| 1 | A bill to be entitled |
| 2 | An act relating to community associations; amending s. |
| 3 | 718.103, F.S.; revising the definition of the term |
| 4 | "developer" to exclude a bulk assignee or bulk buyer; |
| 5 | amending s. 718.501, F.S.; revising the jurisdiction of |
| 6 | the Division of Florida Condominiums, Timeshares, and |
| 7 | Mobile Homes to include bulk assignees and bulk buyers; |
| 8 | creating part VII of ch. 718, F.S., relating to distressed |
| 9 | condominium relief; providing a short title; providing |
| 10 | legislative findings and intent; defining the terms "bulk |
| 11 | assignee" and "bulk buyer"; providing for the assignment |
| 12 | of developer rights to and the assumption of developer |
| 13 | rights by a bulk assignee; specifying liabilities of bulk |
| 14 | assignees and bulk buyers; providing exceptions; providing |
| 15 | additional responsibilities of bulk assignees and bulk |
| 16 | buyers; authorizing certain entities to assign developer |
| 17 | rights to a bulk assignee; limiting the number of bulk |
| 18 | assignees at any given time; providing for the transfer of |
| 19 | control of a board of administration; providing effects of |
| 20 | such transfer on units acquired by a bulk assignee; |
| 21 | providing obligations of a bulk assignee upon the transfer |
| 22 | of control of a board of administration; requiring that a |
| 23 | bulk assignee certify certain information in writing; |
| 24 | providing for the resolution of a conflict between |
| 25 | specified provisions of state law; providing that the |
| 26 | failure of a bulk assignee or bulk buyer to comply with |
| 27 | specified provisions of state law results in the loss of |
| 28 | certain protections and exemptions; requiring that a bulk |
| 29 | assignee or bulk buyer file certain information with the |
| 30 | Division of Florida Condominiums, Timeshares, and Mobile |
| 31 | Homes of the Department of Business and Professional |
| 32 | Regulation before offering any units for sale or lease in |
| 33 | excess of a specified term; requiring that a copy of such |
| 34 | information be provided to a prospective purchaser; |
| 35 | requiring that certain contracts and disclosure statements |
| 36 | contain specified statements; requiring that a bulk |
| 37 | assignee or bulk buyer comply with certain disclosure |
| 38 | requirements; prohibiting a bulk assignee from taking |
| 39 | certain actions on behalf of an association while the bulk |
| 40 | assignee is in control of the board of administration of |
| 41 | the association and requiring that such bulk assignee |
| 42 | comply with certain requirements; requiring that a bulk |
| 43 | assignee or bulk buyer comply with certain requirements |
| 44 | regarding certain contracts; providing unit owners with |
| 45 | specified protections regarding certain contracts; |
| 46 | requiring that a bulk buyer comply with certain |
| 47 | requirements regarding the transfer of a unit; prohibiting |
| 48 | a person from being classified as a bulk assignee or bulk |
| 49 | buyer unless condominium units were acquired before a |
| 50 | specified date; providing for the determination of the |
| 51 | date of acquisition of a unit; providing that the |
| 52 | assignment of developer rights to a bulk assignee or bulk |
| 53 | buyer does not release a developer from certain |
| 54 | liabilities; preserving certain liabilities for certain |
| 55 | parties; providing an effective date. |
| 56 |
|
| 57 | Be It Enacted by the Legislature of the State of Florida: |
| 58 |
|
| 59 | Section 1. Subsection (16) of section 718.103, Florida |
| 60 | Statutes, is amended to read: |
| 61 | 718.103 Definitions.-As used in this chapter, the term: |
| 62 | (16) "Developer" means a person who creates a condominium |
| 63 | or offers condominium units parcels for sale or lease in the |
| 64 | ordinary course of business, but does not include: |
| 65 | (a) An owner or lessee of a condominium or cooperative |
| 66 | unit who has acquired the unit for his or her own occupancy;, |
| 67 | nor does it include |
| 68 | (b) A cooperative association that which creates a |
| 69 | condominium by conversion of an existing residential cooperative |
| 70 | after control of the association has been transferred to the |
| 71 | unit owners if, following the conversion, the unit owners will |
| 72 | be the same persons who were unit owners of the cooperative and |
| 73 | no units are offered for sale or lease to the public as part of |
| 74 | the plan of conversion;. |
| 75 | (c) A bulk assignee or bulk buyer as defined in s. |
| 76 | 718.703; or |
| 77 | (d) A state, county, or municipal entity is not a |
| 78 | developer for any purposes under this act when it is acting as a |
| 79 | lessor and not otherwise named as a developer in the declaration |
| 80 | of condominium association. |
| 81 | Section 2. Subsection (1) of section 718.501, Florida |
| 82 | Statutes, is amended to read: |
| 83 | 718.501 Authority, responsibility, and duties of Division |
| 84 | of Florida Condominiums, Timeshares, and Mobile Homes.- |
| 85 | (1) The Division of Florida Condominiums, Timeshares, and |
| 86 | Mobile Homes of the Department of Business and Professional |
| 87 | Regulation, referred to as the "division" in this part, has the |
| 88 | power to enforce and ensure compliance with the provisions of |
| 89 | this chapter and rules relating to the development, |
| 90 | construction, sale, lease, ownership, operation, and management |
| 91 | of residential condominium units. In performing its duties, the |
| 92 | division has complete jurisdiction to investigate complaints and |
| 93 | enforce compliance with the provisions of this chapter with |
