HB 543

1
A bill to be entitled
2An act relating to condominiums; amending s. 718.117,
3F.S.; substantially revising provisions relating to the
4termination of the condominium form of ownership of a
5property; providing legislative findings; providing
6grounds; providing powers and duties of the board of
7administration of the association; waiving certain notice
8requirements following natural disasters; providing
9requirements for a plan of termination; providing for the
10allocation of proceeds from the sale of condominium
11property; providing powers and duties of a termination
12trustee; providing notice requirements; providing a
13procedure for contesting a plan of termination; providing
14rules for the distribution of property and sale proceeds;
15providing for the association's status following
16termination; allowing the creation of another condominium
17by the trustee; specifying an exclusion; providing an
18effective date.
19
20Be It Enacted by the Legislature of the State of Florida:
21
22     Section 1.  Section 718.117, Florida Statutes, is amended
23to read:
24     (Substantial rewording of section. See
25     s. 718.117, F.S., for present text.)
26     718.117  Termination of condominium.--
27     (1)  LEGISLATIVE FINDINGS.--The Legislature finds that it
28is contrary to the public policy of this state to require the
29continued operation of a condominium when to do so would
30constitute economic waste or when the ability to do so is made
31impossible by law or regulation. The provisions of this section
32shall apply to all condominiums in this state in existence on or
33after the effective date of this act.
34     (2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
35IMPOSSIBILITY.--
36     (a)  Notwithstanding any provision to the contrary in the
37declaration, the condominium form of ownership of a property may
38be terminated by a plan of termination approved by the lesser of
39a majority of the total voting interests or as otherwise
40provided in the declaration for approval of termination, in the
41following circumstances:
42     1.  When the total estimated cost of repairs necessary to
43restore the improvements to their former condition or bring them
44into compliance with applicable laws or regulations exceeds the
45combined fair market value of all units in the condominium after
46completion of the repairs; or
47     2.  When it becomes impossible to operate or reconstruct a
48condominium in its prior physical configuration because of land-
49use laws or regulations.
50     (b)  Notwithstanding paragraph (a), a condominium in which
5175 percent or more of the units are timeshare units may only be
52terminated pursuant to a plan of termination approved by 80
53percent of the total voting interests of the association and the
54holders of 80 percent of the original principal amount of
55outstanding recorded mortgage liens of timeshare estates in the
56condominium, unless the declaration provides for a lower voting
57percentage.
58     (3)  OPTIONAL TERMINATION.--Except as provided in
59subsections (2) and (4) or unless the declaration provides for a
60lower percentage, the condominium form of ownership of the
61property may be terminated pursuant to a plan of termination
62approved by at least 80 percent of the total voting interests of
63the condominium. This subsection does not apply to condominiums
64in which 75 percent or more of the units are timeshare units.
65     (4)  JURISDICTION.--
66     (a)  If 80 percent of the total voting interests fail to
67approve the plan of termination but fewer than 20 percent of the
68total voting interests vote to disapprove of the plan, the
69circuit court shall have jurisdiction to entertain a petition by
70the association or by one or more unit owners and approve the
71plan of termination, and the action may be a class action.
72     (b)  All unit owners and the association must be parties to
73the action. The action may be brought against the nonconsenting
74unit owners as a class action. Service of process on unit owners
75may be by publication, but the plaintiff must furnish each unit
76owner not personally served with process a copy of the petition
77and plan of termination, and after entry of judgment, a copy of
78the final decree of the court, by mail at the owner's last known
79address.
80     (c)  After the consideration of whether the rights and
81interests of unit owners are equitably set forth in the plan of
82termination as required by this section, the plan of termination
83may be approved or rejected by the court. Consistent with the
84provisions of this section, the court may also modify the plan
85of termination to provide for an equitable distribution of the
86interests of unit owners prior to approving the plan of
87termination.
88     (d)  This subsection does not apply to condominiums in
89which 75 percent or more of the units are timeshare units.
90     (5)  EXEMPTION.--A plan of termination is not an amendment
91subject to s. 718.110(4).
92     (6)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
93to the contrary in the declaration or this chapter, approval of
94a plan of termination by the holder of a recorded mortgage lien
95affecting a condominium parcel in which fewer than 75 percent of
96the units are timeshare units is not required unless the plan of
97termination will result in less than the full satisfaction of
98the mortgage lien affecting the parcel.
