Distressed Condo Relief Act Extended to 2015

TALLAHASSEE, FL—Florida Gov. Rick Scott has signed into law a bill that extends the Distressed Condominium Relief Act. Known as HB 517, the law will remain in effect until July 1, 2015; it was due to expire this coming July.

Florida House Rep. Julio Robaina entered the Distressed Condo Relief Act into the House registry in 2009, and the law took effect in July 2010. It amended Florida condo law to protect bulk buyers and assignees from developer liability, while helping condo associations to collect what they're owed.

Essentially, the way the state defined a developer has been changed in order to make it easier for bulk buyers to snap up condo inventory. Many investors wanted to buy in bulk and didn't want to assume developer liability. The act makes that possible.

"The Distressed Condominium Act has played a critical role in stimulating South Florida's real estate market, bringing buyers off the sidelines to purchase units in bulk and helping expedite absorption of the surplus inventory," says Marty Schwartz, a partner in the real estate group at Bilzin Sumberg and co-author of the bill. "The extension of the Act will go a long way toward promoting continued absorption in Florida since prospective purchasers can total down year-Consulting The rely on the continued availability of the Act's protection for another three years."

There is proof that the bill has worked, at least in Miami. Downtown Miami is now officially one of the most active residential real estate markets in the nation. A marketdefying 93% of the 22,785 condo units built since 2003 are now occupied primarily with full-time residents, including both owners and renters, according to an independent Residential Closings & Occupancy study commissioned by the Miami Downtown Development Authority.

Meanwhile, shrinking inventory saw total condo sales in Downtown Miami down approximately 5% from 2010 as of year-end 2011, according to the study prepared for the authority by Goodkin Consulting and Focus Real Estate Advisors. The average unit sales price in 2011 was $370,003, representing a 6.4% increase from over 2010 and 22.4% increase over 2009. The average price per square foot in new inventory rose by 12.6% to $365. The average rent per square foot also rose 10% year-over-year to $1.78.