| 94 | respect to associations that are still under developer control |
| 95 | or the control of a bulk assignee or bulk buyer pursuant to part |
| 96 | VII of this chapter and complaints against developers, bulk |
| 97 | assignees, or bulk buyers involving improper turnover or failure |
| 98 | to turnover, pursuant to s. 718.301. However, after turnover has |
| 99 | occurred, the division shall only have jurisdiction to |
| 100 | investigate complaints related to financial issues, elections, |
| 101 | and unit owner access to association records pursuant to s. |
| 102 | 718.111(12). |
| 103 | (a)1. The division may make necessary public or private |
| 104 | investigations within or outside this state to determine whether |
| 105 | any person has violated this chapter or any rule or order |
| 106 | hereunder, to aid in the enforcement of this chapter, or to aid |
| 107 | in the adoption of rules or forms hereunder. |
| 108 | 2. The division may submit any official written report, |
| 109 | worksheet, or other related paper, or a duly certified copy |
| 110 | thereof, compiled, prepared, drafted, or otherwise made by and |
| 111 | duly authenticated by a financial examiner or analyst to be |
| 112 | admitted as competent evidence in any hearing in which the |
| 113 | financial examiner or analyst is available for cross-examination |
| 114 | and attests under oath that such documents were prepared as a |
| 115 | result of an examination or inspection conducted pursuant to |
| 116 | this chapter. |
| 117 | (b) The division may require or permit any person to file |
| 118 | a statement in writing, under oath or otherwise, as the division |
| 119 | determines, as to the facts and circumstances concerning a |
| 120 | matter to be investigated. |
| 121 | (c) For the purpose of any investigation under this |
| 122 | chapter, the division director or any officer or employee |
| 123 | designated by the division director may administer oaths or |
| 124 | affirmations, subpoena witnesses and compel their attendance, |
| 125 | take evidence, and require the production of any matter which is |
| 126 | relevant to the investigation, including the existence, |
| 127 | description, nature, custody, condition, and location of any |
| 128 | books, documents, or other tangible things and the identity and |
| 129 | location of persons having knowledge of relevant facts or any |
| 130 | other matter reasonably calculated to lead to the discovery of |
| 131 | material evidence. Upon the failure by a person to obey a |
| 132 | subpoena or to answer questions propounded by the investigating |
| 133 | officer and upon reasonable notice to all persons affected |
| 134 | thereby, the division may apply to the circuit court for an |
| 135 | order compelling compliance. |
| 136 | (d) Notwithstanding any remedies available to unit owners |
| 137 | and associations, if the division has reasonable cause to |
| 138 | believe that a violation of any provision of this chapter or |
| 139 | related rule has occurred, the division may institute |
| 140 | enforcement proceedings in its own name against any developer, |
| 141 | bulk assignee, bulk buyer, association, officer, or member of |
| 142 | the board of administration, or its assignees or agents, as |
| 143 | follows: |
| 144 | 1. The division may permit a person whose conduct or |
| 145 | actions may be under investigation to waive formal proceedings |
| 146 | and enter into a consent proceeding whereby orders, rules, or |
| 147 | letters of censure or warning, whether formal or informal, may |
| 148 | be entered against the person. |
| 149 | 2. The division may issue an order requiring the |
| 150 | developer, bulk assignee, bulk buyer, association, developer- |
| 151 | designated officer, or developer-designated member of the board |
| 152 | of administration, developer-designated assignees or agents, |
| 153 | bulk assignee-designated assignees or agents, bulk buyer- |
| 154 | designated assignees or agents, community association manager, |
| 155 | or community association management firm to cease and desist |
| 156 | from the unlawful practice and take such affirmative action as |
| 157 | in the judgment of the division will carry out the purposes of |
| 158 | this chapter. If the division finds that a developer, bulk |
| 159 | assignee, bulk buyer, association, officer, or member of the |
| 160 | board of administration, or its assignees or agents, is |
| 161 | violating or is about to violate any provision of this chapter, |
| 162 | any rule adopted or order issued by the division, or any written |
| 163 | agreement entered into with the division, and presents an |
| 164 | immediate danger to the public requiring an immediate final |
| 165 | order, it may issue an emergency cease and desist order reciting |
| 166 | with particularity the facts underlying such findings. The |
| 167 | emergency cease and desist order is effective for 90 days. If |
| 168 | the division begins nonemergency cease and desist proceedings, |
| 169 | the emergency cease and desist order remains effective until the |
| 170 | conclusion of the proceedings under ss. 120.569 and 120.57. |
| 171 | 3. If a developer, bulk assignee, or bulk buyer fails to |
| 172 | pay any restitution determined by the division to be owed, plus |
| 173 | any accrued interest at the highest rate permitted by law, |
| 174 | within 30 days after expiration of any appellate time period of |
| 175 | a final order requiring payment of restitution or the conclusion |
| 176 | of any appeal thereof, whichever is later, the division shall |
| 177 | bring an action in circuit or county court on behalf of any |
| 178 | association, class of unit owners, lessees, or purchasers for |
| 179 | restitution, declaratory relief, injunctive relief, or any other |
