HB 407

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 for termination; providing powers and duties of
7the board of administration of the association; waiving
8certain notice requirements following natural disasters;
9providing requirements for a plan of termination;
10providing for the allocation of proceeds from the sale of
11condominium property; providing powers and duties of a
12termination trustee; providing notice requirements;
13providing a procedure for contesting a plan of
14termination; providing for award or recovery of attorney's
15fees and costs; providing rules for the distribution of
16property and sale proceeds; providing for the
17association's status following termination; allowing the
18creation of another condominium by the trustee; specifying
19an exclusion; providing an effective date.
20
21Be It Enacted by the Legislature of the State of Florida:
22
23     Section 1.  Section 718.117, Florida Statutes, is amended
24to read:
25(Substantial rewording of section. See
26s. 718.117, F.S., for present text.)
27     718.117  Termination of condominium.--
28     (1)  LEGISLATIVE FINDINGS.--The Legislature finds that
29condominiums are created as authorized by statute. In
30circumstances that may create economic waste, areas of
31disrepair, or obsolescence of a condominium property for its
32intended use and thereby lower property tax values, the
33Legislature further finds that it is the public policy of this
34state to provide by statute a method to preserve the value of
35the property interests and the rights of alienation thereof that
36owners have in the condominium property before and after
37termination. The Legislature further finds that it is contrary
38to the public policy of this state to require the continued
39operation of a condominium when to do so constitutes economic
40waste or when the ability to do so is made impossible by law or
41regulation. This section applies to all condominiums in this
42state in existence on or after July 1, 2007.
43     (2)  TERMINATION BECAUSE OF ECONOMIC WASTE OR
44IMPOSSIBILITY.--
45     (a)  Notwithstanding any provision to the contrary in the
46declaration, the condominium form of ownership of a property may
47be terminated by a plan of termination approved by the lesser of
48the lowest percentage of voting interests necessary to amend the
49declaration or as otherwise provided in the declaration for
50approval of termination when:
51     1.  The total estimated cost of repairs necessary to
52restore the improvements to their former condition or bring them
53into compliance with applicable laws or regulations exceeds the
54combined fair market value of all units in the condominium after
55completion of the repairs; or
56     2.  It becomes impossible to operate or reconstruct a
57condominium in its prior physical configuration because of land-
58use laws or regulations.
59     (b)  Notwithstanding paragraph (a), a condominium in which
6075 percent or more of the units are timeshare units may be
61terminated only pursuant to a plan of termination approved by 80
62percent of the total voting interests of the association and the
63holders of 80 percent of the original principal amount of
64outstanding recorded mortgage liens of timeshare estates in the
65condominium, unless the declaration provides for a lower voting
66percentage.
67     (3)  OPTIONAL TERMINATION.--Except as provided in
68subsection (2) or unless the declaration provides for a lower
69percentage, the condominium form of ownership of the property
70may be terminated pursuant to a plan of termination approved by
71at least 80 percent of the total voting interests of the
72condominium. This subsection does not apply to condominiums in
73which 75 percent or more of the units are timeshare units.
74     (4)  EXEMPTION.--A plan of termination is not an amendment
75subject to s. 718.110(4).
76     (5)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
77to the contrary in the declaration or this chapter, approval of
78a plan of termination by the holder of a recorded mortgage lien
79affecting a condominium parcel in which fewer than 75 percent of
80the units are timeshare units is not required unless the plan of
81termination will result in less than the full satisfaction of
82the mortgage lien affecting the condominium parcel. If such
83approval is required and not given, a holder of a recorded
84mortgage lien who objects to the plan of termination may contest
85the plan as provided in subsection (16). At the time of sale,
86the lien shall be transferred to the proportionate share of the
87proceeds assigned to the condominium parcel in the plan of
88termination or as subsequently modified by the court.
89     (6)  POWERS IN CONNECTION WITH TERMINATION.--The approval
90of the plan of termination does not terminate the association.
91It shall continue in existence following approval of the plan of
92termination with all powers and duties it had before approval of
93the plan. Notwithstanding any provision to the contrary in the
94declaration or bylaws, after approval of the plan the board
95shall:
96     (a)  Employ directors, agents, attorneys, and other
97professionals to liquidate or conclude its affairs.
98     (b)  Conduct the affairs of the association as necessary
99for the liquidation or termination.
100     (c)  Carry out contracts and collect, pay, and settle debts
101and claims for and against the association.
102     (d)  Defend suits brought against the association.
103     (e)  Sue in the name of the association for all sums due or
104owed to the association or to recover any of its property.
105     (f)  Perform any act necessary to maintain, repair, or
106demolish unsafe or uninhabitable improvements or other
107condominium property in compliance with applicable codes.
