Florida Senate - 2009 COMMITTEE AMENDMENT
Bill No. CS for SB 880
Barcode 962920
LEGISLATIVE ACTION
Senate . House
Comm: RE .
04/14/2009 .
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The Committee on Community Affairs (Deutch) recommended the
following:
1 Senate Substitute for Amendment (335666) (with title
2 amendment)
3
4 Between lines 909 and 910
5 insert:
6 Section 7. Subsection (16) of section 718.103, Florida
7 Statutes, is amended to read:
8 718.103 Definitions.—As used in this chapter, the term:
9 (16) “Developer” means a person who creates a condominium
10 or offers condominium parcels for sale or lease in the ordinary
11 course of business, but does not include:
12 (a) An owner or lessee of a condominium or cooperative unit
13 who has acquired the unit for his or her own occupancy;, nor
14 does it include
15 (b) A cooperative association which creates a condominium
16 by conversion of an existing residential cooperative after
17 control of the association has been transferred to the unit
18 owners if, following the conversion, the unit owners will be the
19 same persons who were unit owners of the cooperative and no
20 units are offered for sale or lease to the public as part of the
21 plan of conversion;.
22 (c) A bulk assignee or bulk buyer as defined in s. 718.703;
23 or
24 (d) A state, county, or municipal entity is not a developer
25 for any purposes under this act when it is acting as a lessor
26 and not otherwise named as a developer in the declaration of
27 condominium association.
28 Section 8. Subsection (1) of section 718.301, Florida
29 Statutes, is amended to read:
30 718.301 Transfer of association control; claims of defect
31 by association.—
32 (1) When unit owners other than the developer own 15
33 percent or more of the units in a condominium that will be
34 operated ultimately by an association, the unit owners other
35 than the developer shall be entitled to elect no less than one
36 third of the members of the board of administration of the
37 association. Unit owners other than the developer are entitled
38 to elect not less than a majority of the members of the board of
39 administration of an association:
40 (a) Three years after 50 percent of the units that will be
41 operated ultimately by the association have been conveyed to
42 purchasers;
43 (b) Three months after 90 percent of the units that will be
44 operated ultimately by the association have been conveyed to
45 purchasers;
46 (c) When all the units that will be operated ultimately by
47 the association have been completed, some of them have been
48 conveyed to purchasers, and none of the others are being offered
49 for sale by the developer in the ordinary course of business;
50 (d) When some of the units have been conveyed to purchasers
51 and none of the others are being constructed or offered for sale
52 by the developer in the ordinary course of business;
53 (e) When the developer files a petition seeking protection
54 in bankruptcy;
55 (f) When a receiver for the developer is appointed by a
56 circuit court and is not discharged within 30 days after such
57 appointment, unless the court determines within 30 days after
58 appointment of the receiver that transfer of control would be
59 detrimental to the association or its members; or
60 (g) Seven years after recordation of the declaration of
61 condominium; or, in the case of an association which may
62 ultimately operate more than one condominium, 7 years after
63 recordation of the declaration for the first condominium it
64 operates; or, in the case of an association operating a phase
65 condominium created pursuant to s. 718.403, 7 years after
66 recordation of the declaration creating the initial phase,
67 whichever occurs first. The developer is entitled to elect at
68 least one member of the board of administration of an
69 association as long as the developer holds for sale in the
70 ordinary course of business at least 5 percent, in condominiums
71 with fewer than 500 units, and 2 percent, in condominiums with
72 more than 500 units, of the units in a condominium operated by
73 the association. Following the time the developer relinquishes
74 control of the association, the developer may exercise the right
75 to vote any developer-owned units in the same manner as any
76 other unit owner except for purposes of reacquiring control of
77 the association or selecting the majority members of the board
78 of administration.
79 Section 9. Part VII of chapter 718, Florida Statutes,
80 consisting of sections 718.701, 718.702, 718.703, 718.704,
81 718.705, 718.706, 718.707, and 718.708, is created to read:
82 718.701 Short title.—This part may be cited as the
83 “Distressed Condominium Relief Act.”
84 718.702 Legislative intent.—
85 (1) The Legislature acknowledges the massive downturn in
86 the condominium market which has transpired throughout the state
87 and the impact of such downturn on developers, lenders, unit
88 owners, and condominium associations. Numerous condominium
89 projects have either failed or are in the process of failing,
90 whereby the condominium has a small percentage of third-party
91 unit owners as compared to the unsold inventory of units. As a
92 result of the inability to find purchasers for this inventory of
93 units, which results in part from the devaluing of real estate
94 in this state, developers are unable to satisfy the requirements
95 of their lenders, leading to defaults on mortgages.