| 180 | available remedy. The division may also temporarily revoke its |
| 181 | acceptance of the filing for the developer to which the |
| 182 | restitution relates until payment of restitution is made. |
| 183 | 4. The division may petition the court for the appointment |
| 184 | of a receiver or conservator. If appointed, the receiver or |
| 185 | conservator may take action to implement the court order to |
| 186 | ensure the performance of the order and to remedy any breach |
| 187 | thereof. In addition to all other means provided by law for the |
| 188 | enforcement of an injunction or temporary restraining order, the |
| 189 | circuit court may impound or sequester the property of a party |
| 190 | defendant, including books, papers, documents, and related |
| 191 | records, and allow the examination and use of the property by |
| 192 | the division and a court-appointed receiver or conservator. |
| 193 | 5. The division may apply to the circuit court for an |
| 194 | order of restitution whereby the defendant in an action brought |
| 195 | pursuant to subparagraph 4. shall be ordered to make restitution |
| 196 | of those sums shown by the division to have been obtained by the |
| 197 | defendant in violation of this chapter. Such restitution shall, |
| 198 | at the option of the court, be payable to the conservator or |
| 199 | receiver appointed pursuant to subparagraph 4. or directly to |
| 200 | the persons whose funds or assets were obtained in violation of |
| 201 | this chapter. |
| 202 | 6. The division may impose a civil penalty against a |
| 203 | developer, bulk assignee, bulk buyer, or association, or its |
| 204 | assignee or agent, for any violation of this chapter or a rule |
| 205 | adopted under this chapter. The division may impose a civil |
| 206 | penalty individually against any officer or board member who |
| 207 | willfully and knowingly violates a provision of this chapter, |
| 208 | adopted rule, or a final order of the division; may order the |
| 209 | removal of such individual as an officer or from the board of |
| 210 | administration or as an officer of the association; and may |
| 211 | prohibit such individual from serving as an officer or on the |
| 212 | board of a community association for a period of time. The term |
| 213 | "willfully and knowingly" means that the division informed the |
| 214 | officer or board member that his or her action or intended |
| 215 | action violates this chapter, a rule adopted under this chapter, |
| 216 | or a final order of the division and that the officer or board |
| 217 | member refused to comply with the requirements of this chapter, |
| 218 | a rule adopted under this chapter, or a final order of the |
| 219 | division. The division, prior to initiating formal agency action |
| 220 | under chapter 120, shall afford the officer or board member an |
| 221 | opportunity to voluntarily comply with this chapter, a rule |
| 222 | adopted under this chapter, or a final order of the division. An |
| 223 | officer or board member who complies within 10 days is not |
| 224 | subject to a civil penalty. A penalty may be imposed on the |
| 225 | basis of each day of continuing violation, but in no event shall |
| 226 | the penalty for any offense exceed $5,000. By January 1, 1998, |
| 227 | the division shall adopt, by rule, penalty guidelines applicable |
| 228 | to possible violations or to categories of violations of this |
| 229 | chapter or rules adopted by the division. The guidelines must |
| 230 | specify a meaningful range of civil penalties for each such |
| 231 | violation of the statute and rules and must be based upon the |
| 232 | harm caused by the violation, the repetition of the violation, |
| 233 | and upon such other factors deemed relevant by the division. For |
| 234 | example, the division may consider whether the violations were |
| 235 | committed by a developer, bulk assignee, bulk buyer, or owner- |
| 236 | controlled association, the size of the association, and other |
| 237 | factors. The guidelines must designate the possible mitigating |
| 238 | or aggravating circumstances that justify a departure from the |
| 239 | range of penalties provided by the rules. It is the legislative |
| 240 | intent that minor violations be distinguished from those which |
| 241 | endanger the health, safety, or welfare of the condominium |
| 242 | residents or other persons and that such guidelines provide |
| 243 | reasonable and meaningful notice to the public of likely |
| 244 | penalties that may be imposed for proscribed conduct. This |
| 245 | subsection does not limit the ability of the division to |
| 246 | informally dispose of administrative actions or complaints by |
| 247 | stipulation, agreed settlement, or consent order. All amounts |
| 248 | collected shall be deposited with the Chief Financial Officer to |
| 249 | the credit of the Division of Florida Condominiums, Timeshares, |
| 250 | and Mobile Homes Trust Fund. If a developer, bulk assignee, or |
| 251 | bulk buyer fails to pay the civil penalty and the amount deemed |
| 252 | to be owed to the association, the division shall issue an order |
| 253 | directing that such developer, bulk assignee, or bulk buyer |
| 254 | cease and desist from further operation until such time as the |
| 255 | civil penalty is paid or may pursue enforcement of the penalty |
| 256 | in a court of competent jurisdiction. If an association fails to |
| 257 | pay the civil penalty, the division shall pursue enforcement in |
| 258 | a court of competent jurisdiction, and the order imposing the |
| 259 | civil penalty or the cease and desist order will not become |
| 260 | effective until 20 days after the date of such order. Any action |
