October 30, 2014
October 29, 2014
October 28, 2014
It's official! Governor Scott has signed the extension of the Florida Distressed Condominium Relief Act into law
As the 2012 legislative session was coming to an end in early March, it appeared that there may not be an extension of the Florida Distressed Condominium Relief Act, which was set to expire on July 1, 2012. The two bills (SB 680 and HB 319) which sought to extend the Relief Act also contained a plethora of other provisions which proved too controversial to pass, and each bill was allowed to "die" in its respective chamber.
The extension of the Relief Act, however, was salvaged by being added literally in the final moments of the legislative session to a completely different bill altogether: HB 517.
On April 6, 2012, Governor Scott made the extension official by signing the bill, which has now become part of the Laws of Florida, Chapter No. 2012-61.
What does this mean? The parties that will be impacted most by this extension include foreclosing lenders and investors in distressed condominium properties on the one hand, and sellers of these properties seeking to maximize the value of these assets on the other.
The Relief Act continues the two "limited liability" classifications that can apply to both foreclosing lenders and investors - "bulk buyer" or "bulk assignee". These classifications explicitly protect the acquirer (whether a lender enforcing its loan rights or a third party investor) 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.
The extension of the Relief Act, lessens the concerns of foreclosing lenders and investors 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.