HB 0543

CS

CHAMBER ACTION

1	The Justice Council recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to condominiums; amending s. 718.117,
7	F.S.; substantially revising provisions relating to the
8	termination of the condominium form of ownership of a
9	property; providing legislative findings; providing
10	grounds; providing powers and duties of the board of
11	administration of the association; waiving certain notice
12	requirements following natural disasters; providing
13	lienholders with the right to propose persons for
14	consideration by the court as receiver; requiring
15	quarterly reports; authorizing certain unit owners to
16	remove members of the board of administration; authorizing
17	certain lienors to petition the court for the appointment
18	of a termination trustee; providing requirements for a
19	plan of termination; providing for the allocation of
20	proceeds from the sale of condominium property; providing
21	powers and duties of a termination trustee; providing
22	notice requirements; providing a procedure for contesting
23	a plan of termination; providing rules for the
24	distribution of property and sale proceeds; providing for
25	the association's status following termination; allowing
26	the creation of another condominium by the trustee;
27	specifying an exclusion; providing an effective date.
28
29	Be It Enacted by the Legislature of the State of Florida:
30
31	Section 1.  Section 718.117, Florida Statutes, is amended
32	to read:
33	(Substantial rewording of section. See
34	s. 718.117, F.S., for present text.)
35	718.117  Termination of condominium.--
36	(1)  LEGISLATIVE FINDINGS.--The Legislature finds that
37	condominiums are created as authorized by statute. In
38	circumstances that may create economic waste, areas of
39	disrepair, or obsolescence of the condominium property for its
40	intended use and thereby lower property tax values, the
41	Legislature further finds that it is the public policy of this
42	state to provide by statute a method to preserve the value of
43	the property interests and the rights of alienation thereof that
44	owners have in the condominium property both before and after
45	termination. The Legislature further finds that it is contrary
46	to the public policy of this state to require the continued
47	operation of a condominium when to do so would constitute
48	economic waste or when the ability to do so is made impossible
49	by law or regulation. The provisions of this section shall apply
50	to all condominiums in this state in existence on or after the
51	effective date of this act.
52	(2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
53	IMPOSSIBILITY.--
54	(a)  Notwithstanding any provision to the contrary in the
55	declaration, the condominium form of ownership of a property may
56	be terminated by a plan of termination approved by the lesser of
57	a majority of the total voting interests or as otherwise
58	provided in the declaration for approval of termination, in the
59	following circumstances:
60	1.  When the total estimated cost of repairs necessary to
61	restore the improvements to their former condition or bring them
62	into compliance with applicable laws or regulations exceeds the
63	combined fair market value of all units in the condominium after
64	completion of the repairs; or
65	2.  When it becomes impossible to operate or reconstruct a
66	condominium in its prior physical configuration because of land-
67	use laws or regulations.
68	(b)  Notwithstanding paragraph (a), a condominium in which
69	75 percent or more of the units are timeshare units may only be
70	terminated pursuant to a plan of termination approved by 80
71	percent of the total voting interests of the association and the
72	holders of 80 percent of the original principal amount of
73	outstanding recorded mortgage liens of timeshare estates in the
74	condominium, unless the declaration provides for a lower voting
75	percentage.
76	(3)  OPTIONAL TERMINATION.--Except as provided in
77	subsections (2) and (4) or unless the declaration provides for a
78	lower percentage, the condominium form of ownership of the
79	property may be terminated pursuant to a plan of termination
80	approved by at least 80 percent of the total voting interests of
81	the condominium. This subsection does not apply to condominiums
82	in which 75 percent or more of the units are timeshare units.
83	(4)  JURISDICTION FOR PLAN-OF-TERMINATION REVIEW.--
84	(a)  If 80 percent of the total voting interests fail to
85	approve the plan of termination but fewer than 20 percent of the
86	total voting interests vote to disapprove of the plan, the
87	circuit court shall have jurisdiction to entertain a petition by
88	the association or by one or more unit owners and approve the
89	plan of termination, and the action may be a class action.
90	(b)  All unit owners and the association must be parties to
91	the action. The action may be brought against the nonconsenting
92	unit owners as a class action. Service of process on unit owners
93	may be by publication, but the plaintiff must furnish each unit
94	owner not personally served with process a copy of the petition
95	and plan of termination, and after entry of judgment, a copy of
96	the final decree of the court, by mail at the owner's last known
97	address.