| 261 | commenced by the division shall be brought in the county in |
| 262 | which the division has its executive offices or in the county |
| 263 | where the violation occurred. |
| 264 | 7. If a unit owner presents the division with proof that |
| 265 | the unit owner has requested access to official records in |
| 266 | writing by certified mail, and that after 10 days the unit owner |
| 267 | again made the same request for access to official records in |
| 268 | writing by certified mail, and that more than 10 days has |
| 269 | elapsed since the second request and the association has still |
| 270 | failed or refused to provide access to official records as |
| 271 | required by this chapter, the division shall issue a subpoena |
| 272 | requiring production of the requested records where the records |
| 273 | are kept pursuant to s. 718.112. |
| 274 | 8. In addition to subparagraph 6., the division may seek |
| 275 | the imposition of a civil penalty through the circuit court for |
| 276 | any violation for which the division may issue a notice to show |
| 277 | cause under paragraph (r). The civil penalty shall be at least |
| 278 | $500 but no more than $5,000 for each violation. The court may |
| 279 | also award to the prevailing party court costs and reasonable |
| 280 | attorney's fees and, if the division prevails, may also award |
| 281 | reasonable costs of investigation. |
| 282 | (e) The division may prepare and disseminate a prospectus |
| 283 | and other information to assist prospective owners, purchasers, |
| 284 | lessees, and developers of residential condominiums in assessing |
| 285 | the rights, privileges, and duties pertaining thereto. |
| 286 | (f) The division has authority to adopt rules pursuant to |
| 287 | ss. 120.536(1) and 120.54 to implement and enforce the |
| 288 | provisions of this chapter. |
| 289 | (g) The division shall establish procedures for providing |
| 290 | notice to an association and the developer during the period |
| 291 | where the developer controls the association when the division |
| 292 | is considering the issuance of a declaratory statement with |
| 293 | respect to the declaration of condominium or any related |
| 294 | document governing in such condominium community. |
| 295 | (h) The division shall furnish each association which pays |
| 296 | the fees required by paragraph (2)(a) a copy of this act, |
| 297 | subsequent changes to this act on an annual basis, an amended |
| 298 | version of this act as it becomes available from the Secretary |
| 299 | of State's office on a biennial basis, and the rules adopted |
| 300 | thereto on an annual basis. |
| 301 | (i) The division shall annually provide each association |
| 302 | with a summary of declaratory statements and formal legal |
| 303 | opinions relating to the operations of condominiums which were |
| 304 | rendered by the division during the previous year. |
| 305 | (j) The division shall provide training and educational |
| 306 | programs for condominium association board members and unit |
| 307 | owners. The training may, in the division's discretion, include |
| 308 | web-based electronic media, and live training and seminars in |
| 309 | various locations throughout the state. The division shall have |
| 310 | the authority to review and approve education and training |
| 311 | programs for board members and unit owners offered by providers |
| 312 | and shall maintain a current list of approved programs and |
| 313 | providers and shall make such list available to board members |
| 314 | and unit owners in a reasonable and cost-effective manner. |
| 315 | (k) The division shall maintain a toll-free telephone |
| 316 | number accessible to condominium unit owners. |
| 317 | (l) The division shall develop a program to certify both |
| 318 | volunteer and paid mediators to provide mediation of condominium |
| 319 | disputes. The division shall provide, upon request, a list of |
| 320 | such mediators to any association, unit owner, or other |
| 321 | participant in arbitration proceedings under s. 718.1255 |
| 322 | requesting a copy of the list. The division shall include on the |
| 323 | list of volunteer mediators only the names of persons who have |
| 324 | received at least 20 hours of training in mediation techniques |
| 325 | or who have mediated at least 20 disputes. In order to become |
| 326 | initially certified by the division, paid mediators must be |
| 327 | certified by the Supreme Court to mediate court cases in county |
| 328 | or circuit courts. However, the division may adopt, by rule, |
| 329 | additional factors for the certification of paid mediators, |
| 330 | which factors must be related to experience, education, or |
| 331 | background. Any person initially certified as a paid mediator by |
| 332 | the division must, in order to continue to be certified, comply |
| 333 | with the factors or requirements imposed by rules adopted by the |
| 334 | division. |
| 335 | (m) When a complaint is made, the division shall conduct |
| 336 | its inquiry with due regard to the interests of the affected |
| 337 | parties. Within 30 days after receipt of a complaint, the |
| 338 | division shall acknowledge the complaint in writing and notify |
| 339 | the complainant whether the complaint is within the jurisdiction |
| 340 | of the division and whether additional information is needed by |
| 341 | the division from the complainant. The division shall conduct |
| 342 | its investigation and shall, within 90 days after receipt of the |
| 343 | original complaint or of timely requested additional |
| 344 | information, take action upon the complaint. However, the |
| 345 | failure to complete the investigation within 90 days does not |