108     (g)  Sell at public or private sale or exchange, convey, or
109otherwise dispose of assets of the association for an amount
110deemed to be in the best interests of the association, and
111execute bills of sale and deeds of conveyance in the name of the
112association.
113     (h)  Collect and receive rents, profits, accounts
114receivable, income, maintenance fees, special assessments, or
115insurance proceeds for the association.
116     (i)  Contract and do anything in the name of the
117association which is proper or convenient to terminate the
118affairs of the association.
119     (7)  NATURAL DISASTERS.--
120     (a)  If, after a natural disaster, the identity of the
121directors or their right to hold office is in doubt, if they are
122deceased or unable to act, if they fail or refuse to act, or if
123they cannot be located, any interested person may petition the
124circuit court to determine the identity of the directors or, if
125found to be in the best interests of the unit owners, to appoint
126a receiver to conclude the affairs of the association after a
127hearing following notice to such persons as the court directs.
128Lienholders shall be given notice of the petition and have the
129right to propose persons for the consideration by the court as
130receiver.
131     (b)  The receiver shall have all powers given to the board
132pursuant to the declaration, bylaws, and subsection (6), and any
133other powers that are necessary to conclude the affairs of the
134association and are set forth in the order of appointment. The
135appointment of the receiver is subject to the bonding
136requirements of such order. The order shall also provide for the
137payment of a reasonable fee to the receiver from the sources
138identified in the order, which may include rents, profits,
139incomes, maintenance fees, or special assessments collected from
140the condominium property.
141     (8)  REPORTS AND REPLACEMENT OF RECEIVER.--
142     (a)  The association, receiver, or termination trustee
143shall prepare reports each quarter following the approval of the
144plan of termination setting forth the status and progress of the
145termination, costs and fees incurred, the date the termination
146is expected to be completed, and the current financial condition
147of the association, receivership, or trusteeship and provide
148copies of the report by regular mail to the unit owners and
149lienors at the mailing address provided to the association by
150the unit owners and the lienors.
151     (b)  The unit owners of an association in termination may
152recall or remove members of the board of administration with or
153without cause at any time as provided in s. 718.112(2)(j).
154     (c)  The lienors of an association in termination
155representing at least 50 percent of the outstanding amount of
156liens may petition the court for the appointment of a
157termination trustee, which shall be granted upon good cause
158shown.
159     (9)  PLAN OF TERMINATION.--The plan of termination must be
160a written document executed in the same manner as a deed by unit
161owners having the requisite percentage of voting interests to
162approve the plan and by the termination trustee. A copy of the
163proposed plan of termination shall be given to all unit owners,
164in the same manner as for notice of an annual meeting, at least
16514 days prior to the meeting at which the plan of termination is
166to be voted upon or prior to or simultaneously with the
167distribution of the solicitation seeking execution of the plan
168of termination or written consent to or joinder in the plan. A
169unit owner may document assent to the plan by executing the plan
170or by consent to or joinder in the plan in the manner of a deed.
171A plan of termination and the consents or joinders of unit
172owners and, if required, consents or joinders of mortgagees must
173be recorded in the public records of each county in which any
174portion of the condominium is located. The plan is effective
175only upon recordation or at a later date specified in the plan.
176     (10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
177of termination must specify:
178     (a)  The name, address, and powers of the termination
179trustee.
180     (b)  A date after which the plan of termination is void if
181it has not been recorded.
182     (c)  The interests of the respective unit owners in the
183association property, common surplus, and other assets of the
184association, which shall be the same as the respective interests
185of the unit owners in the common elements immediately before the
186termination, unless otherwise provided in the declaration.
187     (d)  The interests of the respective unit owners in any
188proceeds from the sale of the condominium property. The plan of
189termination may apportion those proceeds pursuant to any method
190prescribed in subsection (12). If, pursuant to the plan of
191termination, condominium property or real property owned by the
192association is to be sold following termination, the plan must
193provide for the sale and may establish any minimum sale terms.
194     (e)  Any interests of the respective unit owners in
195insurance proceeds or condemnation proceeds that are not used
196for repair or reconstruction at the time of termination. Unless
197the declaration expressly addresses the distribution of
198insurance proceeds or condemnation proceeds, the plan of
199termination may apportion those proceeds pursuant to any method
200prescribed in subsection (12).
201     (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
202TERMINATION.--
203     (a)  The plan of termination may provide that each unit
204owner retains the exclusive right of possession to the portion
205of the real estate that formerly constituted the unit, in which
206case the plan must specify the conditions of possession.
