The real estate market in Florida is rebounding from the doldrums of what some consider Florida’s worst real estate collapse.  Real estate developers took advantage of significant opportunities to obtain properties that were once deemed unobtainable, and there is a new wave of residential development on the drawing boards and in progress in Florida.  The development and sale of single-family homes, townhomes, and condominiums in residential and mixed use projects is proceeding at a quickening pace.  Real estate developers, however, should be wary that potential pitfalls may lurk in what they may view as routine sales of residential properties and routine association documents applicable to condominiums and communities governed by homeowners associations.  Developers of “for sale” residential properties that are governed by homeowners associations and condominium associations must be prudent  and consider a myriad of legal as well as practical considerations that should be examined, including the following issues that are often overlooked.

  1. The purchase and sale agreements must comply with the Interstate Land Sales Full Disclosure Act.
  2. Marketing materials must comply with the Florida Condominium Act, the Interstate Land Sales Full Disclosure Act, and other applicable state and federal regulations.
  3. The developer’s sales staff should be properly trained on the form of sales documents including appropriate responses to questions concerning the form sale documents.
  4. If the project will have a clubhouse, developers should consider whether to structure the clubhouse as a common area or a separate club with membership fees that can be sold to a third party or to the association post turnover.
  5. If the development is mixed use or made up of various condominium and/or homeowners associations, the condominium and association documents, including the various association obligations and responsibilities, must be consistent and allocations and other provisions relating to costs and expenses must have reasonable basis.
  6. The use of approved and/or affiliated title companies and lenders, as well as sales and closing documents, must comply with the Real Estate Settlement Procedures Act.
  7. Review the different methods of measuring square footages and make proper disclosures regarding the measurements and methods used.
  8. Review all title, land use, zoning and other documents applicable to the property and confirm that all material matters are properly disclosed to buyers.
  9. Be prepared for turnover; proper planning can result in the association executing a release in favor of the developer.
  10. Confirm that leasing and sale restrictions, as well as the application of same, are consistent with state and federal prohibitions on discrimination.
  11. Establish policies and procedures for out-of-state marketing and sales to out-of-state residents and comply with all out-of-state registration requirements.