98	(c)  After the consideration of whether the rights and
99	interests of unit owners are equitably set forth in the plan of
100	termination as required by this section, the plan of termination
101	may be approved or rejected by the court. Consistent with the
102	provisions of this section, the court may also modify the plan
103	of termination to provide for an equitable distribution of the
104	interests of unit owners prior to approving the plan of
105	termination.
106	(d)  This subsection does not apply to condominiums in
107	which 75 percent or more of the units are timeshare units.
108	(5)  EXEMPTION.--A plan of termination is not an amendment
109	subject to s. 718.110(4).
110	(6)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
111	to the contrary in the declaration or this chapter, approval of
112	a plan of termination by the holder of a recorded mortgage lien
113	affecting a condominium parcel in which fewer than 75 percent of
114	the units are timeshare units is not required unless the plan of
115	termination will result in less than the full satisfaction of
116	the mortgage lien affecting the condominium parcel. Should such
117	approval be required and not given, and should the holder of a
118	recorded mortgage lien object to the plan of termination, such
119	lienor may contest the plan as provided in subsection (17). At
120	the time of sale, the lien shall be transferred to the
121	proportionate share of the proceeds assigned to the condominium
122	parcel in the plan of termination or as subsequently modified by
123	the court.
124	(7)  POWERS IN CONNECTION WITH TERMINATION.--The
125	association shall continue in existence following approval of
126	the plan of termination, with all powers it had before approval
127	of the plan. Notwithstanding any contrary provision in the
128	declaration or bylaws, after approval of the plan, the board has
129	the power and duty:
130	(a)  To employ directors, agents, attorneys, and other
131	professionals to liquidate or conclude its affairs.
132	(b)  To conduct the affairs of the association as necessary
133	for the liquidation or termination.
134	(c)  To carry out contracts and collect, pay, and settle
135	debts and claims for and against the association.
136	(d)  To defend suits brought against the association.
137	(e)  To sue in the name of the association for all sums due
138	or owed to the association or to recover any of its property.
139	(f)  To perform any act necessary to maintain, repair, or
140	demolish unsafe or uninhabitable improvements or other
141	condominium property in compliance with applicable codes.
142	(g)  To sell at public or private sale or to exchange,
143	convey, or otherwise dispose of assets of the association for an
144	amount deemed to be in the best interests of the association,
145	and to execute bills of sale and deeds of conveyance in the name
146	of the association.
147	(h)  To collect and receive rents, profits, accounts
148	receivable, income, maintenance fees, special assessments, or
149	insurance proceeds for the association.
150	(i)  To contract and do anything in the name of the
151	association which is proper or convenient to terminate the
152	affairs of the association.
153	(8)  NATURAL DISASTERS.--
154	(a)  If, after a natural disaster, the identity of the
155	directors or their right to hold office is in doubt, if they are
156	deceased or unable to act, if they fail or refuse to act, or if
157	they cannot be located, any interested person may petition the
158	circuit court to determine the identity of the directors or, if
159	found to be in the best interests of the unit owners, to appoint
160	a receiver to conclude the affairs of the association after a
161	hearing following notice to such persons as the court directs.
162	Lienholders shall be given notice of the petition and shall have
163	the right to propose persons for the consideration by the court
164	as receiver.
165	(b)  The receiver shall have all powers given to the board
166	pursuant to the declaration, bylaws, and subsection (7), and any
167	other powers that are necessary to conclude the affairs of the
168	association and are set forth in the order of appointment. The
169	appointment of the receiver is subject to the bonding
170	requirements of such order. The order shall also provide for the
171	payment of a reasonable fee to the receiver from the sources
172	identified in the order, which may include rents, profits,
173	incomes, maintenance fees, or special assessments collected from
174	the condominium property.
175	(9)  REPORTS AND REPLACEMENT OF RECEIVER.--
176	(a)  The association, receiver, or termination trustee
177	shall prepare reports each quarter following the approval of the
178	plan of termination setting forth the status and progress of the
179	termination, the costs and fees incurred, the date the
180	termination is expected to be completed, and the current
181	financial condition of the association, receivership, or
182	trusteeship, and provide copies of the report by regular mail to
183	the unit owners and lienors at the mailing addresses provided to
184	the association by the unit owners and lienors.
