New Rules Condotel Buyers Need to Know
New legislation requires condotel buyers to receive disclosures about maintenance responsibilities and fees for non-condo areas, ensuring clarity before purchase.
ORLANDO, Fla. – On October 1, 2024, Florida Realtors® released revisions to its existing condominium riders to add a section with disclosure language related to “Condominiums Created within a Portion of a Building or Within a Multiple Parcel Building.” This disclosure language was mandated by the Legislature’s creation of section 718.407, Florida Statutes, pertaining to such condominiums. But that title doesn’t shed much light on exactly what kind of condominium the Legislature was talking about. This type of condominium is usually referred to as a “Condotel.”
Most people are vaguely familiar with the usual type of condominium. Generally speaking, the condominium form of governance is created when a developer builds a building (or sometimes a townhouse community) and then sells the individual dwelling units within the building to buyers. These buyers actually own the space inside the unit. In addition to the units themselves, the condominium consists of “common areas,” which are essentially any space outside the units. In a typical condominium, this space can encompass many things, including hallways, elevators, parking garages, pools and pickle ball courts. Once the developer has turned over control to the association, the owners within the condominium own these common areas collectively. The association board then votes on assessments to charge each owner to maintain the whole condominium, including these common areas.
Condotels are a little different. In the condotel form of governance, the owner of the building still sells individual units to buyers, who own the space inside. However, the building owner never turns the building over to an association of unit owners. The building owner – not the unit owners – retains control and ownership of the space outside the units.
Recent legal disputes muddied the waters with respect to who is responsible for the maintenance of this exterior space and whether specific parts of the space constitute common areas or shared amenities. Ultimately, the precise definition of these spaces is not crucial for purposes of this article. The important takeaway is that unit owners recognize they may have little control over how much they are charged to maintain these spaces outside their units.
Concern over this issue prompted the Legislature to pass section 718.407, Florida Statutes. Section 718.407 recognizes the condotel form of ownership and governance, calling it a “condominium created within a portion of a building or within a multiple parcel building.” The statute mandates that when creating such a condominium, the declaration must state which parts of the building are subject to a condominium form of governance and which are not. The declaration must then state which party is responsible for operating and maintaining such shared facilities and the way maintenance expenses will be apportioned.
Perhaps the most significant part of section 718.407 is the Legislature’s mandate that any buyer considering purchasing a unit in a condotel be provided a disclosure acknowledging what they are buying into. This is the reason the Florida Realtors disclosures were amended. The buyer must acknowledge multiple factors, including the fact that there are portions of the building outside their unit not included within the condominium form of governance. Critically, the disclosure puts the buyer on notice that even though the condo owners will not have control over the maintenance budget for these spaces, they will still be responsible for paying these fees.
Most importantly, though the prospective buyer must acknowledge their responsibility for fees, the disclosure does not give the buyer the right to terminate the contract once they become aware of this responsibility. It is therefore crucial that a buyer interested in a condotel unit be aware of this fact before making an offer on such a property. Real estate agents can assist with education about condotels by informing buyers of these issues, and directing their attention to section 718.407, Florida Statutes, at the outset of the representation. If the buyer still has questions, they should consult an attorney familiar with the ins and outs of condotels.
Richard Swank is an Associate General Counsel for Florida Realtors.
Note: Information deemed accurate on date of publication.
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