207     (b)  In a conditional termination, the plan must specify
208the conditions for termination. A conditional plan does not vest
209title in the termination trustee until the plan and a
210certificate executed by the association with the formalities of
211a deed, confirming that the conditions in the conditional plan
212have been satisfied or waived by the requisite percentage of the
213voting interests, have been recorded.
214     (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
215PROPERTY.--
216     (a)  Unless the declaration expressly provides for the
217allocation of the proceeds of sale of condominium property, the
218plan of termination must first apportion the proceeds between
219the aggregate value of all units and the value of the common
220elements, based on their respective fair-market values
221immediately before the termination, as determined by one or more
222independent appraisers selected by the association or
223termination trustee.
224     (b)  The portion of proceeds allocated to the units shall
225be further apportioned among the individual units. The
226apportionment is deemed fair and reasonable if it is so
227determined by the unit owners, who may approve the plan of
228termination by any of the following methods:
229     1.  The respective values of the units based on the fair-
230market values of the units immediately before the termination,
231as determined by one or more independent appraisers selected by
232the association or termination trustee;
233     2.  The respective values of the units based on the most
234recent market value of the units before the termination, as
235provided in the county property appraiser's records; or
236     3.  The respective interests of the units in the common
237elements specified in the declaration immediately before the
238termination.
239     (c)  The methods of apportionment in paragraph (b) do not
240prohibit any other method of apportioning the proceeds of sale
241allocated to the units agreed upon in the plan of termination.
242The portion of the proceeds allocated to the common elements
243shall be apportioned among the units based upon their respective
244interests in the common elements as provided in the declaration.
245     (d)  Liens that encumber a unit shall be transferred to the
246proceeds of sale of the condominium property and the proceeds of
247sale or other distribution of association property, common
248surplus, or other association assets attributable to such unit
249in their same priority. The proceeds of any sale of condominium
250property pursuant to a plan of termination may not be deemed to
251be common surplus or association property.
252     (13)  TERMINATION TRUSTEE.--The association shall serve as
253termination trustee unless another person is appointed in the
254plan of termination. If the association is unable, unwilling, or
255fails to act as trustee, any unit owner may petition the court
256to appoint a trustee. Upon the date of the recording or at a
257later date specified in the plan, title to the condominium
258property vests in the trustee. Unless prohibited by the plan,
259the termination trustee shall be vested with the powers given to
260the board pursuant to the declaration, bylaws, and subsection
261(6). If the association is not the termination trustee, the
262trustee's powers shall be coextensive with those of the
263association to the extent not prohibited in the plan of
264termination or the order of appointment. If the association is
265not the termination trustee, the association shall transfer any
266association property to the trustee. If the association is
267dissolved, the trustee shall also have such other powers
268necessary to conclude the affairs of the association.
269     (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
270is pursuant to a plan of termination under subsection (2) or
271subsection (3), the unit owners' rights and title as tenants in
272common in undivided interests in the condominium property vest
273in the termination trustee when the plan is recorded or at a
274later date specified in the plan. The unit owners thereafter
275become the beneficiaries of the proceeds realized from the plan
276of termination. The termination trustee may deal with the
277condominium property or any interest therein if the plan confers
278on the trustee the authority to protect, conserve, manage, sell,
279or dispose of the condominium property. The trustee, on behalf
280of the unit owners, may contract for the sale of real property,
281but the contract is not binding on the unit owners until the
282plan is approved pursuant to subsection (2) or subsection (3).
283     (15)  NOTICE.--
284     (a)  Within 30 days after a plan of termination has been
285recorded, the termination trustee shall deliver by certified
286mail, return receipt requested, notice to all unit owners,
287lienors of the condominium property, and lienors of all units at
288their last known addresses that a plan of termination has been
289recorded. The notice must include the book and page number of
290the public records in which the plan was recorded, notice that a
291copy of the plan shall be furnished upon written request, and
292notice that the unit owner or lienor has the right to contest
293the fairness of the plan.
294     (b)  The trustee, within 90 days after the effective date
295of the plan, shall provide to the division a certified copy of
296the recorded plan, the date the plan was recorded, and the
297county, book, and page number of the public records in which the
298plan is recorded.
299     (16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
300a plan of termination by initiating a summary procedure pursuant
301to s. 51.011 within 90 days after the date the plan is recorded.
302A unit owner or lienor who does not contest the plan within the
30390-day period is barred from asserting or prosecuting a claim
304against the association, the termination trustee, any unit
305owner, or any successor in interest to the condominium property.
