A six-month-old law designed to spur the bulk sale of troubled condo projects throughout the state has been credited with about $1 billion in property sales, according to an author of the legislation. Still, proponents are preparing a “glitch bill” to fix problems that have cropped up with the law.
Real estate attorney Daniel Kaskel credits the Distressed Condo Relief Act for the Dec. 29 closing of a $7 million, 65-unit deal at the 2560 South Ocean Condominium project in Palm Beach.
The deal in the 94-unit condo “closed only because of the act,” he said.
Kaskel, a partner at the Sachs, Sax Caplan law firm in Boca Raton, said he saw activity pick up as soon as the law went into effect. While all the deals he’s worked on haven’t closed, they wouldn’t have been discussed without the law, he said.
The act went into effect July 1. One of its main provisions relieves buyers who purchase more than seven units from the guarantees made by the original developer of a condo building. Without the law, many of those guarantees could saddle buyers with millions of dollars in promises made by builders. That kept investors from making bulk condominium purchases — which are needed to move the glut of condos that flooded the market during the South Florida real estate boom and are now sitting empty and idle.
The statute does not require the state to track purchases made using the law. However, it does require buyers that have acquired units in a distressed condo to file financial and other information before offering units for sale, said Sandi Copes, spokesperson for the Department of Business and Professional Regulation. Since the act went into effect, 16 buyers have filed with the state, she said.
Charles Brecker, a partner at Stearns Weaver Miller Weissler Alhadeff & Sitterson in Fort Lauderdale who helped draft the law, said it has spurred about $1 billion in sales. While the law has worked as intended, problems have surfaced with imprecise language, he said. He’s helping draft a so-called “glitch bill” to address some of that ambiguity.
Through the legislative process, the bill’s language morphed, creating some vagueness that the glitch bill will try to fix.
Changes include such things as more clearly defining a bulk buyer and clarifying the buyer’s responsibility if assessments fall short of meeting the condo association’s budget. Brecker said it has to be made clear that the buyer is not responsible for shortfalls in budget guarantees made by the developer.
These changes should “greatly enhance the use” of the bulk buyer legislation, Brecker said. The proposal is already being discussed in Tallahassee.
The law is scheduled to sunset July 1, 2012. Kaskel said it is still early, but he hopes lawmakers will extend it. There are too many distressed condos, and the law is important to turning them around, he said.