Florida’s new Distressed Condominium Relief Act
On June 1, 2010, Governer Charlie Crist signed into law Senate Bill 1196, which amends portions of Chapter 718 (Condominium Act) of the Florida Statutes. The following is a brief summary of that portion of the legislation included in Senate Bill 1196 that involves the bulk purchase of condominium units and which recently became effective on July 1, 2010.
The Distressed Condominium Relief Act (the "Act") protects bulk buyers or bulk assignees from assuming the developer's liabilities and responsibilities, provided that the conveyance of units is structured in accordance with the statutory requirements. The "Condominium Bulk Buyer Law," as it has commonly been referred to, removes significant barriers to condominium bulk buyer acquisitions, and investors wishing to purchase more than seven (7) condominium units will no longer be subject to accepting the original developer's liabilities.
For example, under the provision of the Act, a bulk assignee is not responsible for:
(i) the warranties of the developer;
(ii) obligation to fund the developer's converter reserves or warranties;
(iii) obligation to fund the developer's assessment or budgetary deficits; or
(iv) obligation to provide an audit during the time period in which the developer controlled the association.
The Act specifies when a bulk buyer or bulk assignee is required to turn over control of the condominium association and what documentation is required to be given to the association at the time of turnover It also specifies what documentation and information a bulk buyer or bulk assignee must provide to purchasers of units.
In order to take advantage of the Act:
(1) all statutory requirements thereunder must followed, and
(2) the bulk buyer or bulk assignee must acquire title to the units prior to July 1, 2012.