CS/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, provided that not more than 10 percent of the total
73voting interests of the condominium have rejected the plan of
74termination by negative vote or by providing written objections
75thereto. This subsection does not apply to condominiums in which
7675 percent or more of the units are timeshare units.
77     (4)  EXEMPTION.--A plan of termination is not an amendment
78subject to s. 718.110(4).
79     (5)  MORTGAGE LIENHOLDERS.--Notwithstanding any provision
80to the contrary in the declaration or this chapter, approval of
81a plan of termination by the holder of a recorded mortgage lien
82affecting a condominium parcel in which fewer than 75 percent of
83the units are timeshare units is not required unless the plan of
84termination will result in less than the full satisfaction of
85the mortgage lien affecting the condominium parcel. If such
86approval is required and not given, a holder of a recorded
87mortgage lien who objects to the plan of termination may contest
88the plan as provided in subsection (16). At the time of sale,
89the lien shall be transferred to the proportionate share of the
90proceeds assigned to the condominium parcel in the plan of
91termination or as subsequently modified by the court.
92     (6)  POWERS IN CONNECTION WITH TERMINATION.--The approval
93of the plan of termination does not terminate the association.
94It shall continue in existence following approval of the plan of
95termination with all powers and duties it had before approval of
96the plan. Notwithstanding any provision to the contrary in the
97declaration or bylaws, after approval of the plan the board
98shall:
99     (a)  Employ directors, agents, attorneys, and other
100professionals to liquidate or conclude its affairs.
101     (b)  Conduct the affairs of the association as necessary
102for the liquidation or termination.
103     (c)  Carry out contracts and collect, pay, and settle debts
104and claims for and against the association.
105     (d)  Defend suits brought against the association.
106     (e)  Sue in the name of the association for all sums due or
107owed to the association or to recover any of its property.
108     (f)  Perform any act necessary to maintain, repair, or
109demolish unsafe or uninhabitable improvements or other
110condominium property in compliance with applicable codes.
111     (g)  Sell at public or private sale or exchange, convey, or
112otherwise dispose of assets of the association for an amount
113deemed to be in the best interests of the association, and
114execute bills of sale and deeds of conveyance in the name of the
115association.
116     (h)  Collect and receive rents, profits, accounts
117receivable, income, maintenance fees, special assessments, or
118insurance proceeds for the association.
119     (i)  Contract and do anything in the name of the
120association which is proper or convenient to terminate the
121affairs of the association.
122     (7)  NATURAL DISASTERS.--
123     (a)  If, after a natural disaster, the identity of the
124directors or their right to hold office is in doubt, if they are
125deceased or unable to act, if they fail or refuse to act, or if
126they cannot be located, any interested person may petition the
127circuit court to determine the identity of the directors or, if
128found to be in the best interests of the unit owners, to appoint
129a receiver to conclude the affairs of the association after a
130hearing following notice to such persons as the court directs.
131Lienholders shall be given notice of the petition and have the
132right to propose persons for the consideration by the court as
133receiver.
134     (b)  The receiver shall have all powers given to the board
135pursuant to the declaration, bylaws, and subsection (6), and any
136other powers that are necessary to conclude the affairs of the
137association and are set forth in the order of appointment. The
138appointment of the receiver is subject to the bonding
139requirements of such order. The order shall also provide for the
140payment of a reasonable fee to the receiver from the sources
141identified in the order, which may include rents, profits,
142incomes, maintenance fees, or special assessments collected from
143the condominium property.
144     (8)  REPORTS AND REPLACEMENT OF RECEIVER.--
145     (a)  The association, receiver, or termination trustee
146shall prepare reports each quarter following the approval of the
147plan of termination setting forth the status and progress of the
148termination, costs and fees incurred, the date the termination
149is expected to be completed, and the current financial condition
150of the association, receivership, or trusteeship and provide
151copies of the report by regular mail to the unit owners and
152lienors at the mailing address provided to the association by
153the unit owners and the lienors.
154     (b)  The unit owners of an association in termination may
155recall or remove members of the board of administration with or
156without cause at any time as provided in s. 718.112(2)(j).
