Condo terminations expected to rise as developers look to older buildings
Daily Business Review
03 January 2017
South Florida's aging condominium stock, especially buildings sitting
on oceanfront land, is ripe for glitzy redevelopment as developers push
to expand a skyline where little to no prime, undeveloped land remains.
Redevelop aged buildings on underutilized sites, preferably near the water.
Real estate lawyers who specialize in condo terminations reported a
busy 2016 season, despite the noted slowdown in the region's luxury
condo market. As undeveloped land becomes scarce, builders have turned
to more creative measures: Redevelop aged buildings on underutilized
sites, preferably near the water.
"Developers are seeing a lot of opportunities particularly along the
coast with older condominiums that may have been built in the '50s,
'60s and '70s that are now pretty much functionally obsolete," said Joe
Hernandez, a real estate lawyer with Weiss Serota Helfman Cole &
For unit owners of dilapidated condo properties whose repairs outweigh
their existing value, a condo termination may be the only viable option.
"The owners in those condos then face a tough problem because things
get more and more expensive to maintain," said Hernandez, who is a
partner with the firm in Fort Lauderdale.
While condo terminations have been happening for years, the shortage of
well-located development sites has catalyzed a recent flurry of
activity, said Howard Vogel, a partner with Rennert Vogel Mandler &
The Miami real estate lawyer said his clients are actively searching
for older buildings, particularly those whose condo declarations are
most conducive to terminations — even as the market for high-end condos
has slowed. Developers are taking a more long-term approach, which
points to the development community's confidence in the region's condo
"They saw how quickly the market recovered after the last downturn and
how important it is to be well-positioned for the recovery," Vogel said.
Law in flux
The law governing condo terminations has been in a state of flux since the housing market fell to its knees.
Before 2007, the decades-old legislation required unanimous approval
before a condo could be terminated, whether for redevelopment or
conversion to rental property. The Florida legislature decreased the
threshold to 80 percent approval so long as no more than 10 percent of
the unit owners rejected the plan.
"In condo living, one owner shouldn't be able to be a veto power when
everybody else wants something," said real estate lawyer Mark Grant,
explaining the legislature's thought process for the 2007 amendment.
Getting 100 percent approval was nearly impossible, so the change in
law streamlined the process for developers aiming to buy out old
buildings and replace them with lucrative towers or convert them to
there have been 200 terminations across Florida, but many of them are still pending
Grant, a shareholder with Greenspoon Marder in Fort Lauderdale, said
there have been 200 terminations across Florida, but many of them are
still pending. A recent ruling from the Third District Court of Appeal
may throw several of those terminations into doubt.
The court found the 2007 amendment applies only to condo building
created after the law went into effect. All buildings with condo
declarations pre-dating the amendment are subject to the 100 percent
approval threshold, unless their governing documents say otherwise,
which is rarely the case, Grant said.
Despite the changing legal landscape, real estate attorneys expect to
see more condo terminations as developers scour the coast for new
Grant said this a trend seen not only in Florida, but all over the country.
"It's going to happen all up and down the coast, where these older
projects are on land where they can now build a high-rise with many
more units," he said. "As our downtowns grow and as our coastlines
become more valuable, putting aside rising tides for the moment, I can
see this continuing to happen.