96 Consequently, lenders are faced with the task of finding a
97 solution to the problem in order to be paid for their
98 investments.
99 (2) The Legislature recognizes that all of the factors
100 listed in this section lead to condominiums becoming distressed,
101 resulting in detriment to the unit owners and the condominium
102 association on account of the resulting shortage of assessment
103 moneys available to support the financial requirements for
104 proper maintenance of the condominium. Such shortage and the
105 resulting lack of proper maintenance further erodes property
106 values. The Legislature finds that individuals and entities
107 within Florida and in other states have expressed interest in
108 purchasing unsold inventory in one or more condominium projects,
109 but are reticent to do so because of accompanying liabilities
110 inherited from the original developer, which are by definition
111 imputed to the successor purchaser, including a foreclosing
112 mortgagee. This results in the potential purchaser having
113 unknown and unquantifiable risks, and potential successor
114 purchasers are unwilling to accept such risks. The result is
115 that condominium projects stagnate, leaving all parties involved
116 at an impasse without the ability to find a solution.
117 (3) The Legislature finds and declares that it is the
118 public policy of this state to protect the interests of
119 developers, lenders, unit owners, and condominium associations
120 with regard to distressed condominiums, and that there is a need
121 for relief from certain provisions of the Florida Condominium
122 Act geared toward enabling economic opportunities within these
123 condominiums for successor purchasers, including foreclosing
124 mortgagees. Such relief would benefit existing unit owners and
125 condominium associations. The Legislature further finds and
126 declares that this situation cannot be open-ended without
127 potentially prejudicing the rights of unit owners and
128 condominium associations, and thereby declares that the
129 provisions of this part shall be used by purchasers of
130 condominium inventory for a specific and defined period.
131 718.703 Definitions.—As used in this part, the term:
132 (1) “Bulk assignee” means a person who:
133 (a) Acquires more than seven condominium parcels as set
134 forth in s. 718.707; and
135 (b) Receives an assignment of some or all of the rights of
136 the developer as are set forth in the declaration of condominium
137 or in this chapter by a written instrument recorded as an
138 exhibit to the deed or as a separate instrument in the public
139 records of the county in which the condominium is located.
140 (2) “Bulk buyer” means a person who acquires more than
141 seven condominium parcels as set forth in s. 718.707 but who
142 does not receive an assignment of any developer rights other
143 than the right to conduct sales, leasing, and marketing
144 activities within the condominium.
145 718.704 Assignment and assumption of developer rights by
146 bulk assignee; bulk buyer.—
147 (1) A bulk assignee shall be deemed to have assumed and is
148 liable for all duties and responsibilities of the developer
149 under the declaration and this chapter, except:
150 (a) Warranties of the developer under s. 718.203(1) or s.
151 718.618, except for design, construction, development, or repair
152 work performed by or on behalf of such bulk assignee;
153 (b) The obligation to:
154 1. Fund converter reserves under s. 718.618 for a unit
155 which was not acquired by the bulk assignee; or
156 2. Provide converter warranties on any portion of the
157 condominium property except as may be expressly provided by the
158 bulk assignee in the contract for purchase and sale executed
159 with a purchaser and pertaining to any design, construction,
160 development, or repair work performed by or on behalf of the
161 bulk assignee;
162 (c) The requirement to provide the association with a
163 cumulative audit of the association’s finances from the date of
164 formation of the condominium association as required by s.
165 718.301. However, the bulk assignee shall provide an audit for
166 the period for which the bulk assignee elects a majority of the
167 members of the board of administration;
168 (d) Any liability arising out of or in connection with
169 actions taken by the board of administration or the developer
170 appointed directors before the bulk assignee elects a majority
171 of the members of the board of administration; or
172 (e) Any liability for or arising out of the developer’s
173 failure to fund previous assessments or to resolve budgetary
174 deficits in relation to a developer’s right to guarantee
175 assessments, except as otherwise provided in subsection (2).
176
177 Further, the bulk assignee is responsible for delivering
178 documents and materials in accordance with s. 718.705(3). A bulk
179 assignee may expressly assume some or all of the obligations of
180 the developer described in paragraphs (a)-(e).