306In an action contesting a plan of termination, the person
307contesting the plan has the burden of pleading and proving that
308the apportionment of the proceeds from the sale among the unit
309owners was not fair and reasonable. The apportionment of sale
310proceeds is presumed fair and reasonable if it was determined
311pursuant to the methods prescribed in subsection (12). The court
312shall determine the rights and interests of the parties and
313order the plan of termination to be implemented if it is fair
314and reasonable. If the court determines that the plan of
315termination is not fair and reasonable, the court may void the
316plan or may modify the plan to apportion the proceeds in a fair
317and reasonable manner pursuant to this section based upon the
318proceedings and order the modified plan of termination to be
319implemented. In such action, the prevailing party shall recover
320reasonable attorney's fees and costs.
321     (17)  DISTRIBUTION.--
322     (a)  Following termination of the condominium, the
323condominium property, association property, common surplus, and
324other assets of the association shall be held by the termination
325trustee, as trustee for unit owners and holders of liens on the
326units, in their order of priority.
327     (b)  Not less than 30 days before the first distribution,
328the termination trustee shall deliver by certified mail, return
329receipt requested, a notice of the estimated distribution to all
330unit owners, lienors of the condominium property, and lienors of
331each unit at their last known addresses stating a good-faith
332estimate of the amount of the distributions to each class and
333the procedures and deadline for notifying the termination
334trustee of any objections to the amount. The deadline must be at
335least 15 days after the date the notice was mailed. The notice
336may be sent with or after the notice required by subsection
337(15). If a unit owner or lienor files a timely objection with
338the termination trustee, the trustee need not distribute the
339funds and property allocated to the respective unit owner or
340lienor until the trustee has had a reasonable time to determine
341the validity of the adverse claim. In the alternative, the
342trustee may interplead the unit owner, lienor, and any other
343person claiming an interest in the unit and deposit the funds
344allocated to the unit in the court registry, at which time the
345condominium property, association property, common surplus, and
346other assets of the association are free of all claims and liens
347of the parties to the suit. In an interpleader action, the
348trustee and prevailing party may recover reasonable attorney's
349fees and costs and court costs.
350     (c)  The proceeds from any sale of condominium property or
351association property and any remaining condominium property or
352association property, common surplus, and other assets shall be
353distributed in the following priority:
354     1.  To pay the reasonable termination trustee's fees and
355costs and accounting fees and costs.
356     2.  To lienholders of liens recorded prior to the recording
357of the declaration.
358     3.  To purchase-money lienholders on units to the extent
359necessary to satisfy their liens.
360     4.  To lienholders of liens of the association which have
361been consented to under s. 718.121(1).
362     5.  To creditors of the association, as their interests
363appear.
364     6.  To unit owners, the proceeds of any sale of condominium
365property subject to satisfaction of liens on each unit in their
366order of priority, in shares specified in the plan of
367termination, unless objected to by a unit owner or lienor.
368     7.  To unit owners, the remaining condominium property,
369subject to satisfaction of liens on each unit in their order of
370priority, in shares specified in the plan of termination, unless
371objected to by a unit owner or a lienor as provided in paragraph
372(b).
373     8.  To unit owners, the proceeds of any sale of association
374property, the remaining association property, common surplus,
375and other assets of the association, subject to satisfaction of
376liens on each unit in their order of priority, in shares
377specified in the plan of termination, unless objected to by a
378unit owner or a lienor as provided in paragraph (b).
379     (d)  After determining that all known debts and liabilities
380of an association in the process of termination have been paid
381or adequately provided for, the termination trustee shall
382distribute the remaining assets pursuant to the plan of
383termination. If the termination is by court proceeding or
384subject to court supervision, the distribution may not be made
385until any period for the presentation of claims ordered by the
386court has elapsed.
387     (e)  Assets held by an association upon a valid condition
388requiring return, transfer, or conveyance, which condition has
389occurred or will occur, shall be returned, transferred, or
390conveyed in accordance with the condition. The remaining
391association assets shall be distributed pursuant to paragraph
392(c).
393     (f)  Distribution may be made in money, property, or
394securities and in installments or as a lump sum, if it can be
395done fairly and ratably and in conformity with the plan of
396termination. Distribution shall be made as soon as is reasonably
397consistent with the beneficial liquidation of the assets.
398     (18)  ASSOCIATION STATUS.--The termination of a condominium
399does not change the corporate status of the association that
400operated the condominium property. The association continues to
401exist to conclude its affairs, prosecute and defend actions by
402or against it, collect and discharge obligations, dispose of and
403convey its property, and collect and divide its assets, but not
404to act except as necessary to conclude its affairs.
405     (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
406a condominium does not bar the creation by the termination
407trustee of another condominium affecting any portion of the same
408property.
409     (20)  EXCLUSION.--This section does not apply to the
410termination of a condominium incident to a merger of that
411condominium with one or more other condominiums under s.
412718.110(7).
413     Section 2.  This act shall take effect July 1, 2007.


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