HOA C.U.R.S.E. #4: FL Condo Law’s Loopholes

By Deborah Goonan, Independent American Communities

HOA C.U.R.S.E. = Consumer Unfriendly Regulatory Statute Example

I have written about Condo Terminations in Florida and other states before, but today I want to highlight the portions of Florida statute that allow wealthy real estate investment firms and developers to takeover condominium associations and force remaining owners to sell, against their will, often at a substantial loss.

Since 2007, through a process called termination, thousands of Florida condo owners have been forced to sell their units to investors for tens or hundreds of thousands of dollars less than what they paid for them at the height of the market in 2005-2007.

In response to bad publicity, the Florida Legislature passed an amendment to the Condominium Act in June of 2015, but, as you can see from this America Tonight report, there are still gaping loopholes in the law that allow bulk buyers to get around the stated intent of the law. That intent was to make condo owners “whole” by requiring investors to pay displaced owners at least their original purchase price, in cases where original price exceeds current fair market value.

Are Floridians still being forced to sell their homes at huge losses? (VIDEO)



Let’s take a look at the offending portions of FL Statute 718.117

I have emphasized the key phrases.


(3) OPTIONAL TERMINATION.Except as provided in subsection (2) or unless the declaration provides for a lower percentage, the condominium form of ownership may be terminated for all or a portion of the condominium property pursuant to a plan of termination approved by at least 80 percent of the total voting interests of the condominium. If 10 percent or more of the total voting interests of the condominium have rejected the plan of termination by negative vote or by providing written objections, the plan of termination may not proceed.

In plain language, what does this mean?

First, you need to understand that a voting interest is assigned to the unit or units an individual or corporate entity owns. So each member, be it a person or an investment corporation, adds up all the voting interests assigned to each unit they own to determine total voting power.

There is no such thing as “one person, one vote” in the world of corporate owners’ associations.

The more units you own, the more voting interests you hold. Larger condo units often hold greater voting power than smaller condo units. So an investor corporation that owns most of the units – usually acquiring them over several months or years – eventually accumulates enough voting interests to force a termination.

Pay close attention to the phrase “unless the declaration provides for a lower percentage.”

Florida statute allows for termination at percentages lower than 80% approval, if the “declaration” – your CC&Rs – says so. As you can see from the video above, an investor or developer-controlled board can easily amend the Declarations. Why? Because they hold a super majority of voting interests, which is enough to “vote” for any amendment they can dream up.

That includes amending the Declaration to allow for a termination with, for example, 75% total voting interests, if that just so happens to be the amount of voting interests held by the bulk buying investor group.

Now read on.


(a) The termination of the condominium form of ownership is subject to the following conditions:

For purposes of this subsection, the term “bulk owner” means the single holder of such voting interests or an owner together with a related entity or entities that would be considered an insider, as defined in s. 726.102, holding such voting interests. If the condominium association is a residential association proposed for termination pursuant to this section and, at the time of recording the plan of termination, at least 80 percent of the total voting interests are owned by a bulk owner, the plan of termination is subject to the following conditions and limitations:


Allow me to pause here. Pay close attention to the fact that all of the conditions that follow only apply if “at least 80 percent of the total voting interests are owned by a bulk owner.”

But if 75% or even 79% of the total voting interests are owned by the bulk owner, and said bulk owner has amended the Declaration to allow for termination at 75% approval, then the conditions do not apply!

Another loophole yet to be exposed.

Below are the conditions that must apply in order for a condo owner to be paid at least their original purchase price, so that they are not forced to sell at a loss to wealthy investors.


For their respective units, all unit owners other than the bulk owner must be compensated at least 100 percent of the fair market value of their units. The fair market value shall be determined as of a date that is no earlier than 90 days before the date that the plan of termination is recorded and shall be determined by an independent appraiser selected by the termination trustee. For an original purchaser from the developer who rejects the plan of termination and whose unit was granted homestead exemption status by the applicable county property appraiser, or was an owner-occupied operating business, as of the date that the plan of termination is recorded and who is current in payment of both assessments and other monetary obligations to the association and any mortgage encumbering the unit as of the date the plan of termination is recorded, the fair market value for the unit owner rejecting the plan shall be at least the original purchase price paid for the unit.

As pointed out by real people in the America Tonight report, the most recent amendment to the Florida Condominium Act will not help make you – the condo owner – “whole” if any of the following conditions apply:

  • You did not purchase your unit directly from the developer (in other words, you purchased a resale from the previous owner).


  • You are no longer using your unit as a primary residence (homestead), even if you have been forced to become a reluctant landlord simply because you had to move out, but cannot afford to take a loss on selling your underwater unit.


  • You owe any monetary obligation to either the mortgage lender or the condo association. Why is this a problem? What if you are unjustly fined at the time the termination is recorded? What if the bulk buyer issues a large special assessment just prior to recording the termination, and you find yourself unable to pay that assessment in one lump sum? Obviously, there’s the potential for abuse here.


The loopholes are quite obvious, and they were equally apparent when the Legislature was considering the amendment that is now the law.

Clearly, the Florida Condominium Act is written for the benefit of HOA Industry stakeholders at the expense of consumers.

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