  recent market value of the units before the termination, as

 3  provided in the county property appraiser's records; or

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

 5  elements specified in the declaration immediately before the

 6  termination.

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

 8  not prohibit any other method of apportioning the proceeds of

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

10  termination.  The portion of the proceeds allocated to the

11  common elements shall be apportioned among the units based

12  upon their respective interests in the common elements as

13  provided in the declaration.

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

15  the proceeds of sale of the condominium property attributable

16  to such unit in their same priority. The proceeds of any sale

17  of condominium property pursuant to a plan of termination may

18  not be deemed to be common surplus or association property.

19         (11)  TERMINATION TRUSTEE.--The association shall serve

20  as termination trustee unless another person is appointed in

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

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

23  petition the court to appoint a trustee.  Upon recording or at

24  a later date specified in the plan, title to the condominium

25  property vests in the trustee.  Unless prohibited by the plan,

26  the trustee shall be vested with the powers given to the board

27  pursuant to the declaration, bylaws, and subsection (5).  If

28  the association is not the termination trustee, the trustee's

29  powers shall be co-extensive with those of the association to

30  the extent not prohibited in the plan of termination or the

31  order of appointment. If the association is not the trustee,

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 1  the association shall transfer any association property to the

 2  trustee.  If the association is dissolved, the trustee shall

 3  also have such other powers necessary to conclude the affairs

 4  of the association.

 5         (12)  TITLE VESTED IN TERMINATION TRUSTEE.--If

 6  termination is pursuant to a plan of termination under

 7  subsection (1) or subsection (2), the unit owners' rights as

 8  tenants in common in undivided interests in the condominium

 9  property vest in the termination trustee when the plan is

10  recorded or at a later date specified in the plan.  The unit

11  owners thereafter become the beneficiaries of proceeds

12  realized from any plan of termination.  The termination

13  trustee may deal with the condominium property or any interest

14  therein if the plan confers to the trustee the authority to

15  protect, conserve, manage, sell, or dispose of the condominium

16  property. The trustee, on behalf of the unit owners, may

17  contract for the sale of real property, but the contract is

18  not binding on the unit owners until the plan is approved

19  pursuant to subsection (1) or subsection (2).

20         (13)  NOTICE.--

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

22  been recorded, the termination trustee shall deliver by

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

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

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

26  termination has been recorded. The notice shall include the

27  book and page number of the public records where the plan is

28  recorded, notice that a copy of the plan shall be furnished

29  upon written request, and notice that the unit owner or lienor

30  has the right to contest the fairness of the plan.

31  

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 1         (b)  The trustee, within 30 days after the effective

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

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

 4  the county, book, and page number of the public records where

 5  it was recorded.

 6         (14)  RIGHT TO CONTEST.--A unit owner or lienor may

 7  contest a plan of termination by initiating a summary

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

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

10  contest the plan is barred from asserting or prosecuting a

11  claim against the association, the termination trustee, any

12  unit owner, or  any successor in interest to the condominium

13  property.  In an action contesting a plan of termination, the

14  person contesting the plan has the burden of pleading and

15  proving that the apportionment of the proceeds from the sale

16  among the unit owners was not fair and reasonable.  The

17  apportionment of sale proceeds is presumed fair and reasonable

18  if it was determined pursuant to the methods prescribed in

19  subsection (10).  The court shall adjudge the rights and

20  interests of the parties and order the plan of termination to

21  be implemented if it is fair and reasonable. The court shall

22  void a plan that is determined not to be fair and reasonable.

23  In such action the prevailing party may recover reasonable

24  attorney's fees and costs.

25         (15)  DISTRIBUTION.--Following termination of the

26  condominium, the condominium property, association property,

27  common surplus, and other assets of the association shall be

28  held by the termination trustee, as trustee for unit owners

29  and holders of liens on the units, in their order of priority.

30         (a)  Not less than 30 days prior to the first

31  distribution, the termination trustee shall deliver by

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

 2  estimated distribution to all unit owners, lienors of the

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

 4  known address stating a good-faith estimate of the amount of

 5  the distributions to each class and the procedures and

 6  deadline for notifying the termination trustee of any

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

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

 9  sent with or after the notice required by subsection (13).  If

10  a unit owner or lienor files an objection with the termination

11  trustee, the trustee does not have to distribute the funds and

12  property allocated to the respective unit owner and lienor

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

14  validity of the adverse claims.  In the alternative, the

15  trustee may interplead the unit owner, lienor, and any other

16  person claiming an interest in the unit and deposit the funds

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

18  condominium property, association property, common surplus,

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

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

21  the trustee and prevailing party may recover reasonable

22  attorney's fees and costs and court costs.

23         (b)  The proceeds of any sale of condominium or

24  association property and any remaining condominium or

25  association property, common surplus, and other assets shall

26  be distributed in the following priority:

27         1.  To pay the costs of implementing the plan of

28  termination, including demolition, removal, and disposal fees,

29  termination trustee's fees and costs, accounting fees and

30  costs, and attorney's fees and costs.

31  

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 1         2.  To lienholders for liens recorded prior to the

 2  recording of the declaration.

 3         3.  To lienholders for liens of the association which

 4  have been consented to under s. 718.121.

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

 6  appear.

 7         5.  To unit owners, the proceeds of any sale of

 8  condominium property subject to satisfaction of liens on each

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

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

11  lienor.

12         6.  To unit owners, the remaining condominium property,

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

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

15  unless objected to by a unit owner or a lienor.

16         7.  To unit owners, the proceeds of any sale of

17  association property, the remaining association property,

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

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

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

21  unless objected to by a unit owner or a lienor.

22         (c)  After determining that all known debts and

23  liabilities of an association in the process of termination

24  have been paid or adequately provided for, the termination

25  trustee shall distribute the remaining assets pursuant to the

26  plan of termination.  If the termination is by court

27  proceeding or subject to court supervision, the distribution

28  may not be made until any period for the presentation of

29  claims ordered by the court has passed.

30         (d)  Assets held by an association upon a valid

31  condition requiring return, transfer, or conveyance, which

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

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

 3  remaining association assets shall be distributed pursuant to

 4  paragraph (b).

 5         (e)  Distribution may be made in money, property, or

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

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

 8  termination. Distribution shall be made as soon as is

 9  reasonably consistent with the beneficial liquidation of the

10  assets.

11         (16)  ASSOCIATION STATUS.--The termination of a

12  condominium does not change the corporate status of the

13  association that operated the condominium property.  The

14  association continues to exist to conclude its affairs,

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

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

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

18  necessary to conclude its affairs.

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

20  of a condominium does not bar the creation, by the termination

21  trustee, of another condominium affecting any portion of the

22  same property.

23         (18)  EXCLUSION.--This section does not apply to the

24  termination of a condominium incident to a merger of that

25  condominium with one or more other condominiums under s.

26  718.110(7).

27         Section 2.  This act shall take effect July 1, 2005.

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 1            *****************************************

 2                          SENATE SUMMARY

 3    Substantially revises provisions relating to the
      termination of a condominium. Provides an orderly
 4    procedure, powers and duties of the board of
      administration of the association, unit owners, and the
 5    termination trustee. Provides notice requirements.
      Provides procedures to contest a plan of termination.
 6    (See bill for details.)

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