The Distressed Condominium Relief Act enacted as Part VII of the Condominium Act in 2010 (“Act”) was a temporary measure to encourage absorption of unsold condominium units arising as a result of the Great Recession. This legislation attempted to allay the fears of potential investors about incurring developer liability in connection with the purchase of bulk units. The Act created a shield in favor of bulk purchasers from such potential liability, especially construction defects liability.

The Act worked well and, within its two year original life, many distressed projects were restored to viability. The success in restoring these projects encouraged the Florida Legislature to extend the life of the Act for an additional three years. A further one year extension was made by the 2014 Legislature. 

The 2015 Legislature has now made an additional two year extension to the Act which will now expire on July 1, 2018. Read Chapter 2015-97 here.

This latest extension is significant because, during the life of the Act, some unfavorable case law has developed justifying the fears of investors. In one case, a lender foreclosing its mortgage against the developer on unsold condominium units was held to be responsible for construction defects in the condominium property.

Without the shield provided by the Act, it is likely that bulk purchasers of future distressed projects or construction lending for future condominium projects may be unavailable. Hopefully this latest extension of the Act will not be the last.