Could Your Condominium Be Voluntarily Terminated?
Do you live in an older condominium building in a prime location? Have you ever thought about terminating your condominium in order to sell your older building to a developer desirous of your location? Has the fact that your older building is going to require significant ongoing maintenance and repairs become an inducement to consider termination?
I heard earlier last week from the son of a woman who lives in a Boynton Beach community which has accepted a developer’s offer to purchase the condominium property and terminate the condominium form of ownership. He was citing the provisions in Section 718.117, F.S. relating to waste and questioning whether or not the termination of his mother’s condominium met that litmus test. I provided him with the voluntary termination provisions in that same section of the Condominium Act and explained that 80% of the owners can vote to terminate the condominium form of ownership for any reason so long as not more than 10% of owners do not object to same.
Florida’s Condominium Act was changed a few years ago to make voluntary condominium terminations possible so that owners could take advantage of offers to purchaser without being hamstrung by a handful of their neighbors. This last session saw language pass which now requires a delay in voting on a termination for several months after an initial vote fails to achieve the necessary threshold.
The downside to any termination is that an owner could have purchased his or her unit at the height of the market, taken a mortgage and when the termination is approved, receive fair market value which is far below the outstanding mortgage balance. The upside to the voluntary termination provisions is that it allows the vast majority (80%) of owners to take advantage of an advantageous developer offer to purchase an older building in a prime location.
There will always be owners who resist a termination offer as being a hassle or not likely to result in sufficient monetary gain. However, for others the ability to make an otherwise unconsidered real estate gain, the offer may be too good to turn down. Still others may be disenchanted with the condominium concept altogether and would welcome the opportunity to “cash out”.
Has your condominium community been approached about a possible termination and what would you do if you were?