| 346 | prevent the division from continuing the investigation, |
| 347 | accepting or considering evidence obtained or received after 90 |
| 348 | days, or taking administrative action if reasonable cause exists |
| 349 | to believe that a violation of this chapter or a rule of the |
| 350 | division has occurred. If an investigation is not completed |
| 351 | within the time limits established in this paragraph, the |
| 352 | division shall, on a monthly basis, notify the complainant in |
| 353 | writing of the status of the investigation. When reporting its |
| 354 | action to the complainant, the division shall inform the |
| 355 | complainant of any right to a hearing pursuant to ss. 120.569 |
| 356 | and 120.57. |
| 357 | (n) Condominium association directors, officers, and |
| 358 | employees; condominium developers; condominium bulk assignees |
| 359 | and bulk buyers; community association managers; and community |
| 360 | association management firms have an ongoing duty to reasonably |
| 361 | cooperate with the division in any investigation pursuant to |
| 362 | this section. The division shall refer to local law enforcement |
| 363 | authorities any person whom the division believes has altered, |
| 364 | destroyed, concealed, or removed any record, document, or thing |
| 365 | required to be kept or maintained by this chapter with the |
| 366 | purpose to impair its verity or availability in the department's |
| 367 | investigation. |
| 368 | (o) The division may: |
| 369 | 1. Contract with agencies in this state or other |
| 370 | jurisdictions to perform investigative functions; or |
| 371 | 2. Accept grants-in-aid from any source. |
| 372 | (p) The division shall cooperate with similar agencies in |
| 373 | other jurisdictions to establish uniform filing procedures and |
| 374 | forms, public offering statements, advertising standards, and |
| 375 | rules and common administrative practices. |
| 376 | (q) The division shall consider notice to a developer, |
| 377 | bulk assignee, and bulk buyer to be complete when it is |
| 378 | delivered to the developer's address of the developer, bulk |
| 379 | assignee, or bulk buyer currently on file with the division. |
| 380 | (r) In addition to its enforcement authority, the division |
| 381 | may issue a notice to show cause, which shall provide for a |
| 382 | hearing, upon written request, in accordance with chapter 120. |
| 383 | (s) The division shall submit to the Governor, the |
| 384 | President of the Senate, the Speaker of the House of |
| 385 | Representatives, and the chairs of the legislative |
| 386 | appropriations committees an annual report that includes, but |
| 387 | need not be limited to, the number of training programs provided |
| 388 | for condominium association board members and unit owners, the |
| 389 | number of complaints received by type, the number and percent of |
| 390 | complaints acknowledged in writing within 30 days and the number |
| 391 | and percent of investigations acted upon within 90 days in |
| 392 | accordance with paragraph (m), and the number of investigations |
| 393 | exceeding the 90-day requirement. The annual report shall also |
| 394 | include an evaluation of the division's core business processes |
| 395 | and make recommendations for improvements, including statutory |
| 396 | changes. The report shall be submitted by September 30 following |
| 397 | the end of the fiscal year. |
| 398 | Section 3. Part VII of chapter 718, Florida Statutes, |
| 399 | consisting of sections 718.701, 718.702, 718.703, 718.704, |
| 400 | 718.705, 718.706, 718.707, and 718.708, is created to read: |
| 401 | PART VII |
| 402 | DISTRESSED CONDOMINIUM RELIEF |
| 403 | 718.701 Short title.-This part may be cited as the |
| 404 | "Distressed Condominium Relief Act." |
| 405 | 718.702 Legislative intent.- |
| 406 | (1) The Legislature acknowledges the massive downturn in |
| 407 | the condominium market which has transpired throughout the state |
| 408 | and the impact of such downturn on developers, lenders, unit |
| 409 | owners, and condominium associations. Numerous condominium |
| 410 | projects have either failed or are in the process of failing, |
| 411 | whereby the condominium has a small percentage of third-party |
| 412 | unit owners as compared to the unsold inventory of units. As a |
| 413 | result of the inability to find purchasers for this inventory of |
| 414 | units, which results in part from the devaluing of real estate |
| 415 | in this state, developers are unable to satisfy the requirements |
| 416 | of their lenders, leading to defaults on mortgages. |
| 417 | Consequently, lenders are faced with the task of finding a |
| 418 | solution to the problem in order to be paid for their |
| 419 | investments. |
| 420 | (2) The Legislature recognizes that all of the factors |
| 421 | listed in this section lead to condominiums becoming distressed, |
| 422 | resulting in detriment to the unit owners and the condominium |
| 423 | association on account of the resulting shortage of assessment |
| 424 | moneys available to support the financial requirements for |
| 425 | proper maintenance of the condominium. Such shortage and the |
| 426 | resulting lack of proper maintenance further erode property |
| 427 | values. The Legislature finds that individuals and entities |
| 428 | within Florida and in other states have expressed interest in |
| 429 | purchasing unsold inventory in one or more condominium projects, |
| 430 | but are reticent to do so because of the potential of |
| 431 | accompanying liabilities inherited from the original developer, |
| 432 | which are potentially by definition imputed to the successor |
| 433 | purchaser, including a foreclosing mortgagee. This results in |
