Back on March 20, we discussed how Florida law allows a single party to decide unilaterally to terminate a condominium association, if that party owns at least 80 percent of the condo’s units. Many investment companies do this in order to sell off the condo so it can be converted into rental housing.
Besides shutting the other owners out of the decision-making process, many critics say this law fails even to fully compensate minority homeowners. As we previously noted, many condo owners bought during the housing bubble, which means they may owe significantly more on their mortgages than what their units are currently worth. If they live in their condos, they may end up unwillingly out of the building and suffering a huge financial loss.
A pair of bills in the Florida Legislature seeks to address both issues. As reported by South Florida Business Journal, under the bills, when a condo association is terminated, each owner’s first mortgage must be fully satisfied. Unit owners who vote against termination would be entitled to the full amount they paid for their unit from the 80 percent owner, regardless of the unit’s current market value.
These measures would provide some financial security for homeowners whose buildings have been largely taken over by investors looking to convert to apartments. Those who do not want to leave at all might support the portion of the bill that changes the way votes to terminate would happen.
Instead of straight majority rules, the bill would make such a vote fail if at least 10 percent of owners reject termination. The bulk owner could not bring up the matter for another vote for at least 18 months. Also, even owners who are behind on their condo fees would have a vote, defeating a ploy by bulk owners to drive up fees in order to deprive homeowners of a vote.
We will keep an eye on these companion bills, and update our readers with their progress.