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Condominium reconstruction

Questions and answers as we clean up from Hurricane Frances and await Ivan.

What if our condominium were destroyed by a hurricane? What happens next?

Every declaration of condominium includes language that addresses reconstruction, said Ellen Hirsch de Haan, a lawyer with the Largo office of Becker & Poliakoff, which specializes in condo law. Look at your documents: Typically you will find this right after the section dealing with insurance.

The language may vary from one set of documents to another, but typically it will provide that the condo can be dissolved if a certain percentage of the units are uninhabitable (75 percent is a common figure), or if the damage is so substantial that a certain percentage of the insurance coverage becomes payable. Again, 75 percent is a common figure.

In some cases, those conditions trigger a vote by the members whether to rebuild. In other cases, those conditions alone are enough to dissolve the condo. The percentage of votes needed to rebuild or not to rebuild may vary: Some documents require 100 percent, some require 75 percent, some call for only a majority.

Older documents, de Haan said, are more likely to require higher percentages. More recent documents, written after Hurricane Andrew in 1992, call for smaller percentages.

If the decision is to dissolve the condo and not to rebuild, the property is sold and the proceeds distributed to the owners according to their percentage of ownership of the condo.

If the decision is to rebuild, that would be done with insurance money and assessments of the unit owners.

Florida lawyers have been watching these laws closely since Andrew. De Haan recalled that two condos west of Homestead Air Force Base, in the Naranja Lakes area, were wiped out. "The remaining owners were holding meetings on the concrete slabs," she recalled. Those were the first two condos to be terminated in Florida, she said.

The documents in those cases required that 75 percent of the membership had to vote not to rebuild, "but we couldn't find everybody." Unit owners had scattered; no one knew how to reach many of them. In that instance, the court stepped in and required a lower percentage of the vote not to rebuild and oversaw the sale of the property and distribution of funds.

A reader writes to real estate columnist Robert J. Bruss:

My husband thought you were crazy to frequently advise homeowners to have a home equity credit line for emergencies and opportunities, as you stated. We live in Port Charlotte. Although our house wasn't as badly harmed by Hurricane Charley as some, it sustained roof and other damage, which we estimate will cost at least $35,000 to repair. Thanks to you, if the insurance doesn't pay for all the repairs, we feel secure knowing we have our $125,000 home equity credit line. Last year, when we paid the $50 annual bank fee, my husband almost canceled, saying it was a waste of money. Now he is so glad I insisted on keeping that credit line.

Yours is the first letter I received from a victim of Hurricane Charley. I'm sorry to learn of the damage but am thankful your home can be repaired. Situations such as yours show why every homeowner and condo owner should have either a home equity credit line or a senior citizen reverse-mortgage line of credit to use for an emergency or an investment opportunity.