Condo Buying Tips

Developer checklist for condominium conversion

The following is a list of information required from you, as the developer, for the preparation of condominium conversion documents and filing. We will advise you of any additional information we require as the need arises.

Notice of intended conversion to existing tenants:

1. Prior to or simultaneous with the first offering of individual units to any person, developer shall deliver via certified or registered mail a notice of intended conversion to all tenants.

2. The notice shall provide each tenant, who for the 180 days preceding a notice of intended conversion has been a residential tenant, with the right of first refusal to purchase in the unit in which he or she resides.

3. The developer shall distribute to tenants having a right of first refusal the following:
(1) Information in summary form regarding mortgage financing; estimated down payment; alternative financing and down payments; monthly payments of principal, interest, and real estate taxes; and federal income tax benefits.
(2) Any other information which the division publishes and by rule determines will assist tenants in making a decision and which the division makes available to the developer.

Conversion information

The developer shall disclose the following:
1. The condition of the improvements and the condition of certain components and their current estimated replacement costs.

2. The following information shall be stated concerning the improvements:
(a) The date and type of construction.
(b) The prior use.
(c) Whether there is termite damage or infestation and whether the termite damage or infestation, if any, has been properly treated. The statement shall be substantiated by including, as an exhibit, an inspection report by a certified pest control operator.

3. (a) Disclosure of condition shall be made for each of the following components that the existing improvements may include:
1. Roof.
2. Structure.
3. Fireproofing and fire protection systems.
4. Elevators.
5. Heating and cooling systems.
6. Plumbing.
7. Electrical systems.
8. Swimming pool.
9. Seawalls.
10. Pavement and parking areas.
11. Drainage systems.
(b) For each component, the following information shall be disclosed and substantiated by attaching a copy of a certificate under seal of an architect or engineer authorized to practice in this state:
1. The age of the component.
2. The estimated remaining useful life of the component.
3. The estimated current replacement cost of the component, expressed:
a. As a total amount; and
b. As a per-unit amount, based upon each unit's proportional share of the common expenses.
4. The structural and functional soundness of the component.

4. The disclosure shall include a letter from the City acknowledging that it has been notified of the proposed creation of a residential condominium by conversion of existing, previously occupied improvements and acknowledging compliance with applicable zoning requirements as determined by the municipality.

Establishment of reserve accounts for capital expenditures and deferred maintenance

The developer shall establish reserve accounts for capital expenditures and deferred maintenance or give warranties or post a surety bond. Please contact our office to discuss these options. In addition to establishing the reserve accounts specified above, the developer shall establish those other reserve accounts required by Section 718.112(2)(f), Florida Statutes, and shall fund those accounts in accordance with the formula provided therein.
PLEASE NOTE: A developer makes no implied warranties when existing improvements are converted to ownership as a residential condominium and reserve accounts are funded in accordance with Section 718.618, Florida Statutes. As an alternative to establishing such reserve accounts, or when a developer fails to establish the reserve accounts, the developer shall be deemed to have granted to the purchaser of each unit an implied warranty of fitness and merchantability for the purposes or uses intended, as to the roof and structural components of the improvements; as to fireproofing and fire protection systems; and as to mechanical, electrical, and plumbing elements serving the improvements, except mechanical elements serving only one unit. The warranty shall be for a period beginning with the notice of intended conversion and continuing for 3 years thereafter, or the recording of the declaration to condominium and continuing for 3 years thereafter, or 1 year after owners other than the developer obtain control of the association, whichever occurs last, but in no event more than 5 years.
If instead of establishing reserve accounts, the developer desires to post a surety bond, the developer shall, after notification to the buyer, acquire a surety bond issued by a company licensed to do business in this state, if such a bond is readily available in the open market, in an amount which would be equal to the total amount of all reserve accounts required, payable to the association.