99     (7)  POWERS IN CONNECTION WITH TERMINATION.--The
100association shall continue in existence following approval of
101the plan of termination, with all powers it had before approval
102of the plan. Notwithstanding any contrary provision in the
103declaration or bylaws, after approval of the plan, the board has
104the power and duty:
105     (a)  To employ directors, agents, attorneys, and other
106professionals to liquidate or conclude its affairs.
107     (b)  To conduct the affairs of the association as necessary
108for the liquidation or termination.
109     (c)  To carry out contracts and collect, pay, and settle
110debts and claims for and against the association.
111     (d)  To defend suits brought against the association.
112     (e)  To sue in the name of the association for all sums due
113or owed to the association or to recover any of its property.
114     (f)  To perform any act necessary to maintain, repair, or
115demolish unsafe or uninhabitable improvements or other
116condominium property in compliance with applicable codes.
117     (g)  To sell at public or private sale or to exchange,
118convey, or otherwise dispose of assets of the association for an
119amount deemed to be in the best interests of the association,
120and to execute bills of sale and deeds of conveyance in the name
121of the association.
122     (h)  To collect and receive rents, profits, accounts
123receivable, income, maintenance fees, special assessments, or
124insurance proceeds for the association.
125     (i)  To contract and do anything in the name of the
126association which is proper or convenient to terminate the
127affairs of the association.
128     (8)  NATURAL DISASTERS.--
129     (a)  If, after a natural disaster, the identity of the
130directors or their right to hold office is in doubt, if they are
131deceased or unable to act, if they fail or refuse to act, or if
132they cannot be located, any interested person may petition the
133circuit court to determine the identity of the directors or, if
134found to be in the best interests of the unit owners, to appoint
135a receiver to conclude the affairs of the association after a
136hearing following notice to such persons as the court directs.
137     (b)  The receiver shall have all powers given to the board
138pursuant to the declaration, bylaws, and subsection (7), and any
139other powers that are necessary to conclude the affairs of the
140association and are set forth in the order of appointment. The
141appointment of the receiver is subject to the bonding
142requirements of such order. The order shall also provide for the
143payment of a reasonable fee to the receiver from the sources
144identified in the order, which may include rents, profits,
145incomes, maintenance fees, or special assessments collected from
146the condominium property.
147     (9)  PLAN OF TERMINATION.--The plan of termination must be
148a written document executed in the same manner as a deed by unit
149owners having the requisite percentage of voting interests to
150approve the plan and by the termination trustee. A copy of the
151proposed plan of termination shall be given to all unit owners,
152in the same manner as for notice of an annual meeting, at least
15314 days prior to the meeting at which the plan of termination is
154to be voted upon or prior to or simultaneously with the
155distribution of the solicitation seeking execution of the plan
156of termination or written consent to or joinder in the plan. A
157unit owner may document assent to the plan of termination by
158executing the plan or by consent to or joinder in the plan in
159the manner of a deed. A plan of termination and the consents or
160joinders of unit owners and, if required, consents or joinders
161of mortgagees must be recorded in the public records of each
162county in which any portion of the condominium is located. The
163plan of termination is effective only upon recordation or at a
164later date specified in the plan.
165     (10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
166of termination must specify:
167     (a)  The name, address, and powers of the termination
168trustee.
169     (b)  A date after which the plan of termination is void if
170it has not been recorded.
171     (c)  The interests of the respective unit owners in the
172association property, common surplus, and other assets of the
173association, which shall be the same as the respective interests
174of the unit owners in the common elements immediately before the
175termination, unless otherwise provided in the declaration.
176     (d)  The interests of the respective unit owners in any
177proceeds from any sale of the condominium property. The plan of
178termination may apportion those proceeds pursuant to any of the
179methods prescribed in subsection (12). If, pursuant to the plan
180of termination, condominium property or real property owned by
181the association is to be sold following termination, the plan
182must provide for the sale and may establish any minimum sale
183terms.
184     (e)  Any interests of the respective unit owners in any
185insurance proceeds or condemnation proceeds that are not used
186for repair or reconstruction. Unless the declaration expressly
187addresses the distribution of insurance proceeds or condemnation
188proceeds, the plan of termination may apportion those proceeds
189pursuant to any of the methods prescribed in subsection (12).
190     (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
191TERMINATION.--
192     (a)  The plan of termination may provide that each unit
193owner retains the exclusive right of possession to the portion
194of the real estate that formerly constituted the unit, in which
195case the plan must specify the conditions of possession.
196     (b)  In the case of a conditional termination, the plan
197must specify the conditions for termination. A conditional plan
198will not vest title in the termination trustee until the plan
199and a certificate executed by the association with the
200formalities of a deed, confirming that the conditions in the
201conditional plan have been satisfied or waived by the requisite
202percentage of the voting interests, have been recorded.
