This statute clears up certain problems experienced in prior terminations while imposing a number of impediments to future terminations.
If a termination plan is rejected, the period in which it may be reconsidered is extended from 180 days to 18 months. Furthermore, condominiums created by conversions of rental properties cannot be terminated prior to five years following the recording of their declarations of condominium.
If a termination is effected by a “bulk owner”—someone with affiliates that owns at least 80% of the units—the other owners are granted the following rights:Owners must receive 100% of the fair market value of their units. If the units have homestead status, the owners must also receive a relocation payment of 1% of the proceeds allocated to their units. If the property is to be operated as rental units following termination, owners have a right to receive a one-year lease on the terms offered to the general public. If an owner’s unit is subject to a mortgage which exceeds the fair market value of the unit, in common parlance the owner is “underwater,” then as long as the owner is current in payment of his or her mortgage and the condominium assessments, the excess value of the mortgage debt over the fair market value of the unit is extinguished.
The statute also requires a bulk owner to include in any plan of termination:The identity of the individuals who directly or indirectly control the bulk owner. The date the bulk owner’s units were acquired and the total compensation paid for each unit. The relationship of any board of directors member to the bulk owner.
Furthermore, if all of the board of directors has been elected by the bulk owner, the statute requires a new election for one-third of the board by owners, other than the bulk owner, before a plan of termination may be approved.
Although some of these changes seem well intentioned, it is doubtful they can be applied to existing condominiums to address the perceived abuses. They may, however, have a perverse effect by preventing absorption of units of distressed condominiums in any future downturn.