Description of Project

  • name of the condominium
  • name of the developer and owner of the property: (single-purpose entity?)
  • principal of developer and details of his or her years of experience and prior projects
  • total number of residential units
  • number of bedrooms/bathrooms for each unit type
  • description of facilities in condominium
  • description of facilities within master common properties which unit owners will use in common with others
  • minimum amount developer will spend to purchase personal property for the facilities (nominal amounts such as $10,000 are typical)
  • does the developer wish to retain any commercial units or roof rights (to control “community systems” e.g. telephone and cable services)
  • will the project have any commercial components such as retail, restaurants or sundry shop?
  • graphics, including legal description, survey and plot plan (Note: Label as Exhibit “2”)
  • unit floor plans (Note: label as Exhibit “G”, do not include in Exhibit “2” and provide sq. footage separately)
  • whether units will be subject to a recreational facilities lease
  • whether unit owners will be required to join a club
  • estimated latest date of completion of condominium
  • description of parking
  • number of parking spaces (including visitor spaces)
  • Certified Engineer’s Report disclosing the condition of the improvements, certain specific components thereof, and their current estimated replacement costs. This report must contain the following:
  • (a) the date and type of construction
    (b) the prior use
    (c) whether there is termite damage or infestation and whether it has been properly treated. An inspection report from a certified pest control operator must be provided.
    (d) the age, estimated remaining useful life, estimated current replacement cost (expressed as a total amount and as a per unit amount based on each unit’s proportional share of the common expenses) and structural and functional soundness of the following components:
    (i) roof
    (ii) structure
    (iii) fireproofing and fire protection systems
    (iv) elevators
    (v) heating and cooling systems
    (vi) plumbing
    (vii) electrical systems
    (viii) swimming pool
    (ix) seawalls
    (x) pavement and parking areas
    (xi) drainage systems
    (e) If located within a municipality, the disclosure shall include a letter from the municipality acknowledging that it has been notified of the proposed creation of a residential condominium by conversion of existing, previously occupied improvements and acknowledging compliance with applicable zoning requirements as determined by the municipality
  • whether developer will establish converter reserve accounts for capital expenditures and deferred maintenance or give warranties or post a surety bond. If establishing converter reserve accounts, provide a schedule of the converter reserve accounts as described in the attached memorandum.
  • The Association

  • condominium association
  • estimated operating budget
  • whether the level of assessments will be guaranteed (versus payment of assessments on unsold units)
  • whether there will be initial working capital contributions (not recommended if level of assessments is guaranteed)
  • will assessments of condominium association be based on sq. footage of units?
  • copies of any management or maintenance contracts (including cable and recycling, if applicable)
  • names and addresses of initial officers and directors
  • Utility Providers

  • electricity (advise if other than FPL)
  • gas (if available)
  • telephone (advise if other than BellSouth)
  • water and sewer (advise if other than Miami-Dade Water and Sewer Authority)
  • solid waste removal, if determined
  • trash re-cycling, if determined
  • cable or satellite television provider, if determined
  • fire rescue
  • police protection:
  • Interests Offered for Sale

  • whether developer will reserve the right to lease unsold units
  • number of parking spaces (confirm: one space included and additional can be purchased)
  • number of storage spaces (will any be included in the sale price of the unit or sold separately?)
  • buyer closing fee (1.5% to 1.75% typical)
  • pre-sale contingencies, if any-such as 50% within 180 days
  • will buyers get interest on deposits?
  • Name of escrow agent
  • Restrictions

  • limits on number and weight of pets?
  • leasing-minimum term and maximum number per year and security deposits?
  • Flooring sound transmission standard? specify Impact Isolation Class rating (48-55)?
  • require for hard surface flooring in bottom floor units, bathrooms, kitchens and foyers?
  • limit on type of vehicles-motorcycles, trucks, commercial vehicles, trailers, jet skis?
  • Miscellaneous

  • evidence of ownership (copy of deed)
  • title insurance policy and copies of Schedule B-II documents
  • easements
  • copy of underlying plat, if any
  • zoning and other governmental restrictions
  • private restrictions
  • copy of sales brochures (if available)
  • Conversion Information

  • A schedule of tenants indicating their lease start date and expiration date for the purpose of sending required notices.
  • A “Notice of Intended Conversion” must be sent to existing tenants (form of notice is attached)
  • Tenants who have resided in their apartments for 180 days prior to the notice are given a right of first refusal to purchase their apartments. These tenants must be provided with “Purchase Information” within 90 days after sending the Notice of Intended Conversion. The Purchase Information must include the following:
  • (a) an offer to sell stating the price and terms of purchase
    (b) the following economic information: information in summary form regarding mortgage financing; estimated down payment; alternative financing and down payments; monthly payments of principal, interest, and real estate taxes; and federal income tax benefits
    (c) the following educational brochures which can be obtained from the Division of Land Sales in Tallahassee: (i) Condominium and Cooperative Conversion (Form DBR 335) (ii) Condominium Living in Florida (Form DBR 336) (iii) A Guide to Purchasing a Condominium Unit (Form DBR 337)
    (d) the Prospectus together with all exhibits thereto