October 15, 2019
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_h0327__
HB 327

1
A bill to be entitled
2An act relating to community associations; amending s.
3718.103, F.S.; revising the definition of the term
4"developer" to exclude a bulk assignee or bulk buyer;
5creating part VII of ch. 718, F.S., relating to distressed
6condominium relief; providing a short title; providing
7legislative findings and intent; defining the terms "bulk
8assignee" and "bulk buyer"; providing for the assignment
9of developer rights to and the assumption of developer
10rights by a bulk assignee; specifying liabilities of bulk
11assignees and bulk buyers; providing exceptions; providing
12additional responsibilities of bulk assignees and bulk
13buyers; authorizing certain entities to assign developer
14rights to a bulk assignee; limiting the number of bulk
15assignees at any given time; providing for the transfer of
16control of a board of administration; providing effects of
17such transfer on parcels acquired by a bulk assignee;
18providing obligations of a bulk assignee upon the transfer
19of control of a board of administration; requiring that a
20bulk assignee certify certain information in writing;
21providing for the resolution of a conflict between
22specified provisions of state law; providing that the
23failure of a bulk assignee or bulk buyer to comply with
24specified provisions of state law results in the loss of
25certain protections and exemptions; requiring that a bulk
26assignee or bulk buyer file certain information with the
27Division of Florida Condominiums, Timeshares, and Mobile
28Homes of the Department of Business and Professional
29Regulation before offering any units for sale or lease in
30excess of a specified term; requiring that a copy of such
31information be provided to a prospective purchaser;
32requiring that certain contracts and disclosure statements
33contain specified statements; requiring that a bulk
34assignee or bulk buyer comply with certain disclosure
35requirements; prohibiting a bulk assignee from taking
36certain actions on behalf of an association while the bulk
37assignee is in control of the board of administration of
38the association and requiring that such bulk assignee
39comply with certain requirements; requiring that a bulk
40assignee or bulk buyer comply with certain requirements
41regarding certain contracts; providing unit owners with
42specified protections regarding certain contracts;
43requiring that a bulk buyer comply with certain
44requirements regarding the transfer of a unit; prohibiting
45a person from being classified as a bulk assignee or bulk
46buyer unless condominium parcels were acquired before a
47specified date; providing for the determination of the
48date of acquisition of a parcel; providing that the
49assignment of developer rights to a bulk assignee or bulk
50buyer does not release a developer from certain
51liabilities; preserving certain liabilities for certain
52parties; providing an effective date.
53
54Be It Enacted by the Legislature of the State of Florida:
55
56     Section 1.  Subsection (16) of section 718.103, Florida
57Statutes, is amended to read:
58     718.103  Definitions.--As used in this chapter, the term:
59     (16)  "Developer" means a person who creates a condominium
60or offers condominium parcels for sale or lease in the ordinary
61course of business, but does not include:
62     (a)  An owner or lessee of a condominium or cooperative
63unit who has acquired the unit for his or her own occupancy;,
64nor does it include
65     (b)  A cooperative association that which creates a
66condominium by conversion of an existing residential cooperative
67after control of the association has been transferred to the
68unit owners if, following the conversion, the unit owners will
69be the same persons who were unit owners of the cooperative and
70no units are offered for sale or lease to the public as part of
71the plan of conversion;.
72     (c)  A bulk assignee or bulk buyer as defined in s.
73718.703; or
74     (d)  A state, county, or municipal entity is not a
75developer for any purposes under this act when it is acting as a
76lessor and not otherwise named as a developer in the declaration
77of condominium association.
78     Section 2.  Part VII of chapter 718, Florida Statutes,
79consisting of sections 718.701, 718.702, 718.703, 718.704,
80718.705, 718.706, 718.707, and 718.708, is created to read:
81
PART VII
82
DISTRESSED CONDOMINIUM RELIEF
83     718.701  Short title.--This part may be cited as the
84"Distressed Condominium Relief Act."
85     718.702  Legislative intent.--
86     (1)  The Legislature acknowledges the massive downturn in
87the condominium market which has transpired throughout the state
88and the impact of such downturn on developers, lenders, unit
89owners, and condominium associations. Numerous condominium
90projects have either failed or are in the process of failing,
91whereby the condominium has a small percentage of third-party
92unit owners as compared to the unsold inventory of units. As a
93result of the inability to find purchasers for this inventory of
94units, which results in part from the devaluing of real estate
95in this state, developers are unable to satisfy the requirements
96of their lenders, leading to defaults on mortgages.
97Consequently, lenders are faced with the task of finding a
98solution to the problem in order to be paid for their
99investments.
