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An article authored by managing partner Oscar R. Rivera and shareholder Lindsey Thurswell Lehr appeared in the Daily Business Review‘s 2025 Real Estate Trends Special Report. The article, which is titled “Effective Termination Strategies in Today’s Troubled Condo Market,” focuses on the state of condominium terminations in Florida in the aftermath of a March 2024 appellate ruling that hamstrung the use of amendments to lower voting thresholds for owner approvals. The ruling, which has hampered one of the procedures used by associations to enhance their ability to terminate a condominium, has made strategic and creative approaches from developers and unit owners more vital than ever. Their article reads:
. . . The opinion by the Third District Court of Appeal came in the case of Avila v. Biscayne 21 Condominium, and it was the focus of an August 2024 article from the Wall Street Journal titled “Zombie Condos, Angry Residents and a Ruling That Stunned Miami’s Developers.” The newspaper chronicled how the decision halted a long-standing practice of enacting amendments to a condominium’s governing documents to reduce the threshold of votes required to effectuate a termination of an existing condominium regime.
After acquiring a large number of units, developers would use their newly gained control to pass an amendment to reduce the voting threshold for owners’ approval of a condominium termination from as high as 100% to 80%, which coincides with the current state law. Biscayne 21 involved an appeal of the lower court’s decision to deny a temporary injunction to plaintiffs who challenged the validity of just such an amendment to the governing documents of the condominium located in Miami’s Edgewater neighborhood.
The appellate court recognized the specific contractual language in the association’s declaration of condominium that prohibited amendments altering the voting rights of any owner without 100 percent approval of the owners. While the circuit court denied the plaintiffs’ request for an injunction, the appellate panel unanimously found that such amendments lowering the threshold for termination from 100 to 80% altered the owners’ voting rights by removing each owner’s veto power to nullify a termination. It reversed the lower court’s decision denying the injunction and remanded the case back for the issuance of an injunction to stop the termination from proceeding.
Uncertainty Now Reigns
While the ruling was submitted for consideration before the Florida Supreme Court, which has not agreed to take up the case, many condo terminations relying on such amendments to lower owners’ approval threshold have been left in limbo. That is especially the case in Miami-Dade and Monroe counties, which fall under the jurisdiction of the Third District. However, it is less certain in the state’s other appellate districts, where the circuit courts will consider the decision persuasive but not binding.
“If the ruling in Miami-Dade last month on Biscayne 21 stands, Florida condo owners are left with fewer rights and even fewer options,” State Rep. Vicki Lopez wrote in a Miami Herald op-ed. “Just one individual could stand in the way of the desires – and what may be in the best interest – of the vast majority of owners. Without options, condo owners across the state will be saddled with financial burdens and obligations, even the possibility of foreclosure.”
Lopez concluded: “If there is not a rehearing on this case, we will be forced to take swift action to mitigate the impacts of this opinion statewide and uphold Floridians’ property rights. If we do not, what is a brewing condo crisis will become an economic catastrophe.”
That being so, condominium developers and the directors for communities that are prime candidates for termination will now need to employ more planning and forethought.
Some smaller buildings in need of substantial structural repairs may be able to circumvent the stringent termination approval requirements if they meet the criteria for a “termination for economic waste or impossibility.” Such terminations can take place when the total estimated repairs exceed the combined market value of all the units, or if “it becomes impossible to operate or reconstruct a condominium to its prior physical configuration because of land use laws or regulations.” Unlike optional terminations, state law provides that economic waste/impossibility terminations may be approved by “the lowest percentage of voting interests necessary to amend the declaration,” which can be as low as a majority of the owners.
However, for the vast majority of condominiums, an optional termination that meets either the 80 percent approval threshold under the state law, which also provides that no more than five percent of the owners can vote in dissent, or possibly as high as 100% if stipulated by their governing documents will be their only alternative. Which of the two will be in play will depend on evolving case law and whether their declarations include what is known as the “Kaufman language,” which is used to incorporate changes to the state’s condominium laws into an association’s governing documents.
In an extensive footnote, the appellate court clarified and explained its interpretation of how and when Kaufman language would apply, and to a certain extent limited its applicability as well. While the footnote is dicta (not binding but persuasive), practitioners are well advised to read it carefully in determining when and how the language would apply and how it can be used.
Associations without such language and specifically calling for 100% owner approval for termination will represent the most daunting cases, but they should not be considered impossible.
Transparency and Incentives Critical
Developers and real estate brokers have employed various approaches for condominium terminations. Some have tried quietly buying up units under the names of different LLCs, while others have chosen to make offers to the directors and unit owners for the bulk purchase of a building as a whole.
Developers providing owners with complete transparency of their intentions may be more successful because such communications can not only involve market-value discussions, but also other accommodations such as the continued occupancy of the residences rent-free for months after their sales closings. Developers should also consider providing full disclosure on how units are valued, and perhaps taking into account their size, view and location in the building rather than just offering the same price per square foot for every dwelling.
Such open and transparent discussions and offers that include accommodations for displaced owners can present effective strategies. Other incentives, such as paying all the closing costs, facilitating 1031 exchanges for those seeking to defer capital gains taxes, and conducting individual meetings with owners who require more handholding and convincing, could also prove to be decisive.
For those with residences in older buildings facing steep assessment increases due to needed repairs and new state requirements, above-market offers could prove to be enticing. The calculus is also fairly simple for developers, which just need to determine and compare the value of the land for redevelopment versus the total combined purchase costs for all the residences. . .
Oscar and Lindsey conclude their article by noting that terminations can take many months to complete, and some could become contentious and take as long as several years. They write that the developers that will be able to consummate them will generally be those that target the right properties, make strong offers that include adequate incentives, and demonstrate to the owners that waiting for an eventual termination will be less lucrative than selling in advance.
Our firm salutes Oscar and Lindsey for sharing their insights on the current state of condominium terminations with the readers of the Daily Business Review. Click here to read the complete article in the outlet’s website.