Terminating Condominiums According to the Florida Condominium Act: Part V

This is Part V in a series of Blog posts dedicated to explaining the process for the termination of condominiums according to the Florida Condominium Act.   Previous posts in this series discussed the process of termination due to certain events such as economic waste, impossibility to continue as a condominium, and the purchase of condominium property by a developer.  Part III and Part IV also explained the required provisions for a plan of termination and what must be done after the plan is executed and in effect.  This Blog post describes the powers of the association and the trustee during the termination of condominium process.

When the plan of termination is approved, the association, i.e., the board of directors, is not automatically dissolved.  Fla. Stat. § 718.117(6).  Rather, the association continues in existence after approval of the plan with all of the powers and duties that it had prior to the plan’s approval, unless the declaration has a provision stating otherwise.  Id.  Notwithstanding any declaration provision to the contrary, the association has the power to do the following after the plan of termination has been approved:

• Employ directors, agents, attorneys, and other professionals to liquidate or conclude its affairs.

• Continue to perform under existing contracts and to collect, pay and settle debts and claims for and against the association.

• Defend any legal action brought against the association.

• Sue to recover all sums owed to the association or to recover association property.

• Perform any act necessary to maintain, repair or demolish any unsafe or uninhabitable areas of condominium property, in compliance with applicable codes.

• Sell, exchange or convey assets of the association for an amount deemed to be in the best interest of the association, including executing bills of sale and deeds of conveyance in the name of the association.

• Collect and receive rents, profits, accounts receivable, income, maintenance fees, special assessments, or insurance proceeds for the association.

• Do anything in the name of the association which is proper or convenient to terminate the affairs of the association.

Fla. Stat. § 718.117(6)(a)-(i).

It is also important to note that the termination of a condominium does not change the corporate status of the association.  Fla. Stat. § 718.117(18).  The association continues existing as a corporation in order to conclude its affairs, similar to the winding up of a corporation after dissolution.  Id.  When there is a partial termination, the association continues in its corporate entity for the property which remains subject to the association’s declaration. Id.  Moreover, the association, and/or termination trustee, may also be involved in the creation of a subsequent condominium.  In other words, the termination of an existing condominium does not preclude the filing of a new declaration by the association and/or trustee for a new condominium on the same property.  Fla. Stat. § 718.117(19).

Concerning the powers of the trustee, upon the date of recording the plan of termination, title to the condominium property included within the plan will vest in the trustee.  Fla. Stat. § 718.117(13).  Those powers vested to the trustee will include all the powers given to the board under the association’s declaration and bylaws.  Id.  Stated another way, if the association is not the trustee, the trustee’s powers shall be coextensive with those of the association and the association shall transfer any association property to the trustee.  Id.  If the association is dissolved, the trustee shall also have such other powers necessary to conclude the association’s affairs.  Id.

Once the plan of termination is recorded in the public records, and title to the condominium property being terminated vests in the trustee, the unit owners immediately become the beneficiaries of any proceeds realized from the plan of termination.  Fla. Stat. § 718.117(14).  If the plan confers on the trustee the authority to protect, conserve, manage, sell or dispose of the condominium property then the trustee may do so on behalf of the unit owners. Id.  In that situation, the trustee may contract for the sale of the affected condominium property on behalf of the unit owners, but the contracts are not binding on the unit owners until the plan is approved.  Id.   The forthcoming Part VI in this Blog series will discuss the appointment of a receiver, along with the affirmative duties of the association, receiver and trustee during the entire termination process.