| 434 | the potential purchaser having unknown and unquantifiable risks, |
| 435 | and potential successor purchasers are unwilling to accept such |
| 436 | risks. The result is that condominium projects stagnate, leaving |
| 437 | all parties involved at an impasse without the ability to find a |
| 438 | solution. |
| 439 | (3) The Legislature finds and declares that it is the |
| 440 | public policy of this state to protect the interests of |
| 441 | developers, lenders, unit owners, and condominium associations |
| 442 | with regard to distressed condominiums, and that there is a need |
| 443 | for relief from certain provisions of the Florida Condominium |
| 444 | Act geared toward enabling economic opportunities within these |
| 445 | condominiums for successor purchasers, including foreclosing |
| 446 | mortgagees, while at the same time clarifying the ambiguity in |
| 447 | the law. Such relief would benefit existing unit owners and |
| 448 | condominium associations. The Legislature further finds and |
| 449 | declares that this situation cannot be open-ended without |
| 450 | potentially prejudicing the rights of unit owners and |
| 451 | condominium associations, and thereby declares that the |
| 452 | provisions of this part shall be used by purchasers of |
| 453 | condominium inventory for a specific and defined period. |
| 454 | 718.703 Definitions.-As used in this part, the term: |
| 455 | (1) "Bulk assignee" means a person who: |
| 456 | (a) Acquires more than seven condominium units in a single |
| 457 | condominium as set forth in s. 718.707; and |
| 458 | (b) Receives an assignment of all or substantially all of |
| 459 | the rights of the developer as are set forth in the declaration |
| 460 | of condominium or in this chapter by a written instrument |
| 461 | recorded as an exhibit to the deed or as a separate instrument |
| 462 | in the public records of the county in which the condominium is |
| 463 | located. |
| 464 | (2) "Bulk buyer" means a person who acquires more than |
| 465 | seven condominium units in a single condominium as set forth in |
| 466 | s. 718.707 but who does not receive an assignment of any |
| 467 | developer rights other than, at the bulk buyer's option, the |
| 468 | right to conduct sales, leasing, and marketing activities within |
| 469 | the condominium; the right to be exempt from the payment of |
| 470 | working capital contributions to the condominium association |
| 471 | arising out of or in connection with the bulk buyer's |
| 472 | acquisition of a bulk number of units; and the right to be |
| 473 | exempt from any rights of first refusal which may be held by the |
| 474 | condominium association and would otherwise be applicable to |
| 475 | subsequent transfers of title from the bulk buyer to any third- |
| 476 | party purchaser concerning one or more units. |
| 477 | 718.704 Assignment of developer rights to and assumption |
| 478 | of developer rights by bulk assignee; bulk buyer.- |
| 479 | (1) A bulk assignee shall be deemed to have assumed and is |
| 480 | liable for all duties and responsibilities of a developer under |
| 481 | the declaration and this chapter, except: |
| 482 | (a) Warranties of a developer under s. 718.203(1) or s. |
| 483 | 718.618, except for design, construction, development, or repair |
| 484 | work performed by or on behalf of such bulk assignee. |
| 485 | (b) The obligation to: |
| 486 | 1. Fund converter reserves under s. 718.618 for a unit |
| 487 | that was not acquired by the bulk assignee; or |
| 488 | 2. Provide converter warranties on any portion of the |
| 489 | condominium property except as may be expressly provided by the |
| 490 | bulk assignee in the contract for purchase and sale executed |
| 491 | with a purchaser and pertaining to any design, construction, |
| 492 | development, or repair work performed by or on behalf of the |
| 493 | bulk assignee. |
| 494 | (c) The requirement to provide the association with a |
| 495 | cumulative audit of the association's finances from the date of |
| 496 | formation of the condominium association as required by s. |
| 497 | 718.301. However, the bulk assignee shall provide an audit for |
| 498 | the period for which the bulk assignee elects a majority of the |
| 499 | members of the board of administration. |
| 500 | (d) Any liability arising out of or in connection with |
| 501 | actions taken by the board of administration or the developer- |
| 502 | appointed directors before the bulk assignee elects a majority |
| 503 | of the members of the board of administration. |
| 504 | (e) Any liability for or arising out of the developer's |
| 505 | failure to fund previous assessments or to resolve budgetary |
| 506 | deficits in relation to a developer's right to guarantee |
| 507 | assessments, except as otherwise provided in subsection (2). |
| 508 |
|
| 509 | Further, the bulk assignee is responsible for delivering |
| 510 | documents and materials in accordance with s. 718.705(3). A bulk |
| 511 | assignee may expressly assume some or all of the obligations of |
| 512 | the developer described in paragraphs (a)-(e). |
| 513 | (2) A bulk assignee receiving the assignment of the rights |
| 514 | of the developer to guarantee the level of assessments and fund |
| 515 | budgetary deficits pursuant to s. 718.116 shall be deemed to |
| 516 | have assumed and is liable for all obligations of the developer |
| 517 | with respect to such guarantee, including any applicable funding |
| 518 | of reserves to the extent required by law, for as long as the |
| 519 | guarantee remains in effect. A bulk assignee not receiving an |
| 520 | assignment of the right of the developer to guarantee the level |
