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It appears that some last minute legislative fail-safe
maneuvering has in fact averted the untimely demise of the
Distressed Condominium Relief Act. While most of the provisions of
SB 680 and HB 319 proved too controversial to pass, the extension
of the Relief Act was salvaged by being added to a different bill
altogether - HB 517, which now awaits signature by the
governor.
The parties that will be impacted most by this extension include
foreclosing lenders and investors in distressed condominium
properties on the one hand, and sellers of these properties seeking
to maximize the value of these assets on the other.
The extended Relief Act will continue the two "limited
liability" classifications that can apply to both foreclosing
lenders and investors - "bulk buyer" or "bulk
assignee". These classifications explicitly protect the
acquirer (whether a lender enforcing its loan rights or a third
party investor) against some significant liabilities which could be
inherited from the original developer (a.k.a. "successor
developer" liabilities), while allowing the new owner to
retain certain useful and valuable rights with respect to the
development, operations, and eventual disposition of the
assets.
The extension of the Relief Act will lessen the concerns of
foreclosing lenders and investors relating to statutory warranties
on units and common elements, unfunded reserves, past due
assessments or deficit funding obligations, the acts and/or
omissions of the prior developer's board of directors, and the
like.
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