185	(b)  The unit owners of the association in termination may
186	recall or remove members of the board of administration with or
187	without cause at any time as provided in s. 718.112(2)(j).
188	(c)  The lienors of an association in termination
189	representing at least 50 percent of the outstanding amount of
190	liens may petition the court for the appointment of a
191	termination trustee which shall be granted upon good cause
192	shown.
193	(10)  PLAN OF TERMINATION.--The plan of termination must be
194	a written document executed in the same manner as a deed by unit
195	owners having the requisite percentage of voting interests to
196	approve the plan and by the termination trustee. A copy of the
197	proposed plan of termination shall be given to all unit owners,
198	in the same manner as for notice of an annual meeting, at least
199	14 days prior to the meeting at which the plan of termination is
200	to be voted upon or prior to or simultaneously with the
201	distribution of the solicitation seeking execution of the plan
202	of termination or written consent to or joinder in the plan. A
203	unit owner may document assent to the plan of termination by
204	executing the plan or by consent to or joinder in the plan in
205	the manner of a deed. A plan of termination and the consents or
206	joinders of unit owners and, if required, consents or joinders
207	of mortgagees must be recorded in the public records of each
208	county in which any portion of the condominium is located. The
209	plan of termination is effective only upon recordation or at a
210	later date specified in the plan.
211	(11)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
212	of termination must specify:
213	(a)  The name, address, and powers of the termination
214	trustee.
215	(b)  A date after which the plan of termination is void if
216	it has not been recorded.
217	(c)  The interests of the respective unit owners in the
218	association property, common surplus, and other assets of the
219	association, which shall be the same as the respective interests
220	of the unit owners in the common elements immediately before the
221	termination, unless otherwise provided in the declaration.
222	(d)  The interests of the respective unit owners in any
223	proceeds from any sale of the condominium property. The plan of
224	termination may apportion those proceeds pursuant to any of the
225	methods prescribed in subsection (13). If, pursuant to the plan
226	of termination, condominium property or real property owned by
227	the association is to be sold following termination, the plan
228	must provide for the sale and may establish any minimum sale
229	terms.
230	(e)  Any interests of the respective unit owners in any
231	insurance proceeds or condemnation proceeds that are not used
232	for repair or reconstruction at the time of termination. Unless
233	the declaration expressly addresses the distribution of
234	insurance proceeds or condemnation proceeds, the plan of
235	termination may apportion those proceeds pursuant to any of the
236	methods prescribed in subsection (13).
237	(12)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
238	TERMINATION.--
239	(a)  The plan of termination may provide that each unit
240	owner retains the exclusive right of possession to the portion
241	of the real estate that formerly constituted the unit, in which
242	case the plan must specify the conditions of possession.
243	(b)  In the case of a conditional termination, the plan
244	must specify the conditions for termination. A conditional plan
245	will not vest title in the termination trustee until the plan
246	and a certificate executed by the association with the
247	formalities of a deed, confirming that the conditions in the
248	conditional plan have been satisfied or waived by the requisite
249	percentage of the voting interests, have been recorded.
250	(13)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
251	PROPERTY.--
252	(a)  Unless the declaration expressly provides for the
253	allocation of the proceeds of sale of condominium property, the
254	plan of termination must first apportion the proceeds between
255	the aggregate value of all units and the value of the common
256	elements, based on their respective fair-market values
257	immediately before the termination, as determined by one or more
258	independent appraisers selected by the association or
259	termination trustee.
260	(b)  The portion of proceeds allocated to the units shall
261	be further apportioned among the individual units. The
262	apportionment is deemed fair and reasonable if it is determined
263	by the unit owners approving the plan of termination by any of
264	the following methods:
265	1.  The respective values of the units based on the fair-
266	market values of the units immediately before the termination,
267	as determined by one or more independent appraisers selected by
268	the association or termination trustee;
269	2.  The respective values of the units based on the most
270	recent market value of the units before the termination, as
271	provided in the county property appraiser's records; or
272	3.  The respective interests of the units in the common
273	elements specified in the declaration immediately before the
274	termination.
275	(c)  The methods of apportionment in paragraph (b) do not
276	prohibit any other method of apportioning the proceeds of sale
277	allocated to the units agreed upon in the plan of termination.
