718.202
Sales or reservation deposits prior to closing.
718.203
Warranties.
718.202 Sales or
reservation deposits prior to closing.--
(1)
If a developer contracts to sell a condominium parcel and the construction,
furnishing, and landscaping of the property submitted or proposed to be
submitted to condominium ownership has not been substantially completed in
accordance with the plans and specifications and representations made by the
developer in the disclosures required by this chapter, the developer shall pay
into an escrow account all payments up to 10 percent of the sale price received
by the developer from the buyer towards the sale price. The escrow agent shall
give to the purchaser a receipt for the deposit, upon request. In lieu of the
foregoing, the division director has the discretion to accept other assurances,
including, but not limited to, a surety bond or an irrevocable letter of credit
in an amount equal to the escrow requirements of this section. Default
determinations and refund of deposits shall be governed by the escrow release
provision of this subsection. Funds shall be released from escrow as follows:
(a) If a buyer properly terminates the contract pursuant to its terms or
pursuant to this chapter, the funds shall be paid to the buyer together with any
interest earned.
(b) If the buyer defaults in the performance of his or her obligations under the
contract of purchase and sale, the funds shall be paid to the developer together
with any interest earned.
(c) If the contract does not provide for the payment of any interest earned on
the escrowed funds, interest shall be paid to the developer at the closing of
the transaction.
(d) If the funds of a buyer have not been previously disbursed in accordance
with the provisions of this subsection, they may be disbursed to the developer
by the escrow agent at the closing of the transaction, unless prior to the
disbursement the escrow agent receives from the buyer written notice of a
dispute between the buyer and developer.
(2) All payments which are in excess of the 10 percent of the sale price
described in subsection (1) and which have been received prior to completion of
construction by the developer from the buyer on a contract for purchase of a
condominium parcel shall be held in a special escrow account established as
provided in subsection (1) and controlled by an escrow agent and may not be used
by the developer prior to closing the transaction, except as provided in
subsection (3) or except for refund to the buyer. If the money remains in this
special account for more than 3 months and earns interest, the interest shall be
paid as provided in subsection (1).
(3) If the contract for sale of the condominium unit so provides, the developer
may withdraw escrow funds in excess of 10 percent of the purchase price from the
special account required by subsection (2) when the construction of improvements
has begun. He or she may use the funds for the actual costs incurred by the
developer in the construction and development of the condominium property in
which the unit to be sold is located. For purposes of this subsection, the term
“actual costs” includes, but is not limited to, expenditures for demolition,
site clearing, permit fees, impact fees, and utility reservation fees, as well
as architectural, engineering, and surveying fees that directly relate to
construction and development of the condominium property. However, no part of
these funds may be used for salaries, commissions, or expenses of salespersons;
for advertising, marketing, or promotional purposes; or for loan fees and costs,
principal and interest on loans, attorney fees, accounting fees, or insurance
costs. A contract which permits use of the advance payments for these purposes
shall include the following legend conspicuously printed or stamped in boldfaced
type on the first page of the contract and immediately above the place for the
signature of the buyer: ANY PAYMENT IN EXCESS OF 10 PERCENT OF THE PURCHASE
PRICE MADE TO DEVELOPER PRIOR TO CLOSING PURSUANT TO THIS CONTRACT MAY BE USED
FOR CONSTRUCTION PURPOSES BY THE DEVELOPER.
(4) The term “completion of construction” means issuance of a certificate of
occupancy for the entire building or improvement, or the equivalent
authorization issued by the governmental body having jurisdiction, and, in a
jurisdiction where no certificate of occupancy or equivalent authorization is
issued, it means substantial completion of construction, finishing, and
equipping of the building or improvements according to the plans and
specifications.
(5) The failure to comply with the provisions of this section renders the
contract voidable by the buyer, and, if voided, all sums deposited or advanced
under the contract shall be refunded with interest at the highest rate then
being paid on savings accounts, excluding certificates of deposit, by savings
and loan associations in the area in which the condominium property is located.
(6) If a developer enters into a reservation agreement, the developer shall pay
into an escrow account all reservation deposit payments. Reservation deposits
shall be payable to the escrow agent, who shall give to the prospective
purchaser a receipt for the deposit, acknowledging that the deposit is being
held pursuant to the requirements of this subsection. The funds may be placed in
either interest-bearing or non-interest-bearing accounts, provided that the
funds shall at all reasonable times be available for withdrawal in full by the
escrow agent. The developer shall maintain separate records for each condominium
or proposed condominium for which deposits are being accepted. Upon written
request to the escrow agent by the prospective purchaser or developer, the funds
shall be immediately and without qualification refunded in full to the
prospective purchaser. Upon such refund, any interest shall be paid to the
prospective purchaser, unless otherwise provided in the reservation agreement. A
reservation deposit shall not be released directly to the developer except as a
down payment on the purchase price simultaneously with or subsequent to the
execution of a contract. Upon the execution of a purchase agreement for a unit,
any funds paid by the purchaser as a deposit to reserve the unit pursuant to a
reservation agreement, and any interest thereon, shall cease to be subject to
the provisions of this subsection and shall instead be subject to the provisions
of subsections (1)-(5).
