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IT’S BETTER TO BE THE DEVELOPER IN AN HOA
By
Eric Glazer, Esq.
Published October 28, 2019
When it comes to Florida Statute 720, there’s no question that
you would rather be the developer than the homeowner.
At least The Florida Condominium Act has a drop-dead seven year
deadline where the developer must turn over majority control of
the Board of Directors to the unit owners. If you’re an HOA
however, here is what the law says:
(1) Members other than the
developer are entitled to elect at least a majority of the
members of the board of directors of the homeowners’ association
when the earlier of the following events occurs:
(a) Three months after 90
percent of the parcels in all phases of the community that will
ultimately be operated by the homeowners’ association have been
conveyed to members;
(b) Such other percentage of
the parcels has been conveyed to members, or such other date or
event has occurred, as is set forth in the governing documents
in order to comply with the requirements of any governmentally
chartered entity with regard to the mortgage financing of
parcels;
(c) Upon the developer
abandoning or deserting its responsibility to maintain and
complete the amenities or infrastructure as disclosed in the
governing documents. There is a rebuttable presumption that the
developer has abandoned and deserted the property if the
developer has unpaid assessments or guaranteed amounts under s.
720.308 for a period of more than 2 years;
(d) Upon the developer filing a
petition seeking protection under chapter 7 of the federal
Bankruptcy Code;
(e) Upon the developer losing
title to the property through a foreclosure action or the
transfer of a deed in lieu of foreclosure, unless the successor
owner has accepted an assignment of developer rights and
responsibilities first arising after the date of such
assignment; or
(f) Upon a receiver for the
developer being appointed by a circuit court and not being
discharged within 30 days after such appointment, unless the
court determines within 30 days after such appointment that
transfer of control would be detrimental to the association or
its members.
Let me make this simple for you. If the developer never gets to
90% of the parcels sold, keeps title to the property, doesn’t go
bankrupt and builds what they were supposed to build – turnover
may never occur. That’s why we hear horror stories of the same
developer in control for decades. But if you’re in an HOA,
wait, it gets worse.
If you live in a Florida condominium, at turnover you get
certain warranties from the developer regarding the condition of
the property. Structural, electrical, plumbing all must be safe
and sound. In an HOA, you get nothing. A few years ago the 5th
District Court of Appeals decided that if The Florida
Legislature won’t address warranties for HOAs, they would, and
held there was a warranty for certain improvements.
Immediately, The Florida Legislature took those warranties away,
because “it would create uncertainty in the state’s fragile real
estate and construction industry.” Can you imagine? Somehow
giving homeowners a warranty would create uncertainty in the
real east and construction industry. I think I would argue in
the reverse. Perhaps not giving a warranty would create
uncertainty.
But wait. It gets worse……..But you’ll have to read next week’s
blog to find out why.
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About
HOA & Condo Blog
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Eric Glazer graduated from
the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for more than 2
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decades and is the owner of Glazer
and Sachs, P.A. a seven attorney law firm with offices in
Fort Lauderdale and Orlando and satellite offices in Naples,
Fort Myers and Tampa.
Since 2009, Eric has been the host
of Condo Craze and HOAs, a weekly one hour radio show that airs
at noon each Sunday on 850 WFTL.
See:
www.condocrazeandhoas.com.
He is the first attorney in the
State of Florida that designed a course that certifies
condominium residents as eligible to serve on a condominium
Board of Directors and has now certified more than 10,000
Floridians all across the state. He is certified as a Circuit
Court Mediator by The Florida Supreme Court and has mediated
dozens of disputes between associations and unit owners. Eric
also devotes significant time to advancing legislation in the
best interest of Florida community association members.
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