157     (c)  The lienors of an association in termination
158representing at least 50 percent of the outstanding amount of
159liens may petition the court for the appointment of a
160termination trustee, which shall be granted upon good cause
161shown.
162     (9)  PLAN OF TERMINATION.--The plan of termination must be
163a written document executed in the same manner as a deed by unit
164owners having the requisite percentage of voting interests to
165approve the plan and by the termination trustee. A copy of the
166proposed plan of termination shall be given to all unit owners,
167in the same manner as for notice of an annual meeting, at least
16814 days prior to the meeting at which the plan of termination is
169to be voted upon or prior to or simultaneously with the
170distribution of the solicitation seeking execution of the plan
171of termination or written consent to or joinder in the plan. A
172unit owner may document assent to the plan by executing the plan
173or by consent to or joinder in the plan in the manner of a deed.
174A plan of termination and the consents or joinders of unit
175owners and, if required, consents or joinders of mortgagees must
176be recorded in the public records of each county in which any
177portion of the condominium is located. The plan is effective
178only upon recordation or at a later date specified in the plan.
179     (10)  PLAN OF TERMINATION; REQUIRED PROVISIONS.--The plan
180of termination must specify:
181     (a)  The name, address, and powers of the termination
182trustee.
183     (b)  A date after which the plan of termination is void if
184it has not been recorded.
185     (c)  The interests of the respective unit owners in the
186association property, common surplus, and other assets of the
187association, which shall be the same as the respective interests
188of the unit owners in the common elements immediately before the
189termination, unless otherwise provided in the declaration.
190     (d)  The interests of the respective unit owners in any
191proceeds from the sale of the condominium property. The plan of
192termination may apportion those proceeds pursuant to any method
193prescribed in subsection (12). If, pursuant to the plan of
194termination, condominium property or real property owned by the
195association is to be sold following termination, the plan must
196provide for the sale and may establish any minimum sale terms.
197     (e)  Any interests of the respective unit owners in
198insurance proceeds or condemnation proceeds that are not used
199for repair or reconstruction at the time of termination. Unless
200the declaration expressly addresses the distribution of
201insurance proceeds or condemnation proceeds, the plan of
202termination may apportion those proceeds pursuant to any method
203prescribed in subsection (12).
204     (11)  PLAN OF TERMINATION; OPTIONAL PROVISIONS; CONDITIONAL
205TERMINATION.--
206     (a)  The plan of termination may provide that each unit
207owner retains the exclusive right of possession to the portion
208of the real estate that formerly constituted the unit, in which
209case the plan must specify the conditions of possession.
210     (b)  In a conditional termination, the plan must specify
211the conditions for termination. A conditional plan does not vest
212title in the termination trustee until the plan and a
213certificate executed by the association with the formalities of
214a deed, confirming that the conditions in the conditional plan
215have been satisfied or waived by the requisite percentage of the
216voting interests, have been recorded.
217     (12)  ALLOCATION OF PROCEEDS OF SALE OF CONDOMINIUM
218PROPERTY.--
219     (a)  Unless the declaration expressly provides for the
220allocation of the proceeds of sale of condominium property, the
221plan of termination must first apportion the proceeds between
222the aggregate value of all units and the value of the common
223elements, based on their respective fair-market values
224immediately before the termination, as determined by one or more
225independent appraisers selected by the association or
226termination trustee.
227     (b)  The portion of proceeds allocated to the units shall
228be further apportioned among the individual units. The
229apportionment is deemed fair and reasonable if it is so
230determined by the unit owners, who may approve the plan of
231termination by any of the following methods:
232     1.  The respective values of the units based on the fair-
233market values of the units immediately before the termination,
234as determined by one or more independent appraisers selected by
235the association or termination trustee;
236     2.  The respective values of the units based on the most
237recent market value of the units before the termination, as
238provided in the county property appraiser's records; or
239     3.  The respective interests of the units in the common
240elements specified in the declaration immediately before the
241termination.
242     (c)  The methods of apportionment in paragraph (b) do not
243prohibit any other method of apportioning the proceeds of sale
244allocated to the units agreed upon in the plan of termination.
