Condo Crisis Now Requires Action by Florida Supreme Court

Our firm’s latest Miami Herald “Real Estate Counselor” column was authored by shareholder Lindsey Thurswell Lehr and appeared in Sunday’s edition of the newspaper. The article, which is titled “Condo Crisis Now Requires Action by Florida Supreme Court,” focuses on the perfect storm impacting the state’s condominium market and how it has been exacerbated by recent conflicting appellate court decisions involving condominium terminations. Lindsey’s article reads:

. . . At an event in Miami Lakes on Sept. 9, Gov. Ron DeSantis stated that opportunities will exist before the end of the year for the Florida Legislature to pass “reforms and relief” for condominiums. He went on to say that the state’s lawmakers do not have until March or April to act, suggesting that they should be “developing ideas now so these things can be implemented in time to prevent people from being forced out of their homes.”

Gov. DeSantis mentioned low-interest loans and delaying the current Jan. 1 deadline for applicable communities to complete required inspections and adopt budgets with fully funded reserves, concluding: “We don’t want to see people forced out of a unit because they have a crushing assessment.”

Taking such actions before the start of 2025 would require a special session by the legislature. However, Florida Senate President Kathleen Passidomo, R-Naples, rejected such a proposition in her Aug. 16 memorandum to her fellow lawmakers. She wrote that she presently had no intention of convening a special session, noting that “clear inspection and reserve guidelines protect both the personal safety and the financial investment of Floridians who call a condominium home.”

As to future changes, the Senate President wrote: “[T]he legislative process best serves Floridians when there is analysis, collaboration, and input from all stakeholders. I believe the upcoming committee weeks and regular session following our post-election reorganization provide the best opportunity for this type of dialogue.”

These recent clashing statements from the governor and the president of the state senate on the prospects for legislative reforms prior to the end of 2024 are emblematic of the uncertainty that pervades the Florida condo market and is now taking a toll on sales, owners’ finances, and condominium terminations.

An Aug. 29 article by the Miami Herald chronicled the forced evacuations of residents at the Heron Pond Condominiums after the City of Pembroke Pines declared 13 of the community’s 19 two-story buildings to be structurally unsound. The article reported that Federated Foundation Trust now owns 111 of Heron Pond’s 304 units, and owners have filed lawsuits accusing the association of mismanagement and intentionally failing to perform routine maintenance to allegedly promote forced sales of additional residences. A receiver has been appointed by the Broward County Circuit Court to determine the community’s future, which could be a condominium termination.

The state’s current condominium termination law enables owners to band together to negotiate the best possible price and terms in the bulk sale of all their units. Developers have consistently relied on the current termination law in their efforts to buyout current owners, demolish older buildings, and build new condominium communities in their place.  The law allows for an optional termination with a vote of 80 percent of the unit owners, but it also enables five percent or more to block an optional termination from proceeding for a period of 24 months by rejecting it in writing or via a negative vote.

On the other hand, the governing declarations for some condominiums require 100 percent owner approval for termination of the condominium. Developers have previously acquired enough units at such enclaves to amend their documents to reduce 100 to 80 percent approval to coincide with the state law, then procuring the 80 percent approval to terminate.

However, a recent ruling by the state’s Third District Court of Appeal in a Miami case involving the Biscayne 21 Condominium invalidated that practice and the community’s amendments reducing the termination approval threshold. That was followed by a ruling in a similar case in Palm Beach County in which the Fourth District Court of Appeal reached the opposite conclusion and approved an amendment reducing a condominium’s termination approval to 80 percent.  These conflicting rulings by different district courts of appeal call for definitive guidance from the Florida Supreme Court on the validity of such amendments to lower the threshold for termination approval. . .

Lindsey concludes her article by noting that such clarity from the state’s highest court on optional terminations could help ensure access to a viable and potentially lucrative exit strategy for struggling condominium associations and their unit owners. She writes that with additional condo-safety reforms now looming, Florida’s condominium owners, associations and developers deserve a clear understanding for all their options.

Our firm salutes Lindsey for sharing her insights with the readers of the Miami Herald on the need for the Florida Supreme Court to take up this question over condominium terminations created by conflicting appellate opinions. We write about important matters for community associations in this blog and our Herald column, which appears every two weeks on Sundays, and we encourage association directors, members and property managers to click here and subscribe to our newsletter to receive our future articles.