There are some great deals in Florida real estate… especially condos. Just before the downturn in the real estate market, condominium development in Florida was at near-record levels. Today, there are many new unsold condo units, many selling for pennies. Most of these units are near the beach, golf courses, and other amenities that make life in Florida so desirable. For investors and second home buyers, this creates opportunities that may not appear for decades.
However, condos set up under Florida law, are a completely different animal than what you’re used to visiting. It all starts with the concept of ownership. First of all, most people refer to the apartment they will be living in as their “condo.” In fact, a condominium is a whole project consisting of all apartments, grounds, parking areas and, in most cases, recreational facilities. Your apartment is referred to as a “unit”. All the rest of the condos are known as “common elements.” You have exclusive ownership of your unit and you share ownership of the common elements with all other unit owners. The Florida Condo Act states that you all have undivided ownership of the common elements. This means that each unit owner has the right to enjoy the common elements and the obligation to maintain them.
As you might expect, this setup, without guidelines and management, can lead to total chaos. Each unit owner will assert his or her own personal and selfish preferences regarding the use of common elements and many are unwilling to pay their fair share of expenses.
Due to its proximity to your neighbors, the need to regulate the use of common elements and the need to insure, maintain and repair common elements, certain rules and limitations must exist. According to Florida law, these rules and restrictions are found in condominium documents. The short list of these documents is as follows:
1. Declaration of Condominium. This is the main document of the condominium. The declaration actually created the condo. It describes common units and elements, defines the rights of owners of specific units, permits the creation of associations and regulates the use and operation of common elements.
2. Association’s Articles of Association. This document creates a condominium association. It was filed with the Florida State Department.
3. Bylaws. These are guidelines for association operations. The by-laws regulate the number of directors, regulate the procedures for unit owners and board of directors meetings and define the financial and budgetary matters of the association.
4. Operating Budget. This document describes the general costs of the association, which are shared among unit owners in equal proportion to the ownership rights in the common elements.
5. Rules and Regulations. These are enforced by the board of directors and generally consist of restrictions relating to the use of common elements.
Buying a Condo Unit
If you have decided that condo life is right for you, you may want to purchase a unit. Purchasing a condo unit involves many of the same considerations as a single family home. However, due to the unique nature of condos, there are other factors to consider.
There are two circumstances in purchasing a condo unit that are treated differently under the Florida Condos Act. There are different requirements depending on whether you purchased from the developer or from the previous owner of the unit. This article will concentrate on purchasing from Developers.
Buying from Developer
If you buy a unit in a new project from a developer, Florida condominium laws have provisions to ensure you are notified. Each residential condominium developer is required to submit condominium documents to the Florida Division of Land Sales, Condos, and Mobile Homes for review. Developers may not enter into contracts for the purchase and sale of units until they have submitted these documents and the Division has acknowledged that the documents are the property submitted.
Florida has a unique program to allow buyers to order units that have not been built without any obligation to purchase. Prior to submission of condominium documents, Florida law allows developers to enter into reservation agreements with potential buyers and receive reservation deposits. Many developers do this to create interest in a project and to test marketability. By signing a reservation agreement, you are entitled to sign a contract to purchase certain units in the condominium. You can cancel your reservation and receive a full refund of your deposit at any time and for any reason.