100     (2)  The Legislature recognizes that all of the factors
101listed in this section lead to condominiums becoming distressed,
102resulting in detriment to the unit owners and the condominium
103association on account of the resulting shortage of assessment
104moneys available to support the financial requirements for
105proper maintenance of the condominium. Such shortage and the
106resulting lack of proper maintenance further erode property
107values. The Legislature finds that individuals and entities
108within Florida and in other states have expressed interest in
109purchasing unsold inventory in one or more condominium projects,
110but are reticent to do so because of the potential of
111accompanying liabilities inherited from the original developer,
112which are potentially by definition imputed to the successor
113purchaser, including a foreclosing mortgagee. This results in
114the potential purchaser having unknown and unquantifiable risks,
115and potential successor purchasers are unwilling to accept such
116risks. The result is that condominium projects stagnate, leaving
117all parties involved at an impasse without the ability to find a
118solution.
119     (3)  The Legislature finds and declares that it is the
120public policy of this state to protect the interests of
121developers, lenders, unit owners, and condominium associations
122with regard to distressed condominiums, and that there is a need
123for relief from certain provisions of the Florida Condominium
124Act geared toward enabling economic opportunities within these
125condominiums for successor purchasers, including foreclosing
126mortgagees, while at the same time clarifying the ambiguity in
127the law. Such relief would benefit existing unit owners and
128condominium associations. The Legislature further finds and
129declares that this situation cannot be open-ended without
130potentially prejudicing the rights of unit owners and
131condominium associations, and thereby declares that the
132provisions of this part shall be used by purchasers of
133condominium inventory for a specific and defined period.
134     718.703  Definitions.--As used in this part, the term:
135     (1)  "Bulk assignee" means a person who:
136     (a)  Acquires more than seven condominium parcels in a
137single condominium as set forth in s. 718.707; and
138     (b)  Receives an assignment of all or substantially all of
139the rights of the developer as are set forth in the declaration
140of condominium or in this chapter by a written instrument
141recorded as an exhibit to the deed or as a separate instrument
142in the public records of the county in which the condominium is
143located.
144     (2)  "Bulk buyer" means a person who acquires more than
145seven condominium parcels in a single condominium as set forth
146in s. 718.707 but who does not receive an assignment of any
147developer rights other than, at the bulk buyer's option, the
148right to conduct sales, leasing, and marketing activities within
149the condominium; the right to be exempt from the payment of
150working capital contributions to the condominium association
151arising out of or in connection with the bulk buyer's
152acquisition of a bulk number of units; and the right to be
153exempt from any rights of first refusal which may be held by the
154condominium association and would otherwise be applicable to
155subsequent transfers of title from the bulk buyer to any third-
156party purchaser concerning one or more units.
157     718.704  Assignment of developer rights to and assumption
158of developer rights by bulk assignee; bulk buyer.--
159     (1)  A bulk assignee shall be deemed to have assumed and is
160liable for all duties and responsibilities of a developer under
161the declaration and this chapter, except:
162     (a)  Warranties of a developer under s. 718.203(1) or s.
163718.618, except for design, construction, development, or repair
164work performed by or on behalf of such bulk assignee.
165     (b)  The obligation to:
166     1.  Fund converter reserves under s. 718.618 for a unit
167that was not acquired by the bulk assignee; or
168     2.  Provide converter warranties on any portion of the
169condominium property except as may be expressly provided by the
170bulk assignee in the contract for purchase and sale executed
171with a purchaser and pertaining to any design, construction,
172development, or repair work performed by or on behalf of the
173bulk assignee.
174     (c)  The requirement to provide the association with a
175cumulative audit of the association's finances from the date of
176formation of the condominium association as required by s.
177718.301. However, the bulk assignee shall provide an audit for
178the period for which the bulk assignee elects a majority of the
179members of the board of administration.
180     (d)  Any liability arising out of or in connection with
181actions taken by the board of administration or the developer-
182appointed directors before the bulk assignee elects a majority
183of the members of the board of administration.
184     (e)  Any liability for or arising out of the developer's
185failure to fund previous assessments or to resolve budgetary
186deficits in relation to a developer's right to guarantee
187assessments, except as otherwise provided in subsection (2).
188
189Further, the bulk assignee is responsible for delivering
190documents and materials in accordance with s. 718.705(3). A bulk
191assignee may expressly assume some or all of the obligations of
192the developer described in paragraphs (a)-(e).
193     (2)  A bulk assignee receiving the assignment of the rights
194of the developer to guarantee the level of assessments and fund
195budgetary deficits pursuant to s. 718.116 shall be deemed to
196have assumed and is liable for all obligations of the developer
197with respect to such guarantee, including any applicable funding
198of reserves to the extent required by law, for as long as the
199guarantee remains in effect. A bulk assignee not receiving an
200assignment of the right of the developer to guarantee the level
201of assessments and fund budgetary deficits pursuant to s.
