Florida Law Shifts Control of Mixed-Use Common Areas

A legal fight is brewing over a new state law in Florida that gives developers more control over common areas in mixed-use buildings where residential condos share the premises with a hotel, among other uses.

Mixed-use condo buildings aligned with prominent hotel brands that run them like resorts has been a popular business model in South Florida for years.

A bill passed this month and signed into law by Gov. Ron DeSantis, known as HB 1021, was originally intended to create more accountability for condominium homeowner associations and managers.

Shortly before HB 1021 came up for a final vote, it was amended to add a controversial provision from a different bill that states that condo residents in mixed-use buildings only own what has been given to them upfront in contracts drafted by developers.

Opponents say the amendment gives developers and hotel owners control over common spaces like lobbies, pools, restaurants and elevators-and how much money is spent and assessed as fees to maintain and upgrade them, the Miami Herald reported.

Lawyers representing both sides are lining up to face off over the issue. Attorneys for developers and hotel owners argue that control over common areas in mixed-use buildings with condos is essential to make sure the shared areas live up to the standards of their brands.

According to attorneys who have represented condo owners in high-profile disputes with hotel developers over common areas, the new law could force condo owners to pay pricey maintenance fees and assessments levied by commercial operators without any say over how the money is spent or what it is used for.

“Imagine you’re living in a condominium building and all you own is the air rights of your unit. You don’t own your front door. You have no rights to have ownership or control or maintenance of your lobbies, your elevators, your hallways, none of that. That’s all controlled by a developer, and they could control it forever,” attorney Stevan Pardo told the Herald. “It doesn’t make any sense.”

Mark Grant, a real estate attorney who was a proponent of the final version of HB 2021, noted that mixed-use condo buildings under the new law must have a disclosure summary that informs buyers that the association will not control the building.

“Buyers are free to buy or not buy a unit in this type of product,” Grant told the Herald.

Pardo disputed the contention that developers and hotels protecting their brands will take better care of buildings than residents who have personally invested in condos. He also suggested that the new law might be applied by developers to keep control of common areas in buildings that are purely residential.

Grant countered that developers have no profit incentive to keep control of common elements of purely residential condo buildings.

“In a residential condominium the developer wants to sell all the units and after 90% of the units are sold, the developer wants nothing more to do with the common elements,” Grant told the Herald.

Regarding whether homeowner associations or developers take better care of buildings, Grant cited the 2021 collapse of one of the Champlain Towers in Surfside, which killed 98 people in a building that needed structural repairs.

In the wake of the collapse, the legislature updated the law to require structural integrity reserve studies that detail how much money homeowner associations in condo towers must set aside for structural repairs.