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There are just over four months left for foreclosing lenders or bulk investors in distressed condominium projects to qualify as "bulk buyers" or "bulk assignees" under the Distressed Condominium Relief Act. As of July 1, 2012, the window of "limited liability" opportunity currently available will officially close. As a reminder, the Distressed Condominium Relief Act created the "bulk buyers" and "bulk assignees" classifications to encourage the bulk acquisition and repositioning of distressed condominium projects. The Act protects the acquirer against some significant liabilities which could be inherited from the original developer (a.k.a. "successor developer" liabilities), while allowing the new owner to retain certain useful and valuable rights with respect to the development, operations, and eventual disposition of the assets.
But the date that is looming even closer is March 9, 2012 - the last day of the 2012 Regular Session of the Florida legislature.
Two bills have been making their way through the legislature - House Bill 319 and Senate Bill 680. Among various matters affecting residential properties, homeowners' and condominium associations, both bills seek to push back the sunset of the Distressed Condominium Relief Act by three years, to July 1, 2015. As of this writing, the most recent pit stop for the bills are the Judiciary Committees in both the Senate and the House.
If the Relief Act is not extended, liability concerns relating to statutory warranties on units and common elements, unfunded reserves, past due assessments or deficit funding obligations, the acts and/or omissions of the prior developer's board of directors, and the like, are likely to increase and add downward pressures on the still distressed condominium market.
Will such concerns be alleviated by the passage of an extension of the Florida's Distressed Condominium Relief Act? We will know soon enough, as March 9th is just around the corner.
© Lowndes, Drosdick, Doster, Kantor & Reed, PA, 2012. All rights reserved.About the Author