181 (2) A bulk assignee receiving the assignment of the rights
182 of the developer to guarantee the level of assessments and fund
183 budgetary deficits pursuant to s. 718.116 shall be deemed to
184 have assumed and is liable for all obligations of the developer
185 with respect to such guarantee, including any applicable funding
186 of reserves to the extent required by law, for as long as the
187 guarantee remains in effect. A bulk assignee not receiving an
188 assignment of the right of the developer to guarantee the level
189 of assessments and fund budgetary deficits pursuant to s.
190 718.116 or a bulk buyer is not deemed to have assumed and is not
191 liable for the obligations of the developer with respect to such
192 guarantee, but is responsible for payment of assessments in the
193 same manner as all other owners of condominium parcels.
194 (3) A bulk buyer is liable for the duties and
195 responsibilities of the developer under the declaration and this
196 chapter only to the extent provided in this part, together with
197 any other duties or responsibilities of the developer expressly
198 assumed in writing by the bulk buyer.
199 (4) An acquirer of condominium parcels is not considered a
200 bulk assignee or a bulk buyer if the transfer to such acquirer
201 was made with the intent to hinder, delay, or defraud any
202 purchaser, unit owner, or the association, or if the acquirer is
203 a person who would constitute an insider under s. 726.102(7).
204 (5) An assignment of developer rights to a bulk assignee
205 may be made by the developer, a previous bulk assignee, or a
206 court of competent jurisdiction acting on behalf of the
207 developer or the previous bulk assignee. At any particular time,
208 there may be no more than one bulk assignee within a
209 condominium, but there may be more than one bulk buyer. If more
210 than one acquirer of condominium parcels receives an assignment
211 of developer rights from the same person, the bulk assignee is
212 the acquirer whose instrument of assignment is recorded first in
213 applicable public records.
214 718.105 Board of administration; transfer of control.—
215 (1) For purposes of determining the timing for transfer of
216 control of the board of administration of the association to
217 unit owners other than the developer under ss. 718.301(1)(a) and
218 (b), if a bulk assignee is entitled to elect a majority of the
219 members of the board, a condominium parcel acquired by the bulk
220 assignee shall not be deemed to be conveyed to a purchaser, or
221 to be owned by an owner other than the developer, until such
222 condominium parcel is conveyed to an owner who is not a bulk
223 assignee.
224 (2) Unless control of the board of administration of the
225 association has already been relinquished pursuant to s.
226 718.301(1), the bulk assignee is obligated to relinquish control
227 of the association in accordance with s. 718.301 and this part.
228 (3) When a bulk assignee relinquishes control of the board
229 of administration as set forth in s. 718.301, the bulk assignee
230 shall deliver all of those items required by s. 718.301(4).
231 However, the bulk assignee is not required to deliver items and
232 documents not in the possession of the bulk assignee during the
233 period during which the bulk assignee was the owner of
234 condominium parcels. In conjunction with acquisition of
235 condominium parcels, a bulk assignee shall undertake a good
236 faith effort to obtain the documents and materials required to
237 be provided to the association pursuant to s. 718.301(4). To the
238 extent the bulk assignee is not able to obtain all of such
239 documents and materials, the bulk assignee shall certify in
240 writing to the association the names or descriptions of the
241 documents and materials that were not obtainable by the bulk
242 assignee. Delivery of the certificate relieves the bulk assignee
243 of responsibility for the delivery of the documents and
244 materials referenced in the certificate as otherwise required
245 under ss. 718.112 and 718.301 and this part. The responsibility
246 of the bulk assignee for the audit required by s. 718.301(4)
247 shall commence as of the date on which the bulk assignee elected
248 a majority of the members of the board of administration.
249 (4) If a conflict arises between the provisions or
250 application of this section and s. 718.301, this section shall
251 prevail.
252 (5) Failure of a bulk assignee or bulk buyer to comply with
253 all the requirements contained in this part shall result in the
254 loss of any and all protections or exemptions provided under
255 this part.