278	The portion of the proceeds allocated to the common elements
279	shall be apportioned among the units based upon their respective
280	interests in the common elements as provided in the declaration.
281	(d)  Liens that encumber a unit shall be transferred to the
282	proceeds of sale of the condominium property and the proceeds of
283	sale or other distribution of association property, common
284	surplus, or other association assets attributable to such unit
285	in their same priority. The proceeds of any sale of condominium
286	property pursuant to a plan of termination may not be deemed to
287	be common surplus or association property.
288	(14)  TERMINATION TRUSTEE.--The association shall serve as
289	termination trustee unless another person is appointed in the
290	plan of termination. If the association is unable, unwilling, or
291	fails to act as trustee, any unit owner may petition the court
292	to appoint a trustee. Upon recording or at a later date
293	specified in the plan, title to the condominium property vests
294	in the trustee. Unless prohibited by the plan, the termination
295	trustee shall be vested with the powers given to the board
296	pursuant to the declaration, bylaws, and subsection (7). If the
297	association is not the termination trustee, the trustee's powers
298	shall be coextensive with those of the association to the extent
299	not prohibited in the plan of termination or the order of
300	appointment. If the association is not the termination trustee,
301	the association shall transfer any association property to the
302	trustee. If the association is dissolved, the trustee shall also
303	have such other powers necessary to conclude the affairs of the
304	association.
305	(15)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
306	is pursuant to a plan of termination under subsection (2),
307	subsection (3), or subsection (4), the unit owners' rights and
308	title as tenants in common in undivided interests in the
309	condominium property vest in the termination trustee when the
310	plan is recorded or at a later date specified in the plan. The
311	unit owners thereafter become the beneficiaries of the proceeds
312	realized from the plan of termination. The termination trustee
313	may deal with the condominium property or any interest therein
314	if the plan confers on the trustee the authority to protect,
315	conserve, manage, sell, or dispose of the condominium property.
316	The trustee, on behalf of the unit owners, may contract for the
317	sale of real property, but the contract is not binding on the
318	unit owners until the plan is approved pursuant to subsection
319	(2), subsection (3), or subsection (4).
320	(16)  NOTICE.--
321	(a)  Within 30 days after a plan of termination has been
322	recorded, the termination trustee shall deliver by certified
323	mail, return receipt requested, notice to all unit owners,
324	lienors of the condominium property, and lienors of all units at
325	their last known addresses that a plan of termination has been
326	recorded. The notice shall include the book and page number of
327	the public records in which the plan was recorded, notice that a
328	copy of the plan shall be furnished upon written request, and
329	notice that the unit owner or lienor has the right to contest
330	the fairness of the plan.
331	(b)  The trustee, within 90 days after the effective date
332	of the plan, shall provide to the division a certified copy of
333	the recorded plan, the date the plan was recorded, and the
334	county, book, and page number of the public records in which the
335	plan was recorded.
336	(17)  RIGHT TO CONTEST.--A unit owner or lienor may contest
337	a plan of termination by initiating a summary procedure pursuant
338	to s. 51.011 within 90 days after the date the plan is recorded.
339	A unit owner or lienor who does not contest the plan within such
340	90-day period is barred from asserting or prosecuting a claim
341	against the association, the termination trustee, any unit
342	owner, or any successor in interest to the condominium property.
343	In an action contesting a plan of termination, the person
344	contesting the plan has the burden of pleading and proving that
345	the apportionment of the proceeds from the sale among the unit
346	owners was not fair and reasonable. The apportionment of sale
347	proceeds is presumed fair and reasonable if it was determined
348	pursuant to the methods prescribed in subsection (13). The court
349	shall adjudge the rights and interests of the parties and order
350	the plan of termination to be implemented if it is fair and
351	reasonable. If the court determines that the plan of termination
352	is not fair and reasonable, the court may void the plan or may
353	modify the plan to apportion the proceeds in a fair and
354	reasonable manner as required by this section based upon the
355	proceedings and order the modified plan of termination to be
356	implemented. In such action, the prevailing party may recover
357	reasonable attorney's fees and costs.
358	(18)  DISTRIBUTION.--
359	(a)  Following termination of the condominium, the
360	condominium property, association property, common surplus, and
361	other assets of the association shall be held by the termination
362	trustee, as trustee for unit owners and holders of liens on the
363	units, in their order of priority.
