Last week in my blog, I discussed how developers attempt to buy enough units in order to vote to Terminate the condominium. By doing so, the developer files a plan of termination, and buys up all the units. We also spoke about the fact that in some condominiums, a vote of 100% of the owners may be required in order to terminate and the developer may be prevented from terminating the condominium even if there is only one unit owner who won’t agree to the termination.
Well, as the saying goes, there is more than one way to skin a cat. (Strange and sick phrase when you think about it.)
Here’s what typically happens……… The developer purchases enough units so that the developer controls a majority of The Board of Directors. The developer then takes the position that the property is just in miserable shape. In order to bring the property into shape, it requires massive special assessments. That’s where the remaining unit owners typically break. They can’t afford these new massive special assessments. The owners should make sure that the developer is paying the special assessment as well. Ask for access to records.
The developer can also claim that the property is simply in total disrepair and rely on the
following statute: 718.117
(2) TERMINATION BECAUSE OF ECONOMIC WASTE OR IMPOSSIBILITY.—
(a) Notwithstanding any provision in the declaration, the condominium form of ownership of a property may be terminated by a plan of termination approved by the lesser of the lowest percentage of voting interests necessary to amend the declaration or as otherwise provided in the declaration for approval of termination if:
1. The total estimated cost of construction or repairs necessary to construct the intended improvements or restore the improvements to their former condition or bring them into compliance with applicable laws or regulations exceeds the combined fair market value of the units in the condominium after completion of the construction or repairs; or
2. It becomes impossible to operate or reconstruct a condominium to its prior physical configuration because of land use laws or regulations.
So, if those few holdouts don’t agree to sell, the developer can try plan B. In order to get there, the developer has incentive to keep the common elements is disarray. Of course, those persons on the Board who are deliberately keeping the property in disarray can be sued for breaching their fiduciary duty to the owners. That is……if the owners have enough money to fight back.
Next week we’ll discuss whether in some cases the developer does not get to control the Board even if they own almost all of the units.
