A condo termination, also known as a condominium deconversion, refers to the process where a condominium association legally dissolves. Condo terminations occur for several reasons including economic factors, aging infrastructure, or the desire of unit owners to capitalize on real estate market conditions.

The specifics of how a condominium termination is carried out can vary based on local laws and the condominium’s governing documents. Typically, it requires a supermajority vote of the condominium unit owners. Once the termination is approved, the property can be sold as a whole to, for example, an investor or real estate developer.

Florida condominiums are facing specific challenges due to deconversions, also known as terminations, for several reasons. These include:

Deferred Maintenance: Many condominiums in Florida are aging, and over time, the cost of maintenance and repairs has significantly increased. In some cases, owners may have deferred necessary maintenance due to the high costs involved. This deferred maintenance can lead to deteriorating building conditions, making it more difficult and expensive to maintain the property over time.

The Surfside Condo Collapse: The tragic collapse of the Champlain Towers South condominium in Surfside, Florida, in June 2021, has had a profound impact on the condominium market in the state. This event has heightened awareness of the risks associated with aging and potentially neglected condominium buildings, leading to increased scrutiny from buyers, insurers, lenders, and Florida legislators. In response, many condominium associations are being forced to undertake extensive, costly repairs and implement special assessments to ensure their buildings are safe.

Special Assessments: When condominiums require major repairs or improvements, the condominium association may levy special assessments to cover these costs. These assessments can be substantial, leading some owners to prefer selling their units rather than bearing the financial burden.

Insurance Costs: In the wake of the Surfside collapse and due to the increased risk of natural disasters such as hurricanes, insurance costs for Florida condominiums have skyrocketed. These higher insurance premiums add to the financial burden on owners and associations, making it more challenging to maintain properties and potentially leading to more condominium terminations.

Market Pressures: Florida’s real estate market is highly dynamic, with significant demand for residential properties. In some areas, the land value of condominium properties has outstripped the value of the buildings themselves, making it financially attractive for developers to purchase entire condominium complexes, terminate the condominium status, and redevelop the land for new projects. This trend is particularly prevalent in locations with high redevelopment potential, where older condominiums may no longer maximize the economic value of the land they occupy.

 

Legal Resource

These five factors and many others combine to create a dynamic environment for condominium associations in Florida, leading to an increase in condominium terminations.

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, and voting.

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 condominium association has been approached by an interested buyer
  • Your 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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