256 718.706 Specific provisions pertaining to offering of units
257 by a bulk assignee or bulk buyer.—
258 (1) Before offering any units for sale or for lease for a
259 term exceeding 5 years, a bulk assignee or a bulk buyer shall
260 file the following documents with the division and provide such
261 documents to a prospective purchaser:
262 (a) An updated prospectus or offering circular, or a
263 supplement to the prospectus or offering circular, filed by the
264 creating developer prepared in accordance with s. 718.504, which
265 shall include the form of contract for purchase and sale in
266 compliance with s. 718.503(2);
267 (b) An updated Frequently Asked Questions and Answers
268 sheet;
269 (c) The executed escrow agreement if required under s.
270 718.202; and
271 (d) The financial information required by s. 718.111(13).
272 However, if a financial information report does not exist for
273 the fiscal year before acquisition of title by the bulk assignee
274 or bulk buyer, or accounting records cannot be obtained in good
275 faith by the bulk assignee or the bulk buyer which would permit
276 preparation of the required financial information report, the
277 bulk assignee or bulk buyer is excused from the requirement of
278 this paragraph. However, the bulk assignee or bulk buyer must
279 include in the purchase contract the following statement in
280 conspicuous type:
281 THE FINANCIAL INFORMATION REPORT REQUIRED UNDER S.
282 718.111(13) FOR THE IMMEDIATELY PRECEDING FISCAL YEAR OF THE
283 ASSOCIATION IS NOT AVAILABLE OR CANNOT BE CREATED BY THE SELLER
284 AS A RESULT OF INSUFFICIENT ACCOUNTING RECORDS OF THE
285 ASSOCIATION.
286 (2) Before offering any units for sale or for lease for a
287 term exceeding 5 years, a bulk assignee shall file with the
288 division and provide to a prospective purchaser a disclosure
289 statement that must include, but is not limited to:
290 (a) A description to the purchaser of any rights of the
291 developer which have been assigned to the bulk assignee;
292 (b) The following statement in conspicuous type:
293 SELLER IS NOT OBLIGATED FOR ANY WARRANTIES OF THE DEVELOPER
294 UNDER S. 718.203(1) OR S. 718.618, AS APPLICABLE, EXCEPT FOR
295 DESIGN, CONSTRUCTION, DEVELOPMENT, OR REPAIR WORK PERFORMED BY
296 OR ON BEHALF OF SELLER; and
297 (c) If the condominium is a conversion subject to part VI,
298 the following statement in conspicuous type:
299 SELLER HAS NO OBLIGATION TO FUND CONVERTER RESERVES OR TO
300 PROVIDE CONVERTER WARRANTIES UNDER S. 718.618 ON ANY PORTION OF
301 THE CONDOMINIUM PROPERTY EXCEPT AS MAY BE EXPRESSLY REQUIRED OF
302 THE SELLER IN THE CONTRACT FOR PURCHASE AND SALE EXECUTED BY THE
303 SELLER AND THE PREVIOUS DEVELOPER AND PERTAINING TO ANY DESIGN,
304 CONSTRUCTION, DEVELOPMENT, OR REPAIR WORK PERFORMED BY OR ON
305 BEHALF OF THE SELLER.
306 (3) In addition to the requirements set forth in subsection
307 (1), a bulk assignee or bulk buyer must comply with the
308 nondeveloper disclosure requirements set forth in s. 718.503(2)
309 before offering any units for sale or for lease for a term
310 exceeding 5 years.
311 (4) A bulk assignee, while it is in control of the board of
312 administration of the association, may not authorize, on behalf
313 of the association:
314 (a) The waiver of reserves or the reduction of funding of
315 the reserves in accordance with s. 718.112(2)(f)2., unless
316 approved by a majority of the voting interests not controlled by
317 the developer, bulk assignee, and bulk buyer; or
318 (b) The use of reserve expenditures for other purposes in
319 accordance with s. 718.112(2)(f)3., unless approved by a
320 majority of the voting interests not controlled by the
321 developer, bulk assignee, and bulk buyer.
322 (5) A bulk assignee, while it is in control of the board of
323 administration of the association, shall comply with the
324 requirements imposed upon developers to transfer control of the
325 association to the unit owners in accordance with s. 718.301.
326 (6) A bulk assignee or a bulk buyer shall comply with all
327 the requirements of s. 718.302 regarding any contracts entered
328 into by the association during the period the bulk assignee or
329 bulk buyer maintains control of the board of administration.
330 Unit owners shall be afforded all the protections contained in
331 s. 718.302 regarding agreements entered into by the association
332 before unit owners other than the developer, bulk assignee, or
333 bulk buyer elected a majority of the board of administration.