203     (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
204PROPERTY.--
205     (a)  Unless the declaration expressly provides for the
206allocation of the proceeds of sale of condominium property, the
207plan of termination must first apportion the proceeds between
208the aggregate value of all units and the value of the common
209elements, based on their respective fair-market values
210immediately before the termination, as determined by one or more
211independent appraisers selected by the association or
212termination trustee.
213     (b)  The portion of proceeds allocated to the units shall
214be further apportioned among the individual units. The
215apportionment is deemed fair and reasonable if it is determined
216by any of the following methods:
217     1.  The respective values of the units based on the fair-
218market values of the units immediately before the termination,
219as determined by one or more independent appraisers selected by
220the association or termination trustee;
221     2.  The respective values of the units based on the most
222recent market value of the units before the termination, as
223provided in the county property appraiser's records; or
224     3.  The respective interests of the units in the common
225elements specified in the declaration immediately before the
226termination.
227     (c)  The methods of apportionment in paragraph (b) do not
228prohibit any other method of apportioning the proceeds of sale
229allocated to the units agreed upon in the plan of termination.
230The portion of the proceeds allocated to the common elements
231shall be apportioned among the units based upon their respective
232interests in the common elements as provided in the declaration.
233     (d)  Liens that encumber a unit shall be transferred to the
234proceeds of sale of the condominium property and the proceeds of
235sale or other distribution of association property, common
236surplus, or other association assets attributable to such unit
237in their same priority. The proceeds of any sale of condominium
238property pursuant to a plan of termination may not be deemed to
239be common surplus or association property.
240     (13)  TERMINATION TRUSTEE.--The association shall serve as
241termination trustee unless another person is appointed in the
242plan of termination. If the association is unable, unwilling, or
243fails to act as trustee, any unit owner may petition the court
244to appoint a trustee. Upon recording or at a later date
245specified in the plan, title to the condominium property vests
246in the trustee. Unless prohibited by the plan, the termination
247trustee shall be vested with the powers given to the board
248pursuant to the declaration, bylaws, and subsection (7). If the
249association is not the termination trustee, the trustee's powers
250shall be coextensive with those of the association to the extent
251not prohibited in the plan of termination or the order of
252appointment. If the association is not the termination trustee,
253the association shall transfer any association property to the
254trustee. If the association is dissolved, the trustee shall also
255have such other powers necessary to conclude the affairs of the
256association.
257     (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
258is pursuant to a plan of termination under subsection (2) or
259subsection (3), the unit owners' rights and title as tenants in
260common in undivided interests in the condominium property vest
261in the termination trustee when the plan is recorded or at a
262later date specified in the plan. The unit owners thereafter
263become the beneficiaries of the proceeds realized from the plan
264of termination. The termination trustee may deal with the
265condominium property or any interest therein if the plan confers
266on the trustee the authority to protect, conserve, manage, sell,
267or dispose of the condominium property. The trustee, on behalf
268of the unit owners, may contract for the sale of real property,
269but the contract is not binding on the unit owners until the
270plan is approved pursuant to subsection (2) or subsection (3).
271     (15)  NOTICE.--
272     (a)  Within 30 days after a plan of termination has been
273recorded, the termination trustee shall deliver by certified
274mail, return receipt requested, notice to all unit owners,
275lienors of the condominium property, and lienors of all units at
276their last known addresses that a plan of termination has been
277recorded. The notice shall include the book and page number of
278the public records in which the plan was recorded, notice that a
279copy of the plan shall be furnished upon written request, and
280notice that the unit owner or lienor has the right to contest
281the fairness of the plan.
282     (b)  The trustee, within 90 days after the effective date
283of the plan, shall provide to the division a certified copy of
284the recorded plan, the date the plan was recorded, and the
285county, book, and page number of the public records in which the
286plan was recorded.
287     (16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
288a plan of termination by initiating a summary procedure pursuant
289to s. 51.011 within 90 days after the date the plan is recorded.
290A unit owner or lienor who does not contest the plan within such
29190-day period is barred from asserting or prosecuting a claim
292against the association, the termination trustee, any unit
293owner, or any successor in interest to the condominium property.
294In an action contesting a plan of termination, the person
295contesting the plan has the burden of pleading and proving that
296the apportionment of the proceeds from the sale among the unit
297owners was not fair and reasonable. The apportionment of sale
298proceeds is presumed fair and reasonable if it was determined
299pursuant to the methods prescribed in subsection (12). The court
300shall adjudge the rights and interests of the parties and order
301the plan of termination to be implemented if it is fair and
302reasonable. The court shall void a plan that is determined not
303to be fair and reasonable. In such action, the prevailing party
304may recover reasonable attorney's fees and costs.
