In our last post, we discussed how a state law permitting developers and investors to purchase foreclosed or otherwise empty condominium units in bulk and convert them to rental properties has become increasingly problematic.
To recap, many of these bulk-ownership investors — who have secured ownership of more than 11,000 units since 2007 — have assumed control of condo boards of directors, promptly altered the bylaws and voted to terminate the condo association, a move that has forced thousands of condo owners to sell their properties.
In addition to the outrage of losing their homes, many of these condo owners have lost thousands of dollars, as the amount paid for the essentially seized condos — done in compliance with state law — is often considerably lower than the original sale price.
Interestingly, Governor Rick Scott recently signed a new bill that supporters say will help rein in bulk-ownership investors while enhancing the rights of condo owners who find themselves in the crosshairs of a rental-conversion takeover.
What exactly does this new law do?
The new law, sponsored by Rep. Chris Sprowls (R-Palm Harbor), dictates that if a bulk owner — defined as a group that owns a minimum of 80 percent of the condo units — terminates the condo association, it must fully reimburse all condo owners for the amount paid for their units.
Furthermore, the law dictates that if the condos seized by a bulk owner are to be made available for rent, the original owners must also be extended the right to sign a one-year lease on the same terms to be made available to the public.
Do all condo owners stand to benefit from this?
No. While the law was originally written to cover all condo owners, this protection is only being extended to owner occupants, meaning investors and so-called snowbirds are not covered.
Does the law say anything about termination plans?
In addition to new disclosure requirements concerning termination plans, the law mandates that a new election must be held if the bulk owner has elected the entire board of directors and subsequently seeks approval of a condo association termination.
Specifically, a new election will be held for one third of the board seats, all of which must be filled by someone other than the bulk owner.
What happens if a termination plan is rejected?
The new law declares that the earliest a rental-conversion plan can be reconsidered by the board after rejection is 18 months, a considerable increase from the previous standard of 180 days.
Consider speaking with an experienced legal professional if you would have questions or concerns regarding a condo defect or any construction law issue.