| 521 | of assessments and fund budgetary deficits pursuant to s. |
| 522 | 718.116 or a bulk buyer is not deemed to have assumed and is not |
| 523 | liable for the obligations of the developer with respect to such |
| 524 | guarantee, but is responsible for payment of assessments in the |
| 525 | same manner as all other owners of condominium units. |
| 526 | (3) A bulk buyer is liable for the duties and |
| 527 | responsibilities of the developer under the declaration and this |
| 528 | chapter only to the extent provided in this part, together with |
| 529 | any other duties or responsibilities of the developer expressly |
| 530 | assumed in writing by the bulk buyer. |
| 531 | (4) An acquirer of condominium units is not considered a |
| 532 | bulk assignee or a bulk buyer if the transfer to such acquirer |
| 533 | was made prior to the effective date of this Distressed |
| 534 | Condominium Relief Act or was made with the intent to hinder, |
| 535 | delay, or defraud any purchaser, unit owner, or the association, |
| 536 | or if the acquirer is a person who would constitute an insider |
| 537 | under s. 726.102(7). |
| 538 | (5) An assignment of developer rights to a bulk assignee |
| 539 | may be made by the developer, a previous bulk assignee, or a |
| 540 | court of competent jurisdiction acting on behalf of the |
| 541 | developer or the previous bulk assignee. At any particular time, |
| 542 | there may be no more than one bulk assignee within a |
| 543 | condominium, but there may be more than one bulk buyer. If more |
| 544 | than one acquirer of condominium units in the same condominium |
| 545 | receives an assignment of developer rights from the same person, |
| 546 | the bulk assignee is the acquirer whose instrument of assignment |
| 547 | is recorded first in applicable public records. |
| 548 | 718.705 Board of administration; transfer of control.- |
| 549 | (1) For purposes of determining the timing for transfer of |
| 550 | control of the board of administration of the association to |
| 551 | unit owners other than the developer under s. 718.301(1)(a) and |
| 552 | (b), if a bulk assignee is entitled to elect a majority of the |
| 553 | members of the board, any condominium unit acquired by the bulk |
| 554 | assignee shall not be deemed to be conveyed to a purchaser, or |
| 555 | to be owned by an owner other than the developer, until such |
| 556 | condominium unit is conveyed to an owner who is not a bulk |
| 557 | assignee. |
| 558 | (2) Unless control of the board of administration of the |
| 559 | association has already been relinquished pursuant to s. |
| 560 | 718.301(1), the bulk assignee is obligated to relinquish control |
| 561 | of the association in accordance with s. 718.301(1) or (2) and |
| 562 | this part as if the bulk assignee were the developer. |
| 563 | (3) When a bulk assignee relinquishes control of the board |
| 564 | of administration, the bulk assignee shall deliver all of those |
| 565 | items required by s. 718.301(4). However, the bulk assignee is |
| 566 | not required to deliver items and documents not in the |
| 567 | possession of the bulk assignee during the period during which |
| 568 | the bulk assignee was entitled to elect not less than a majority |
| 569 | of the members of the board of administration. In conjunction |
| 570 | with the acquisition of condominium units, a bulk assignee shall |
| 571 | undertake a good faith effort to obtain the documents and |
| 572 | materials required to be provided to the association pursuant to |
| 573 | s. 718.301(4). To the extent the bulk assignee is not able to |
| 574 | obtain all of such documents and materials, the bulk assignee |
| 575 | shall certify in writing to the association the names or |
| 576 | descriptions of the documents and materials that were not |
| 577 | obtainable by the bulk assignee. Delivery of the certificate |
| 578 | relieves the bulk assignee of responsibility for the delivery of |
| 579 | the documents and materials referenced in the certificate as |
| 580 | otherwise required under ss. 718.112 and 718.301 and this part. |
| 581 | The responsibility of the bulk assignee for the audit required |
| 582 | by s. 718.301(4) shall commence as of the date on which the bulk |
| 583 | assignee elected a majority of the members of the board of |
| 584 | administration. |
| 585 | (4) If a conflict arises between the provisions or |
| 586 | application of this section and s. 718.301, this section shall |
| 587 | prevail. |
| 588 | (5) Failure of a bulk assignee or bulk buyer to |
| 589 | substantially comply with all the requirements contained in this |
| 590 | part shall result in the loss of all protections or exemptions |
| 591 | provided under this part. |
| 592 | 718.706 Specific provisions pertaining to offering of |
| 593 | units by a bulk assignee or bulk buyer.- |
| 594 | (1) Before offering any units for sale or for lease for a |
| 595 | term exceeding 5 years, a bulk assignee or a bulk buyer shall |
| 596 | file the following documents with the division and provide such |
| 597 | documents to a prospective purchaser or lessee: |
| 598 | (a) An updated prospectus or offering circular, or a |
| 599 | supplement to the prospectus or offering circular, filed by the |
| 600 | creating developer prepared in accordance with s. 718.504, which |
| 601 | shall include the form of contract for sale and for lease in |
| 602 | compliance with s. 718.503(1)(a); |
| 603 | (b) An updated Frequently Asked Questions and Answers |
| 604 | sheet; |
| 605 | (c) The executed escrow agreement if required under s. |
| 606 | 718.202; and |
| 607 | (d) The financial information required by s. 718.111(13). |
| 608 | However, if a financial information report does not exist for |
