
We all know how condominiums begin—with renderings, design and finishing selections, friendly sales agents, and, of course, so many documents. However, once a condominium becomes an aging project, particularly one rife with escalating maintenance needs and expenses, it is worth considering how the condominium may be terminated.
As background, multi-family dwellings reflecting a shared investment in infrastructure and underlying lands can be tricky to terminate both politically and legally because the owners involved have not agreed ahead of time as to how and when the project’s end will come, and differing attitudes on the subject can pervade. Nevertheless, Florida is beginning to have aging condominium projects in sufficient numbers to provide a basis for the study of when the optimal time to terminate might be and what factors should drive the exploration of termination and redevelopment options.
Of course, the driver of condominium terminations is escalating maintenance costs as compared with value that can be realized in a termination and sale to a redeveloper. Notably, many of Florida’s most attractive locations were the sites of its earliest developments—including its earliest condominium projects. So, by implication, if a condominium is several decades old, it is likely situated on lands that offer attractive redevelopment opportunities. Furthermore, be mindful that new state laws and county ordinances have targeted older condominium projects in the last few years and made it more difficult than ever before for them to defer making repairs on aging infrastructure. To compound this, building inspectors, code enforcement officers, engineers, and other professionals are less likely now than in the past to be patient with condominium associations that are slow to undertake necessary maintenance.
As such, owners may find themselves with a sudden inability to purchase reasonably priced insurance, the need for massive special assessments or massive reserve funding increases, unfavorable milestone inspection report, unfavorable reserve study, sudden infrastructure failure, unexpected life safety issue that must urgently be addressed, inability to meet statutory obligations, or other such development. In the face of such predicaments, owners may be caught off guard when evaluating the possibility of termination.
Fortunately, condominium law practitioners are anticipating higher volume of condominium terminations and are planning accordingly. Furthermore, the Condominium Act has undergone legislative changes in the last fifteen years that have made terminations more accessible than ever before. While some challenges remain, including how best to court the attention of redevelopers, how to obtain the necessary vote, and how best to encourage unit owners to explore and work through termination options collectively, much recent progress has been made bringing attention and study to condominium terminations.
If the circumstances of your condominium community warrant the consideration of condominium termination and redevelopment, do not hesitate to have the condominium association’s board of directors reach out to legal counsel for advice and guidance.