305     (17)  DISTRIBUTION.--
306     (a)  Following termination of the condominium, the
307condominium property, association property, common surplus, and
308other assets of the association shall be held by the termination
309trustee, as trustee for unit owners and holders of liens on the
310units, in their order of priority.
311     (b)  Not less than 30 days prior to the first distribution,
312the termination trustee shall deliver by certified mail, return
313receipt requested, a notice of the estimated distribution to all
314unit owners, lienors of the condominium property, and lienors of
315each unit at their last known addresses stating a good-faith
316estimate of the amount of the distributions to each class and
317the procedures and deadline for notifying the termination
318trustee of any objections to the amount. The deadline must be at
319least 15 days after the date the notice was mailed. The notice
320may be sent with or after the notice required by subsection
321(15). If a unit owner or lienor files a timely objection with
322the termination trustee, the trustee does not have to distribute
323the funds and property allocated to the respective unit owner or
324lienor until the trustee has had a reasonable time to determine
325the validity of the adverse claim. In the alternative, the
326trustee may interplead the unit owner, lienor, and any other
327person claiming an interest in the unit and deposit the funds
328allocated to the unit in the court registry, at which time the
329condominium property, association property, common surplus, and
330other assets of the association are free of all claims and liens
331of the parties to the suit. In an interpleader action, the
332trustee and prevailing party may recover reasonable attorney's
333fees and costs and court costs.
334     (c)  The proceeds of any sale of condominium property or
335association property and any remaining condominium property or
336association property, common surplus, and other assets shall be
337distributed in the following priority:
338     1.  To pay the costs of implementing the plan of
339termination, including demolition, removal, and disposal fees,
340termination trustee's fees and costs, accounting fees and costs,
341and attorney's fees and costs.
342     2.  To lienholders of liens recorded prior to the recording
343of the declaration.
344     3.  To lienholders of liens of the association which have
345been consented to under s. 718.121(1).
346     4.  To creditors of the association, as their interests
347appear.
348     5.  To unit owners, the proceeds of any sale of condominium
349property subject to satisfaction of liens on each unit in their
350order of priority, in shares specified in the plan of
351termination, unless objected to by a unit owner or lienor.
352     6.  To unit owners, the remaining condominium property,
353subject to satisfaction of liens on each unit in their order of
354priority, in shares specified in the plan of termination, unless
355objected to by a unit owner or a lienor as provided in paragraph
356(b).
357     7.  To unit owners, the proceeds of any sale of association
358property, the remaining association property, common surplus,
359and other assets of the association, subject to satisfaction of
360liens on each unit in their order of priority, in shares
361specified in the plan of termination, unless objected to by a
362unit owner or a lienor as provided in paragraph (b).
363     (d)  After determining that all known debts and liabilities
364of an association in the process of termination have been paid
365or adequately provided for, the termination trustee shall
366distribute the remaining assets pursuant to the plan of
367termination. If the termination is by court proceeding or
368subject to court supervision, the distribution may not be made
369until any period for the presentation of claims ordered by the
370court has elapsed.
371     (e)  Assets held by an association upon a valid condition
372requiring return, transfer, or conveyance, which condition has
373occurred or will occur, shall be returned, transferred, or
374conveyed in accordance with the condition. The remaining
375association assets shall be distributed pursuant to paragraph
376(c).
377     (f)  Distribution may be made in money, property, or
378securities and in installments or as a lump sum, if it can be
379done fairly and ratably and in conformity with the plan of
380termination. Distribution shall be made as soon as is reasonably
381consistent with the beneficial liquidation of the assets.
382     (18)  ASSOCIATION STATUS.--The termination of a condominium
383does not change the corporate status of the association that
384operated the condominium property. The association continues to
385exist to conclude its affairs, prosecute and defend actions by
386or against it, collect and discharge obligations, dispose of and
387convey its property, and collect and divide its assets, but not
388to act except as necessary to conclude its affairs.
389     (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
390a condominium does not bar the creation, by the termination
391trustee, of another condominium affecting any portion of the
392same property.
393     (20)  EXCLUSION.--This section does not apply to the
394termination of a condominium incident to a merger of that
395condominium with one or more other condominiums under s.
396718.110(7).
397     Section 2.  This act shall take effect July 1, 2006.


CODING: Words stricken are deletions; words underlined are additions.