What Every Owner Should Know about Condo Deconversion

How does the condominium deconversion process work? In Florida, deconversion is commonly referred to as “termination.” Florida condominiums are dealing with recent changes in state law imposing new restrictions on reserves, structural integrity reserve reports coupled with aging infrastructure, additional requirements imposed by insurance carriers and federal loan programs. Termination has become a reasonable economic alternative where maintenance of the condominium is no longer economically feasible.

When evaluating termination, a Florida association must first determine whether termination is regulated pursuant to the declaration of condominium or applicable Florida statutes, section 718.117. The first text for Section 718.117 required consent of all unit owners and all lienholders for termination, unless otherwise provided in the declaration of condominium. The concept of unanimous approval has been retained in many declarations.

The most significant changes to the statute occurred in 2007, when the legislature recognized termination because of economic waste or impossibility upon approval by 80% of the voting interests and 80% of the principal amount of mortgage liens. Exceptions can be made if the declaration provides for a lower percentage and optional terminations requiring at least 80% approval of the total voting interest of the condominium if less than 10% of total voting interests rejected the plan of termination.

In 2017, the legislature recognized the need to preserve homestead property rights even in the context of an optional termination of declaration of condominium. Simultaneously, the statute was amended to retain the minimum 80% threshold for approvals but reduced the threshold for objections to 5% of the total voting interest. Statutory terminations require a plan of termination to be recorded in the county. Objections to the process of termination must be made by filing a petition for arbitration within 90 days of the recording of the termination plan.

If the declaration of condominium does not incorporate statutory amendments, it is likely the association may not implement a termination pursuant to procedures outlined in the current statute. Associations may terminate if the declaration of condominium is amended to incorporate the current statute and its specific procedures. A review of the governing documents should be made by an attorney experienced in Florida condominium law. That attorney can advise the association as to which law governs its termination process and the viability of amending its declaration to be consistent with current statutes.

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