364	(b)  Not less than 30 days prior to the first distribution,
365	the termination trustee shall deliver by certified mail, return
366	receipt requested, a notice of the estimated distribution to all
367	unit owners, lienors of the condominium property, and lienors of
368	each unit at their last known addresses stating a good-faith
369	estimate of the amount of the distributions to each class and
370	the procedures and deadline for notifying the termination
371	trustee of any objections to the amount. The deadline must be at
372	least 15 days after the date the notice was mailed. The notice
373	may be sent with or after the notice required by subsection
374	(16). If a unit owner or lienor files a timely objection with
375	the termination trustee, the trustee does not have to distribute
376	the funds and property allocated to the respective unit owner or
377	lienor until the trustee has had a reasonable time to determine
378	the validity of the adverse claim. In the alternative, the
379	trustee may interplead the unit owner, lienor, and any other
380	person claiming an interest in the unit and deposit the funds
381	allocated to the unit in the court registry, at which time the
382	condominium property, association property, common surplus, and
383	other assets of the association are free of all claims and liens
384	of the parties to the suit. In an interpleader action, the
385	trustee and prevailing party may recover reasonable attorney's
386	fees and costs and court costs.
387	(c)  The proceeds of any sale of condominium property or
388	association property and any remaining condominium property or
389	association property, common surplus, and other assets shall be
390	distributed in the following priority:
391	1.  To pay the reasonable termination trustee's fees and
392	costs and accounting fees and costs.
393	2.  To lienholders of liens recorded prior to the recording
394	of the declaration.
395	3.  To purchase money lienholders on units to the extent
396	necessary to satisfy their liens.
397	4.  To lienholders of liens of the association which have
398	been consented to under s. 718.121(1).
399	5.  To creditors of the association, as their interests
400	appear.
401	6.  To unit owners, the proceeds of any sale of condominium
402	property subject to satisfaction of liens on each unit in their
403	order of priority, in shares specified in the plan of
404	termination, unless objected to by a unit owner or lienor.
405	7.  To unit owners, the remaining condominium property,
406	subject to satisfaction of liens on each unit in their order of
407	priority, in shares specified in the plan of termination, unless
408	objected to by a unit owner or a lienor as provided in paragraph
409	(b).
410	8.  To unit owners, the proceeds of any sale of association
411	property, the remaining association property, common surplus,
412	and other assets of the association, subject to satisfaction of
413	liens on each unit in their order of priority, in shares
414	specified in the plan of termination, unless objected to by a
415	unit owner or a lienor as provided in paragraph (b).
416	(d)  After determining that all known debts and liabilities
417	of an association in the process of termination have been paid
418	or adequately provided for, the termination trustee shall
419	distribute the remaining assets pursuant to the plan of
420	termination. If the termination is by court proceeding or
421	subject to court supervision, the distribution may not be made
422	until any period for the presentation of claims ordered by the
423	court has elapsed.
424	(e)  Assets held by an association upon a valid condition
425	requiring return, transfer, or conveyance, which condition has
426	occurred or will occur, shall be returned, transferred, or
427	conveyed in accordance with the condition. The remaining
428	association assets shall be distributed pursuant to paragraph
429	(c).
430	(f)  Distribution may be made in money, property, or
431	securities and in installments or as a lump sum, if it can be
432	done fairly and ratably and in conformity with the plan of
433	termination. Distribution shall be made as soon as is reasonably
434	consistent with the beneficial liquidation of the assets.
435	(19)  ASSOCIATION STATUS.--The termination of a condominium
436	does not change the corporate status of the association that
437	operated the condominium property. The association continues to
438	exist to conclude its affairs, prosecute and defend actions by
439	or against it, collect and discharge obligations, dispose of and
440	convey its property, and collect and divide its assets, but not
441	to act except as necessary to conclude its affairs.
442	(20)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
443	a condominium does not bar the creation, by the termination
444	trustee, of another condominium affecting any portion of the
445	same property.
446	(21)  EXCLUSION.--This section does not apply to the
447	termination of a condominium incident to a merger of that
448	condominium with one or more other condominiums under s.
449	718.110(7).
450	Section 2.  This act shall take effect July 1, 2006.

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