245The portion of the proceeds allocated to the common elements
246shall be apportioned among the units based upon their respective
247interests in the common elements as provided in the declaration.
248     (d)  Liens that encumber a unit shall be transferred to the
249proceeds of sale of the condominium property and the proceeds of
250sale or other distribution of association property, common
251surplus, or other association assets attributable to such unit
252in their same priority. The proceeds of any sale of condominium
253property pursuant to a plan of termination may not be deemed to
254be common surplus or association property.
255     (13)  TERMINATION TRUSTEE.--The association shall serve as
256termination trustee unless another person is appointed in the
257plan of termination. If the association is unable, unwilling, or
258fails to act as trustee, any unit owner may petition the court
259to appoint a trustee. Upon the date of the recording or at a
260later date specified in the plan, title to the condominium
261property vests in the trustee. Unless prohibited by the plan,
262the termination trustee shall be vested with the powers given to
263the board pursuant to the declaration, bylaws, and subsection
264(6). If the association is not the termination trustee, the
265trustee's powers shall be coextensive with those of the
266association to the extent not prohibited in the plan of
267termination or the order of appointment. If the association is
268not the termination trustee, the association shall transfer any
269association property to the trustee. If the association is
270dissolved, the trustee shall also have such other powers
271necessary to conclude the affairs of the association.
272     (14)  TITLE VESTED IN TERMINATION TRUSTEE.--If termination
273is pursuant to a plan of termination under subsection (2) or
274subsection (3), the unit owners' rights and title as tenants in
275common in undivided interests in the condominium property vest
276in the termination trustee when the plan is recorded or at a
277later date specified in the plan. The unit owners thereafter
278become the beneficiaries of the proceeds realized from the plan
279of termination. The termination trustee may deal with the
280condominium property or any interest therein if the plan confers
281on the trustee the authority to protect, conserve, manage, sell,
282or dispose of the condominium property. The trustee, on behalf
283of the unit owners, may contract for the sale of real property,
284but the contract is not binding on the unit owners until the
285plan is approved pursuant to subsection (2) or subsection (3).
286     (15)  NOTICE.--
287     (a)  Within 30 days after a plan of termination has been
288recorded, the termination trustee shall deliver by certified
289mail, return receipt requested, notice to all unit owners,
290lienors of the condominium property, and lienors of all units at
291their last known addresses that a plan of termination has been
292recorded. The notice must include the book and page number of
293the public records in which the plan was recorded, notice that a
294copy of the plan shall be furnished upon written request, and
295notice that the unit owner or lienor has the right to contest
296the fairness of the plan.
297     (b)  The trustee, within 90 days after the effective date
298of the plan, shall provide to the division a certified copy of
299the recorded plan, the date the plan was recorded, and the
300county, book, and page number of the public records in which the
301plan is recorded.
302     (16)  RIGHT TO CONTEST.--A unit owner or lienor may contest
303a plan of termination by initiating a summary procedure pursuant
304to s. 51.011 within 90 days after the date the plan is recorded.
305A unit owner or lienor who does not contest the plan within the
30690-day period is barred from asserting or prosecuting a claim
307against the association, the termination trustee, any unit
308owner, or any successor in interest to the condominium property.
309In an action contesting a plan of termination, the person
310contesting the plan has the burden of pleading and proving that
311the apportionment of the proceeds from the sale among the unit
312owners was not fair and reasonable. The apportionment of sale
313proceeds is presumed fair and reasonable if it was determined
314pursuant to the methods prescribed in subsection (12). The court
315shall determine the rights and interests of the parties and
316order the plan of termination to be implemented if it is fair
317and reasonable. If the court determines that the plan of
318termination is not fair and reasonable, the court may void the
319plan or may modify the plan to apportion the proceeds in a fair
320and reasonable manner pursuant to this section based upon the
321proceedings and order the modified plan of termination to be
322implemented. In such action, the prevailing party shall recover
323reasonable attorney's fees and costs.
324     (17)  DISTRIBUTION.--
325     (a)  Following termination of the condominium, the
326condominium property, association property, common surplus, and
327other assets of the association shall be held by the termination
328trustee, as trustee for unit owners and holders of liens on the
329units, in their order of priority.
