Court finds law for selling entire condominium projects is not retroactive [1-17-17]

Article Courtesy of The Florida Record

By Rebecca Campbell

Published January 17, 2017

MIAMI — The 3rd District Court of Appeal recently sided with minority owners by ruling that Florida’s statute law governing the sale of condominium projects does not apply to properties that predate Florida’s 2007 amendment to its condominium statute.

The Daily Business Review reported on Nov. 22 that this news affects many associations in particular The Tropicana Condominium Association Inc., a Sunny Isles Beach group, which is fighting a minority of owners over a blocked sale located in Florida’s expensive Miami-Dade.

According to the report, the Tropicana Condominium Association sought to get its members to approve a sale in order for developers to purchase the buildings to replace them with modern high-rises. It is alleged, though, that a small group of Tropicana owners were accused of being straw buyers, thus preventing any potential future sales.

In Tropicana’s amended legislation, 80 percent is required for the approval of a sale; however, the appeals court sided with the minority owners who argued that in the property’s bylaws unanimous approval is needed. The appeals court found that because the Tropicana’s 1983 governing documents predate the legislative amendment and require all owners to approve the sale, the small number of owners refusing to sell was enough to block a potential deal.

According to the Independent American Communities, a website dedicated to exposing residential real-estate corruption and educating consumers, this interpretation of the Florida statute works to the advantage of real-estate developers, who in this instance were the owners of the Ritz-Carlton, future neighbors to the Tropicana.

The Tropicana association made the accusation that the straw buyers were arranged by Ritz-Carlton who were able to acquire up to five of Tropicana’s 48 units, which was enough to meet the 10 percent threshold for blocking future sales. The Tropicana association is reported to have accused the property developers of resorting to covert measures to gain control.

The association alleged that the Ritz-Carlton undertook these steps to ensure that potential rival investors didn’t purchase the Tropicana to then demolish it before developing a bigger building that would subsequently block any views from the Ritz-Carlton.

During the case the Tropicana Condominium Association turned its attention to the court’s understanding of Florida law focusing on the sale of entire condominium projects. According to the amendment the sale of a whole property is permitted with 80 percent of owners agreeing and not more than 10 percent disagreeing.

However, while the Tropicana argued that this applies to all condominium’s, the appeals court found that it only applied to condos that had been built after July 1, 2007. As such, it didn’t apply to the Tropicana.

Additionally, the appeals court stated that Tropicana needed to update its bylaws or use what is known as “Kaufman language” to ensure that the property’s rules automatically update to reflect any future changes to the Declaration of Covenants and Restrictions put forth by Association Governed Housing Communities.