202718.116 or a bulk buyer is not deemed to have assumed and is not
203liable for the obligations of the developer with respect to such
204guarantee, but is responsible for payment of assessments in the
205same manner as all other owners of condominium parcels.
206     (3)  A bulk buyer is liable for the duties and
207responsibilities of the developer under the declaration and this
208chapter only to the extent provided in this part, together with
209any other duties or responsibilities of the developer expressly
210assumed in writing by the bulk buyer.
211     (4)  An acquirer of condominium parcels is not considered a
212bulk assignee or a bulk buyer if the transfer to such acquirer
213was made prior to the effective date of this Distressed
214Condominium Relief Act or was made with the intent to hinder,
215delay, or defraud any purchaser, unit owner, or the association,
216or if the acquirer is a person who would constitute an insider
217under s. 726.102(7).
218     (5)  An assignment of developer rights to a bulk assignee
219may be made by the developer, a previous bulk assignee, or a
220court of competent jurisdiction acting on behalf of the
221developer or the previous bulk assignee. At any particular time,
222there may be no more than one bulk assignee within a
223condominium, but there may be more than one bulk buyer. If more
224than one acquirer of condominium parcels in the same condominium
225receives an assignment of developer rights from the same person,
226the bulk assignee is the acquirer whose instrument of assignment
227is recorded first in applicable public records.
228     718.705  Board of administration; transfer of control.--
229     (1)  For purposes of determining the timing for transfer of
230control of the board of administration of the association to
231unit owners other than the developer under s. 718.301(1)(a) and
232(b), if a bulk assignee is entitled to elect a majority of the
233members of the board, any condominium parcel acquired by the
234bulk assignee shall not be deemed to be conveyed to a purchaser,
235or to be owned by an owner other than the developer, until such
236condominium parcel is conveyed to an owner who is not a bulk
237assignee.
238     (2)  Unless control of the board of administration of the
239association has already been relinquished pursuant to s.
240718.301(1), the bulk assignee is obligated to relinquish control
241of the association in accordance with s. 718.301(1) or (2) and
242this part as if the bulk assignee were the developer.
243     (3)  When a bulk assignee relinquishes control of the board
244of administration, the bulk assignee shall deliver all of those
245items required by s. 718.301(4). However, the bulk assignee is
246not required to deliver items and documents not in the
247possession of the bulk assignee during the period during which
248the bulk assignee was entitled to elect not less than a majority
249of the members of the board of administration. In conjunction
250with the acquisition of condominium parcels, a bulk assignee
251shall undertake a good faith effort to obtain the documents and
252materials required to be provided to the association pursuant to
253s. 718.301(4). To the extent the bulk assignee is not able to
254obtain all of such documents and materials, the bulk assignee
255shall certify in writing to the association the names or
256descriptions of the documents and materials that were not
257obtainable by the bulk assignee. Delivery of the certificate
258relieves the bulk assignee of responsibility for the delivery of
259the documents and materials referenced in the certificate as
260otherwise required under ss. 718.112 and 718.301 and this part.
261The responsibility of the bulk assignee for the audit required
262by s. 718.301(4) shall commence as of the date on which the bulk
263assignee elected a majority of the members of the board of
264administration.
265     (4)  If a conflict arises between the provisions or
266application of this section and s. 718.301, this section shall
267prevail.
268     (5)  Failure of a bulk assignee or bulk buyer to
269substantially comply with all the requirements contained in this
270part shall result in the loss of all protections or exemptions
271provided under this part.
272     718.706  Specific provisions pertaining to offering of
273units by a bulk assignee or bulk buyer.--
274     (1)  Before offering any units for sale or for lease for a
275term exceeding 5 years, a bulk assignee or a bulk buyer shall
276file the following documents with the division and provide such
277documents to a prospective purchaser or tenant:
278     (a)  An updated prospectus or offering circular, or a
279supplement to the prospectus or offering circular, filed by the
280creating developer prepared in accordance with s. 718.504, which
281shall include the form of contract for purchase and sale in
282compliance with s. 718.503(1)(a);
283     (b)  An updated Frequently Asked Questions and Answers
284sheet;
285     (c)  The executed escrow agreement if required under s.
286718.202; and
287     (d)  The financial information required by s. 718.111(13).
288However, if a financial information report does not exist for
289the fiscal year before acquisition of title by the bulk assignee
290or bulk buyer, or accounting records cannot be obtained in good
291faith by the bulk assignee or the bulk buyer which would permit
292preparation of the required financial information report, the
293bulk assignee or bulk buyer is excused from the requirement of
294this paragraph. However, the bulk assignee or bulk buyer must
295include in the purchase contract the following statement in
296conspicuous type:
297
298THE FINANCIAL INFORMATION REPORT REQUIRED UNDER
299SECTION 718.111(13), FLORIDA STATUTES, FOR THE
300IMMEDIATELY PRECEDING FISCAL YEAR OF THE ASSOCIATION
301IS NOT AVAILABLE OR CANNOT BE CREATED BY THE SELLER AS
302A RESULT OF INSUFFICIENT ACCOUNTING RECORDS OF THE
303ASSOCIATION.