| 609 | the fiscal year before acquisition of title by the bulk assignee |
| 610 | or bulk buyer, or accounting records cannot be obtained in good |
| 611 | faith by the bulk assignee or the bulk buyer which would permit |
| 612 | preparation of the required financial information report, the |
| 613 | bulk assignee or bulk buyer is excused from the requirement of |
| 614 | this paragraph. However, the bulk assignee or bulk buyer must |
| 615 | include in the purchase contract the following statement in |
| 616 | conspicuous type: |
| 617 |
|
| 618 | THE FINANCIAL INFORMATION REPORT REQUIRED UNDER SECTION |
| 619 | 718.111(13), FLORIDA STATUTES, FOR THE IMMEDIATELY PRECEDING |
| 620 | FISCAL YEAR OF THE ASSOCIATION IS NOT AVAILABLE OR CANNOT BE |
| 621 | CREATED BY THE SELLER AS A RESULT OF INSUFFICIENT ACCOUNTING |
| 622 | RECORDS OF THE ASSOCIATION. |
| 623 |
|
| 624 | (2) Before offering any units for sale or for lease for a |
| 625 | term exceeding 5 years, a bulk assignee shall file with the |
| 626 | division and provide to a prospective purchaser a disclosure |
| 627 | statement that must include, but is not limited to: |
| 628 | (a) A description of any rights of the developer which |
| 629 | have been assigned to the bulk assignee; |
| 630 | (b) The following statement in conspicuous type: |
| 631 |
|
| 632 | THE SELLER IS NOT OBLIGATED FOR ANY WARRANTIES OF THE DEVELOPER |
| 633 | UNDER SECTION 718.203(1) OR SECTION 718.618, FLORIDA STATUTES, |
| 634 | AS APPLICABLE, EXCEPT FOR DESIGN, CONSTRUCTION, DEVELOPMENT, OR |
| 635 | REPAIR WORK PERFORMED BY OR ON BEHALF OF SELLER. |
| 636 |
|
| 637 | (c) If the condominium is a conversion subject to part VI, |
| 638 | the following statement in conspicuous type: |
| 639 |
|
| 640 | THE SELLER HAS NO OBLIGATION TO FUND CONVERTER RESERVES OR TO |
| 641 | PROVIDE CONVERTER WARRANTIES UNDER SECTION 718.618, FLORIDA |
| 642 | STATUTES, ON ANY PORTION OF THE CONDOMINIUM PROPERTY EXCEPT AS |
| 643 | MAY BE EXPRESSLY REQUIRED OF THE SELLER IN THE CONTRACT FOR |
| 644 | PURCHASE AND SALE EXECUTED BY THE SELLER AND THE DEVELOPER AND |
| 645 | PERTAINING TO ANY DESIGN, CONSTRUCTION, DEVELOPMENT, OR REPAIR |
| 646 | WORK PERFORMED BY OR ON BEHALF OF THE SELLER. |
| 647 |
|
| 648 | (3) While in control of the board of administration of the |
| 649 | association, a bulk assignee may not authorize, on behalf of the |
| 650 | association: |
| 651 | (a) The waiver of reserves or the reduction of funding of |
| 652 | the reserves in accordance with s. 718.112(2)(f)2., unless |
| 653 | approved by a majority of the voting interests not controlled by |
| 654 | the developer, bulk assignee, and bulk buyer; or |
| 655 | (b) The use of reserve expenditures for other purposes in |
| 656 | accordance with s. 718.112(2)(f)3., unless approved by a |
| 657 | majority of the voting interests not controlled by the |
| 658 | developer, bulk assignee, and bulk buyer. |
| 659 | (4) A bulk assignee or bulk buyer shall comply with all |
| 660 | the requirements of s. 718.302 regarding any contracts entered |
| 661 | into by the association during the period the bulk assignee or |
| 662 | bulk buyer maintains control of the board of administration. |
| 663 | Unit owners shall be afforded all the protections contained in |
| 664 | s. 718.302 regarding agreements entered into by the association |
| 665 | before unit owners other than the developer, bulk assignee, or |
| 666 | bulk buyer elected a majority of the board of administration. |
| 667 | (5) A bulk buyer shall comply with the requirements |
| 668 | contained in the declaration regarding any transfer of a unit, |
| 669 | including sales, leases, and subleases. A bulk buyer is not |
| 670 | entitled to any exemptions afforded a developer or successor |
| 671 | developer under this chapter regarding any transfer of a unit, |
| 672 | including sales, leases, or subleases. |
| 673 | 718.707 Time limitation for classification as bulk |
| 674 | assignee or bulk buyer.-A person acquiring condominium units may |
| 675 | not be classified as a bulk assignee or bulk buyer unless the |
| 676 | condominium units were acquired before July 1, 2012. The date of |
| 677 | such acquisition shall be determined by the date of recording of |
| 678 | a deed or other instrument of conveyance for such units in the |
| 679 | public records of the county in which the condominium is located |
| 680 | or by the date of issuance of a certificate of title in a |
| 681 | foreclosure proceeding with respect to such condominium units. |
| 682 | 718.708 Liability of developers and others.-An assignment |
| 683 | of developer rights to a bulk assignee or bulk buyer does not |
| 684 | release the creating developer from any liabilities under the |
| 685 | declaration or this chapter. This part does not limit the |
| 686 | liability of the creating developer for claims brought by unit |
| 687 | owners, bulk assignees, or bulk buyers for violations of this |
| 688 | chapter by the creating developer, unless specifically excluded |
| 689 | in this part. Nothing contained within this part waives, |
| 690 | releases, compromises, or limits the liability, if any, of |
| 691 | contractors, subcontractors, materialmen, manufacturers, |
| 692 | architects, engineers, or any participant in the design or |
| 693 | construction of a condominium for any claim brought by an |
| 694 | association, unit owners, bulk assignees, or bulk buyers arising |
| 695 | from the design of the condominium, construction defects, |
| 696 | misrepresentations associated with condominium property, or |
| 697 | violations of this chapter, unless specifically excluded in this |
| 698 | part. |
| 699 | Section 4. This act shall take effect upon becoming a law. |