28th Feb 2015
Actually, you won’t be back.
Imagine that you are a senior citizen and that you own your condominium free and clear. Now, imagine that a developer has come to you and told you that he is going to buy your unit for roughly one-third what you paid for it and kick you out. The developer is turning your condo into apartments and you are being forced to sell. And, you have no choice, because the Condo Terminator Law allows it.
Actually, you don’t have to imagine it. It’s happening now.
Back in the early 2000s, when the housing market in Florida was on fire, developers had people lined around the block waiting for the opportunity to purchase units before they were even built. When the housing bubble suddenly collapsed in 2008, purchasers fled from their pre-construction contracts in droves. When some of these condos were finished then, it meant that in an entire building, there might be only a handful of owners. Naturally, in a condo with 100 or more units, if only 5 owners are paying assessments, that leaves a substantial hole in the operating budget. What to do about these “distressed condos” became an issue for the Florida Legislature, which they addressed by passing The Condo Terminator law (actually, “The Distressed Condominium Relief Act of 2010,’ which was codified in Section 718.117, Florida Stats.
The primary goal of the Condo Terminator Law was to provide an incentive for developers or other investors to buy up these abandoned units without becoming the “successor developer.” Up until this amendment, the law in Florida had been that any purchaser of 7 or more units would be construed as a successor developer and assume some of the liabilities of the original developer, such as construction warranties. Naturally, investors who hoped to buy up these distressed condos and turn a profit wanted to limit their liability as much as they could.
However, the Condo Terminator Law not only provided relief from liability to these successor developers, it also lowered the threshold for approval for “termination” of the condominium from approval of 100% of the owners to 80% of the owners.
It’s hard to imagine that the Legislature fully anticipated the impact of the law on the 20% of a condominium’s owners who were essentially cut out of the decision to terminate the condominium in which they had an ownership interest. But it’s also clear that the Condo Terminator Law was aimed at extreme situations that have largely passed. The Act is now being used in situations in which it was never intended to apply, allowing investors to buy up 80% of a condominium’s units and force the remaining owners to sell at a drastically lower price than they would get on the market. There are reform bills being offered during this session. It’s time for the Legislature to terminate the Condo Terminator.