334 (7) A bulk buyer shall comply with the requirements
335 contained in the declaration regarding any transfer of a unit,
336 including sales, leases, and subleases. A bulk buyer is not
337 entitled to any exemptions afforded a developer or successor
338 developer under this chapter regarding any transfer of a unit,
339 including sales, leases, or subleases.
340 718.707 Time limitation for classification as bulk assignee
341 or bulk buyer.—A person acquiring condominium parcels may not be
342 classified as a bulk assignee or bulk buyer unless the
343 condominium parcels were acquired before July 1, 2011. The date
344 of such acquisition shall be determined by the date of recording
345 of a deed or other instrument of conveyance for such parcels in
346 the public records of the county in which the condominium is
347 located, or by the date of issuance of a certificate of title in
348 a foreclosure proceeding with respect to such condominium
349 parcels.
350 718.708 Liability of developers and others.—An assignment
351 of developer rights to a bulk assignee or bulk buyer does not
352 release the developer from any liabilities under the declaration
353 or this chapter. This part does not limit the liability of the
354 developer for claims brought by unit owners, bulk assignees, or
355 bulk buyers for violations of this chapter by the developer,
356 unless specifically excluded in this part. Nothing contained
357 within this part waives, releases, compromises, or limits the
358 liability of contractors, subcontractors, materialmen,
359 manufacturers, architects, engineers, or any participant in the
360 design or construction of a condominium for any claim brought by
361 an association, unit owners, bulk assignees, or bulk buyers
362 arising from the design of the condominium, construction
363 defects, misrepresentations associated with condominium
364 property, or violations of this chapter, unless specifically
365 excluded in this part.
366
367
368 ================= T I T L E A M E N D M E N T ================
369 And the title is amended as follows:
370 Delete line 66
371 and insert:
372 days under certain circumstances; amending s. 718.103,
373 F.S.; expanding the definition of “developer” to
374 include a bulk assignee or bulk buyer; amending s.
375 718.301, F.S.; revising conditions under which unit
376 owners other than the developer may elect not less
377 than a majority of the members of the board of
378 administration of an association; creating part VII of
379 ch. 718, F.S.; providing a short title; providing
380 legislative findings and intent; defining the terms
381 “bulk assignee” and “bulk buyer”; providing for the
382 assignment of developer rights by a bulk assignee;
383 specifying liabilities of bulk assignees and bulk
384 buyers; providing exceptions; providing additional
385 responsibilities of bulk assignees and bulk buyers;
386 authorizing certain entities to assign developer
387 rights to a bulk assignee; limiting the number of bulk
388 assignees at any given time; providing for the
389 transfer of control of a board of administration;
390 providing effects of such transfer on parcels acquired
391 by a bulk assignee; providing obligations of a bulk
392 assignee upon the transfer of control of a board of
393 administration; requiring that a bulk assignee certify
394 certain information in writing; providing for the
395 resolution of a conflict between specified provisions
396 of state law; providing that the failure of a bulk
397 assignee or bulk buyer to comply with specified
398 provisions of state law results in the loss of certain
399 protections and exemptions; requiring that a bulk
400 assignee or bulk buyer file certain information with
401 the Division of Florida Condominiums, Timeshares, and
402 Mobile Homes of the Department of Business and
403 Professional Regulation before offering any units for
404 sale or lease in excess of a specified term; requiring
405 that a copy of such information be provided to a
406 prospective purchaser; requiring that certain
407 contracts and disclosure statements contain specified
408 statements; requiring that a bulk assignee or bulk
409 buyer comply with certain disclosure requirements;
410 prohibiting a bulk assignee from taking certain
411 actions on behalf of an association while the bulk
412 assignee is in control of the board of administration
413 of the association and requiring that such bulk
414 assignee comply with certain requirements; requiring
415 that a bulk assignee or bulk buyer comply with certain
416 requirements regarding certain contracts; providing
417 unit owners with specified protections regarding
418 certain contracts; requiring that a bulk buyer comply
419 with certain requirements regarding the transfer of a
420 unit; prohibiting a person from being classified as a
421 bulk assignee or bulk buyer unless condominium parcels
422 were acquired before a specified date; providing for
423 the determination of the date of acquisition of a
424 parcel; providing that the assignment of developer
425 rights to a bulk assignee does not release a developer
426 from certain liabilities; preserving certain
427 liabilities for certain parties; amending s. 719.108,