Terminating Condominiums According to the Florida Condominium Act: Part VI
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This is Part VI 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 terminating condominiums due to economic waste (part I); the optional termination process (part II); the written plan of termination (part III); executing the written plan of termination (part IV); and the termination trustee (part V). During the time a plan of termination is effective and the condominium is being terminated, the powers to carry out the process are mostly concentrated within the trustee and the association, as represented by the board of directors. However, there may be times when it is necessary to have a receiver appointed to execute the plan of termination and to conclude the affairs of the association. This Blog post will discuss the process for appointing a receiver and the duties of that receiver once appointed.
If the termination of condominium is due to a natural disaster then there is always a possibility that members of the board and/or the trustee named in the plan of termination will be unable to carry out their duties. If a condominium community finds itself in that situation then any interested person may petition the circuit court to have a receiver appointed to conclude the affairs of the association. Fla. Stat. § 718.117(7)(a). Notice must be given to all necessary parties, including all lienholders of condominium property, along with a hearing on the appointment of a receiver. Id. The lienholders have the right to either approve or oppose the potential receiver and to also propose other persons for consideration by the court to be named receiver. Id. Once appointed, the receiver must provide all unit owners with written notice of his or her appointment. This written notice must be mailed or hand delivered to the unit owners within 10 days of the appointment. Id.
The appointed receiver will have all powers given to the board under the condominium’s declaration and bylaws. Fla. Stat. § 718.117(7)(b). The court’s order of appointment may also provide for additional powers, or restrict certain powers, as the court sees fit. The receiver will usually be subject to a bonding requirement, and the receiver will also be entitled to payment of a reasonable fee for his or her services. Id.
After the plan of termination is in effect, the receiver is required to prepare quarterly reports, which provide the status and progress of the plan, the costs and fees incurred to date, and the date the termination is expected to be completed. Fla. Stat. § 718.117(8)(a). The report must also include the financial condition of the association, receivership, or trusteeship. Id. Copies of this quarterly report must be sent to all unit owners and lienholders by regular mail. Id. It is important to note that this quarterly report requirement is mandatory regardless of whether there is a court-appointed receiver handling the termination of condominium or whether the association or the termination trustee is overseeing it. Id.
The unit owners and/or lienholders representing at least 50 percent of the outstanding amount of liens may petition the court for removal of the receiver and appointment of a termination trustee. Fla. Stat. § 718.117(8)(c). This removal can be sought at any time and shall be granted by the court upon approval of good cause shown. Id. The next post in this series will be the final edition and will discuss the allocation of proceeds from the sale of condominium property under a plan of termination.