Terminating a condominium is a significant decision for any Florida condominium community association. This process has evolved through a series of legislative amendments, aimed at balancing the needs of property owners, condo associations, and public safety.
Condominium Termination Factors
In recent years, interest in terminating older condominiums has grown, especially as condo buildings age and repair costs skyrocket. Some condominium associations choose to terminate and redevelop their properties rather than face extensive and costly repairs.
Additionally, the tragic Surfside condo collapse in 2021 has amplified the urgency of considering condominium terminations, particularly for aging buildings where structural safety concerns outweigh the feasibility of repairs. This disaster has led many associations to reevaluate the long-term costs and risks of maintaining older properties, making the option of termination and redevelopment more viable alternative.
Developers and Condominium Terminations
Some condominium associations that have become financially or structurally unsustainable have reverted to their original form, such as apartment complexes or hotels.
Developers are increasingly eyeing older condominiums that are primed for termination as attractive redevelopment opportunities. With prime real estate locations and the rising cost of maintaining aging buildings, developers see potential in acquiring these properties, especially after unit owners vote to terminate.
This trend has led to more bulk purchases, where developers buy out large portions of units to gain controlling interest, making it easier to push through termination plans and redevelop the property into modern, high-value structures.
Florida Law and Condo Terminations
Florida Statutes (F.S.) Section 718.117 outlines the procedures for condominium terminations. The 2017 amendments to this statute were especially important, making it more challenging, costly, and risky to terminate a condominium association.
The most notable change was the requirement for optional terminations (where the majority of unit owners agree to terminate the condominium for reasons other than economic waste) to be reviewed by the Florida Division of Condominiums, Timeshares, and Mobile Homes. This additional review aims to ensure that terminations are in the public’s best interest and that homeowners are treated fairly.
Economic waste or impossibility are key grounds for termination. Economic waste occurs when the cost of repairs exceeds the market value of the units after repairs are completed. Impossibility happens when it is not legally or physically possible to restore the condominium, often due to changes in zoning or land use laws.
These scenarios allow associations to pursue termination without requiring the supermajority vote typically needed for optional terminations. In these cases, a plan must be created and approved by unit owners before being filed with the local authorities.
When pursuing optional termination, at least 80% of unit owners must agree. However, if 5% or more reject the plan, the condominium termination cannot proceed. This provision was designed to offer protection to minority owners, ensuring that termination is not imposed without broad agreement by the majority of unit owners.
Legal Resource
Overall, the termination process is complex, with many procedural steps and safeguards in place. Florida condominium associations considering this path should seek legal guidance, ensuring compliance with statutory requirements while protecting the rights and interests of all parties involved.
When discussing condominium terminations, it’s important to understand the full picture. Community association board member must address a myriad of important governance issues including:
- Written objections
- Unpaid assessments
- Informational meetings
- Contract distribution
- Voting procedures
Condominium terminations are complicated, challenging, time-consuming, involve several parties, and encompass numerous legal considerations. Proper preparation, continued communication, and guidance from experienced legal counsel can provide better understanding during the termination/deconversion process.
Please contact KSN to discuss your legal needs if:
- Your Florida condominium association has been approached by an interested buyer, developer, or real estate developer
- Your Florida condominium association is in the middle of a potential sale or condominium termination
KSN’s dedicated and experienced condominium termination team has the full suite of resources and services needed to successfully complete the complex termination/deconversion process.
Visit www.ksnlaw.com or call our law firm at 855-537-0500 to get started today.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.
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