Dissolving Condos When it's Time to Call it Quits

With all the condos in South Florida, it’s inevitable that some associations will run into problems or situations they never expected—including ceasing to be a condo association entirely. These occurrences don’t happen every day, but they do happen, and they bring into play all sorts of complex issues.

So, what happens when a condominium dissolves as a corporate or residential entity? Sometimes it entails literally dismantling physical buildings but more often it means dissolving the condo form of government and replacing it with something else, such as a rental development. Such situations bring into play all sorts of legal and financial questions, such as what happens to the common areas? And what happens to those owners who don't want to convert to rental?

Why Go?

There are several reasons why a condo association would decide to dissolve. Attorney Donna DiMaggio Berger, a shareholder with the law firm of Becker & Poliakoff in Fort Lauderdale, gives several of them.

One might be a lucrative offer from a developer who covets an older community’s prime location. This is one of the scenarios in which an HOA might literally be demolished—a developer could decide to raze the buildings and build something else there. Another might be if a building has been extremely damaged as a result of a catastrophic event like fire or hurricane, and would require significant ongoing maintenance and repairs. There may not be sufficient insurance proceeds and owner assets to rebuild—and that can lead an association to disband.

In another scenario, says attorney Kevin Fabrikant, owner and partner in the law firm of Kevin H. Fabrikant & Associates in Hollywood, a building owner might initially try to convert a rental development into a condo, only to have the venture fail. “I’ve seen rentals converted to condos where an owner can only sell 10 percent of the units. The owner says, `Let’s get back to rental and dissolve the association.”

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2 Comments

  • We are a 4 unit condo association, which has been run ineffectively, condo docs violated, board has been non existent for over a year. Suspicious activity on monthly financial reports. Recently, the worst violation was when the President sold his unit he violated the Fair housing act for seniors. We have been in the fair housing for seniors act since 1991. He lied on his sellers application and failed to follow the procedures on introducing the new buyers to the rest of the condo owners. We cannot seem to get a new board together because no,one, including me wants to try and sort out years and years of violations. How can we dissolve the association and create a new one without an excessive legal fee.
  • Please let me know how the above question was answered. We have a similar situation. Accept the Corp running us went inactive in like 2008. Another board is running things and selling off areas at $100 quit claim. There is a mod three corporations and oils associate land Nee one involved. The new one is deceptive and disregards inconvenient parts of chapter 718. They act untouchable However, through Florida law we the owners pay taxes on common areas and own them. We question their right to act as a board, on our behalf , since when the old Corp went inactive we did not vote them in. They think owners are not paying attention so they are doing what they want. It has to be illegal. As owners, tax payers and maintainers of this area, we have to have rights. How can this board act on our behalf? Didn’t we have the right to form our own board to take over, with majority votes to control it? Now a one bedroom condo pays association fees to them as high as $800 a month, and 2 bedrooms can be over $have legal rights to1000 month! They say they have the right to charge us? Under what law did they get put in charge of us? They are not the original creators of the original association and they did form through majority vote. However, they are now running people up and buying up as much property in our condo building and area as they can. Soon they will have majority strong hold if we can’t stop this. Do we have legal rights? We pay the taxes .