304
305     (2)  Before offering any units for sale or for lease for a
306term exceeding 5 years, a bulk assignee shall file with the
307division and provide to a prospective purchaser a disclosure
308statement that must include, but is not limited to:
309     (a)  A description of any rights of the developer which
310have been assigned to the bulk assignee;
311     (b)  The following statement in conspicuous type:
312
313THE SELLER IS NOT OBLIGATED FOR ANY WARRANTIES OF THE
314DEVELOPER UNDER SECTION 718.203(1) OR SECTION 718.618,
315FLORIDA STATUTES, AS APPLICABLE, EXCEPT FOR DESIGN,
316CONSTRUCTION, DEVELOPMENT, OR REPAIR WORK PERFORMED BY
317OR ON BEHALF OF SELLER.
318
319     (c)  If the condominium is a conversion subject to part VI,
320the following statement in conspicuous type:
321
322THE SELLER HAS NO OBLIGATION TO FUND CONVERTER
323RESERVES OR TO PROVIDE CONVERTER WARRANTIES UNDER
324SECTION 718.618, FLORIDA STATUTES, ON ANY PORTION OF
325THE CONDOMINIUM PROPERTY EXCEPT AS MAY BE EXPRESSLY
326REQUIRED OF THE SELLER IN THE CONTRACT FOR PURCHASE
327AND SALE EXECUTED BY THE SELLER AND THE DEVELOPER AND
328PERTAINING TO ANY DESIGN, CONSTRUCTION, DEVELOPMENT,
329OR REPAIR WORK PERFORMED BY OR ON BEHALF OF THE
330SELLER.
331
332     (3)  In addition to the requirements set forth in
333subsection (1), a bulk assignee or bulk buyer must comply with
334the nondeveloper disclosure requirements set forth in s.
335718.503(2) before offering any units for sale or for lease for a
336term exceeding 5 years.
337     (4)  While in control of the board of administration of the
338association, a bulk assignee may not authorize, on behalf of the
339association:
340     (a)  The waiver of reserves or the reduction of funding of
341the reserves in accordance with s. 718.112(2)(f)2., unless
342approved by a majority of the voting interests not controlled by
343the developer, bulk assignee, and bulk buyer; or
344     (b)  The use of reserve expenditures for other purposes in
345accordance with s. 718.112(2)(f)3., unless approved by a
346majority of the voting interests not controlled by the
347developer, bulk assignee, and bulk buyer.
348     (5)  A bulk assignee or bulk buyer shall comply with all
349the requirements of s. 718.302 regarding any contracts entered
350into by the association during the period the bulk assignee or
351bulk buyer maintains control of the board of administration.
352Unit owners shall be afforded all the protections contained in
353s. 718.302 regarding agreements entered into by the association
354before unit owners other than the developer, bulk assignee, or
355bulk buyer elected a majority of the board of administration.
356     (6)  A bulk buyer shall comply with the requirements
357contained in the declaration regarding any transfer of a unit,
358including sales, leases, and subleases. A bulk buyer is not
359entitled to any exemptions afforded a developer or successor
360developer under this chapter regarding any transfer of a unit,
361including sales, leases, or subleases.
362     718.707  Time limitation for classification as bulk
363assignee or bulk buyer.--A person acquiring condominium parcels
364may not be classified as a bulk assignee or bulk buyer unless
365the condominium parcels were acquired before July 1, 2012. The
366date of such acquisition shall be determined by the date of
367recording of a deed or other instrument of conveyance for such
368parcels in the public records of the county in which the
369condominium is located or by the date of issuance of a
370certificate of title in a foreclosure proceeding with respect to
371such condominium parcels.
372     718.708  Liability of developers and others.--An assignment
373of developer rights to a bulk assignee or bulk buyer does not
374release the creating developer from any liabilities under the
375declaration or this chapter. This part does not limit the
376liability of the creating developer for claims brought by unit
377owners, bulk assignees, or bulk buyers for violations of this
378chapter by the creating developer, unless specifically excluded
379in this part. Nothing contained within this part waives,
380releases, compromises, or limits the liability of contractors,
381subcontractors, materialmen, manufacturers, architects,
382engineers, or any participant in the design or construction of a
383condominium for any claim brought by an association, unit
384owners, bulk assignees, or bulk buyers arising from the design
385of the condominium, construction defects, misrepresentations
386associated with condominium property, or violations of this
387chapter, unless specifically excluded in this part.
388     Section 3.  This act shall take effect upon becoming a law.


CODING: Words stricken are deletions; words underlined are additions.
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