What are Condominium Conversions?

A Condominium Conversion transforms an existing rental property, such as an apartment building or complex, into a residential condominium building or complex.

The state of Florida sees many such conversions during times of thriving economic activity and when the price of a single-family home becomes impractical for many first-time homebuyers.  As it typically costs less than a single-family home, a condominium unit is an attractive alternative.  The state of Florida’s growing population of retirees, as well as foreign interest in real estate investing, also contribute to the increasing number of condominium conversions.

Enacted in 1980, Part VI of Florida’s “Condominium Act” (otherwise known as the “Roth Act”) establishes when and how a previously occupied structure can undergo conversion into a condominium and how the title transfer process needs to progress.

Requirements for Condominium Conversions and Titles Transfers

First, the condition of the building must be determined.  Developers engage an architect or engineer to make a condominium conversion report with disclosures of the age of the components in the structure, its current condition and soundness, estimates of the remaining useful life of the components (including the roof, the electrical system, the pavement, and many other features), and the costs of any needed replacements.

Developers must also check for termites. This step requires that a certified pest control operator conduct an inspection so the title transfer process can begin.

This information is compiled for the use of buyers and condominium associations as well as developers. Naturally, even if a building’s status seems generally acceptable, investors and unit purchasers should consider the specific condition and age of the investment property when evaluating the desirability of buying in. Older buildings can deteriorate more quickly and may need more maintenance.

Have Questions?

Are you in the process of refinancing your current home? Do you need help with home title services? If you have any questions or needs, contact our Attorneys to find out how we can help you easily navigate the real estate purchasing/mortgage process and how we can provide you with the peace of mind you deserve. True Title is a company setting a standard of excellence industry-wide. We at True Title have been committed to excellence in customer service since 1998.

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Condo Conversions: Three Forms of Protection

Developers must provide post-purchase protection for those who buy the condominium units and who need condominium conversions and titles. This can take one of three forms:

  1. Converter reserve accounts provide for deferred maintenance and capital expenditures;
  2. Surety bonds equal to the sum of all reserve accounts; and
  3. Implied warranties of fitness and merchantability for the purposes or uses intended to afford comparable protection.

When a developer funds a reserve account, the money provides for the replacement of the air conditioning, roof, plumbing, etc. The required amount of a reserve account is based on the age of components as determined in the inspection report. Developers set up reserve accounts in the name of the condominium association.

Surety bonds are issued in the name of a company licensed in Florida to do so. Once posted, they too provide for the cost of repair or replacement of the features they cover. They are often points that are necessarily discussed during the title transfer process.

When converter reserves go unfunded, the developer has in effect granted the purchase of each unit an implied warranty. The warranty guarantees that the developer will cover the cost of repair and replacement of improvements for either a three-year period or a one-year period after someone other than the developer gains control of the condominium association, whichever comes last.

Condominium Conversions and Titles: When are Developers Liable?

Condominium associations can challenge a limitation of warranties or make other claims against developers in a number of circumstances.  First, developers may be held liable if converter reserves were improperly established or funded.  Second, developers may be held liable if they did not provide proper maintenance of common elements while they had control of the association.  Third, developers may be held liable if they did not disclose or fix structure defects they knew about or should properly have known about and in general if they did not make proper disclosures as per Florida law. They also have to be available and accommodating when it comes to the title transfer process.

What to Do if there are Problems

Unfortunately, a fair number of construction defects can go uncovered and uncorrected during the process of condominium conversions and titles transfers. For this reason, litigation is not uncommon.

If there are such issues, it is a good idea to involve an attorney employed by True Title who is knowledgeable about construction defect litigation. Such an attorney can provide insight into the association’s rights and options.  This attorney generally prepares a condominium conversion checklist. The checklist reviews whether the developer properly disclosed the condition of components and improvements and any replacement costs.  It is prudent for a condominium association to involve an attorney promptly to make sure the time period for seeking a legal remedy does not expire.

The uniquely qualified staff at True Title, your Florida title insurance company, is eager to assist you with this process.  Give us a call now so we can get started with your condominium conversion and title transfer process details – (877) 785-8792.

Are you in the process of refinancing your current home? Do you need help with home title services? If you have any questions or needs, contact our Attorneys to find out how we can help you easily navigate the real estate purchasing/mortgage process and how we can provide you with the peace of mind you deserve. True Title is a company setting a standard of excellence industry-wide. We at True Title have been committed to excellence in customer service since 1998.

Contact Us