330     (b)  Not less than 30 days before the first distribution,
331the termination trustee shall deliver by certified mail, return
332receipt requested, a notice of the estimated distribution to all
333unit owners, lienors of the condominium property, and lienors of
334each unit at their last known addresses stating a good-faith
335estimate of the amount of the distributions to each class and
336the procedures and deadline for notifying the termination
337trustee of any objections to the amount. The deadline must be at
338least 15 days after the date the notice was mailed. The notice
339may be sent with or after the notice required by subsection
340(15). If a unit owner or lienor files a timely objection with
341the termination trustee, the trustee need not distribute the
342funds and property allocated to the respective unit owner or
343lienor until the trustee has had a reasonable time to determine
344the validity of the adverse claim. In the alternative, the
345trustee may interplead the unit owner, lienor, and any other
346person claiming an interest in the unit and deposit the funds
347allocated to the unit in the court registry, at which time the
348condominium property, association property, common surplus, and
349other assets of the association are free of all claims and liens
350of the parties to the suit. In an interpleader action, the
351trustee and prevailing party may recover reasonable attorney's
352fees and costs.
353     (c)  The proceeds from any sale of condominium property or
354association property and any remaining condominium property or
355association property, common surplus, and other assets shall be
356distributed in the following priority:
357     1.  To pay the reasonable termination trustee's fees and
358costs and accounting fees and costs.
359     2.  To lienholders of liens recorded prior to the recording
360of the declaration.
361     3.  To purchase-money lienholders on units to the extent
362necessary to satisfy their liens.
363     4.  To lienholders of liens of the association which have
364been consented to under s. 718.121(1).
365     5.  To creditors of the association, as their interests
366appear.
367     6.  To unit owners, the proceeds of any sale of condominium
368property subject to satisfaction of liens on each unit in their
369order of priority, in shares specified in the plan of
370termination, unless objected to by a unit owner or lienor as
371provided in paragraph (b).
372     7.  To unit owners, the remaining condominium property,
373subject to satisfaction of liens on each unit in their order of
374priority, in shares specified in the plan of termination, unless
375objected to by a unit owner or a lienor as provided in paragraph
376(b).
377     8.  To unit owners, the proceeds of any sale of association
378property, the remaining association property, common surplus,
379and other assets of the association, subject to satisfaction of
380liens on each unit in their order of priority, in shares
381specified in the plan of termination, unless objected to by a
382unit owner or a lienor as provided in paragraph (b).
383     (d)  After determining that all known debts and liabilities
384of an association in the process of termination have been paid
385or adequately provided for, the termination trustee shall
386distribute the remaining assets pursuant to the plan of
387termination. If the termination is by court proceeding or
388subject to court supervision, the distribution may not be made
389until any period for the presentation of claims ordered by the
390court has elapsed.
391     (e)  Assets held by an association upon a valid condition
392requiring return, transfer, or conveyance, which condition has
393occurred or will occur, shall be returned, transferred, or
394conveyed in accordance with the condition. The remaining
395association assets shall be distributed pursuant to paragraph
396(c).
397     (f)  Distribution may be made in money, property, or
398securities and in installments or as a lump sum, if it can be
399done fairly and ratably and in conformity with the plan of
400termination. Distribution shall be made as soon as is reasonably
401consistent with the beneficial liquidation of the assets.
402     (18)  ASSOCIATION STATUS.--The termination of a condominium
403does not change the corporate status of the association that
404operated the condominium property. The association continues to
405exist to conclude its affairs, prosecute and defend actions by
406or against it, collect and discharge obligations, dispose of and
407convey its property, and collect and divide its assets, but not
408to act except as necessary to conclude its affairs.
409     (19)  CREATION OF ANOTHER CONDOMINIUM.--The termination of
410a condominium does not bar the creation by the termination
411trustee of another condominium affecting any portion of the same
412property.
413     (20)  EXCLUSION.--This section does not apply to the
414termination of a condominium incident to a merger of that
415condominium with one or more other condominiums under s.
416718.110(7).
417     Section 2.  This act shall take effect July 1, 2007.


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