Question: I am looking at buying a condominium. If I buy from a developer, I understand Florida law requires a lot of disclosures. What if I buy from a non developer?
Answer: Florida's original Condominium Act was passed in 1963. As amended over the years, it placed great emphasis on developer disclosure and protection of buyers of new residential condominiums. In 1992, the legislature expanded its protection to buyers from non developers. As amended, the Condominium Act requires non developer sellers of residential condominiums to provide buyers with specific information when that information is requested by the buyer. Non developer disclosure is codified at section 718.503 (2) of Florida Statute.
The statute requires that all contracts for purchase of residential condominiums from someone who is not a developer of that condominium include a clause which makes the contract voidable by the buyer within 3 days excluding Saturday, Sunday and legal holidays, after the buyer signs the contract and obtains current copy specific condominium documents and records. The buyer has an absolute right, at the seller's expense, to a current copy of the declaration of condominium, articles of incorporation of the association, by-laws, rules of association, year end financial statement for the preceding year, a document titled "frequently asked questions and answers" and copy of the governance form.
The buyer cannot waive the cancellation period, but can close before the 3 days have passed.
If the contract does not have the required clause, the buyer can cancel the contract at any time and obtain a refund of deposit. With the clause, the buyer can cancel the contract any time until 3 days after the buyer has received all of the required documents, unless the buyer has signed a document confirming receipt of the all the required documents. If the buyer signs a receipt, even if all of the documents are not there, the buyer signature is binding.
Through misunderstanding or inattention, sellers often provide buyers with less than a full set of the documents required by statute. Often, the mistake is by the condominium association itself.
In many cases, the association provides a copy of its budget rather than a copy of its financial statement. In others, the seller or a sales agent obtains a copy of the condominium document from a title company. The title company pulls copies from the public records. The public records generally do not include rules, questions and answer sheet, financial statement or governance form.
Because, the statute allows buyers to cancel contracts at any time before they receive all of the documents, it is important for sellers to educated, vigilant and insure the buyer gets all of the documents as soon as possible. Most associations can provide an owner with all of the required documents. But, the owner needs to go through the documents to make sure they are all there.
The document associations most often fail to include is the governance form. The governance form is a generic form published by the Florida Division of Condominiums, Timeshares and Mobile Homes. It is available on the Division website and it is not specific to any condominium. It speaks generally to the role of directors and owners, finances, elections and meetings. Since that form is not part of the mandatory official records to be maintained by an association, it is often left out of the "package".
A buyer is only entitled to those records specified by statute. Associations may refuse to provide copies of other records. If the buyer is truly interested in other information, the association refusal or failure to provide may be overcome by the cooperation of the seller. All owners are entitled to review and copy association records. An owner can do that directly or through an authorized agent.
Records that I have had buyers want, but which have not been available under the statute, include an architect who wanted a copy of the building plans. Another wanted to know if there were a lot of problems in a condominium and requested copies of minutes of meetings. Another client wanted a roster of owners. All of that information could be obtained by the current owner but was not available by right to the buyer.
Florida's legislature has taken an active role in attempting to protect buyers of residential condominiums. That role does not relieve the buyer of the obligation to conduct due diligence. Even a seller needs to make sure all of the statutory requirements are met in connection with both contract and documents. For all of these reasons, parties to a condominium purchase agreement should retain an experienced attorney at the earliest opportunity.
By: William G. Morris, Esquire