(7) Any developer who willfully fails to comply with the provisions of this
section concerning establishment of an escrow account, deposits of funds into
escrow, and withdrawal of funds from escrow is guilty of a felony of the third
degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, or the
successor thereof. The failure to establish an escrow account or to place funds
in an escrow account is prima facie evidence of an intentional and purposeful
violation of this section.
(8) Every escrow account required by this section shall be established with a
bank; a savings and loan association; an attorney who is a member of The Florida
Bar; a real estate broker registered under chapter 475; a title insurer
authorized to do business in this state, acting through either its employees or
a title insurance agent licensed under chapter 626; or any financial lending
institution having a net worth in excess of $5 million. The escrow agent shall
not be located outside the state unless, pursuant to the escrow agreement, the
escrow agent submits to the jurisdiction of the division and the courts of this
state for any cause of action arising from the escrow. Every escrow agent shall
be independent of the developer, and no developer or any officer, director,
affiliate, subsidiary, or employee of a developer may serve as escrow agent.
Escrow funds may be invested only in securities of the United States or an
agency thereof or in accounts in institutions the deposits of which are insured
by an agency of the United States.
(9) Any developer who is subject to the provisions of this section is not
subject to the provisions of s. 501.1375.
(10) Nothing in this section shall be construed to require any filing with the
division in the case of condominiums other than residential condominiums.
(11) All funds deposited into escrow pursuant to subsection (1) or subsection
(2) may be held in one or more escrow accounts by the escrow agent. If only one
escrow account is used, the escrow agent must maintain separate accounting
records for each purchaser and for amounts separately covered under subsections
(1) and (2) and, if applicable, released to the developer pursuant to subsection
(3). Separate accounting by the escrow agent of the escrow funds constitutes
compliance with this section even if the funds are held by the escrow agent in a
single escrow account. It is the intent of this subsection to clarify existing
law.
History.—
s. 1, ch. 76-222; s. 7, ch. 79-314; s. 3, ch. 80-323; s. 3, ch. 81-185; s. 9, ch.
84-368; s. 5, ch. 87-117; s. 14, ch. 90-151; s. 860, ch. 97-102; s. 14, ch.
2010-174; s. 10, ch. 2021-99.
718.203 Warranties.--
(1) 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 follows:
(a) As
to each unit, a warranty for 3 years
commencing with the completion of the
building containing the unit.
(b) As
to the personal property that is transferred
with, or appurtenant to, each unit, a
warranty which is for the same period as
that provided by the manufacturer of the
personal property, commencing with the date
of closing of the purchase or the date of
possession of the unit, whichever is
earlier.
(c) As
to all other improvements for the use of
unit owners, a 3-year warranty commencing
with the date of completion of the
improvements.
(d) As
to all other personal property for the use
of unit owners, a warranty which shall be
the same as that provided by the
manufacturer of the personal property.
(e) As
to the roof and structural components of a
building or other improvements and as to
mechanical, electrical, and plumbing
elements serving improvements or a building,
except mechanical elements serving only one
unit, a warranty for a period beginning with
the completion of construction of each
building or improvement 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.
(f) As
to all other property which is conveyed with
a unit, a warranty to the initial purchaser
of each unit for a period of 1 year from the
date of closing of the purchase or the date
of possession, whichever occurs first.
(2) The
contractor, and all subcontractors and
suppliers, grant to the developer and to the
purchaser of each unit implied warranties of
fitness as to the work performed or materials
supplied by them as follows:
(a) For
a period of 3 years from the date of
completion of construction of a building or
improvement, a warranty as to the roof and
structural components of the building or
improvement and mechanical and plumbing
elements serving a building or an
improvement, except mechanical elements
serving only one unit.
(b) For
a period of 1 year after completion of all
construction, a warranty as to all other
improvements and materials.
(3) “Completion
of a building or improvement” means issuance of
a certificate of occupancy, whether temporary or
otherwise, that allows for occupancy or use of
the entire building or improvement, or an
equivalent authorization issued by the
governmental body having jurisdiction. In
jurisdictions where no certificate of occupancy
or equivalent authorization is issued, the term
means substantial completion of construction,
finishing, and equipping of the building or
improvement according to the plans and
specifications.
(4) These
warranties are conditioned upon routine
maintenance being performed, unless the
maintenance is an obligation of the developer or
a developer-controlled association.
(5) The
warranties provided by this section shall inure
to the benefit of each owner and his or her
successor owners and to the benefit of the
developer.
(6) Nothing
in this section affects a condominium as to
which rights are established by contracts for
sale of 10 percent or more of the units in the
condominium by the developer to prospective unit
owners prior to July 1, 1974, or as to
condominium buildings on which construction has
been commenced prior to July 1, 1974.
(7) Residential
condominiums may be covered by an insured
warranty program underwritten by a licensed
insurance company registered in this state,
provided that such warranty program meets the
minimum requirements of this chapter; to the
degree that such warranty program does not meet
the minimum requirements of this chapter, such
requirements shall apply.
History.—s.
1, ch. 76-222; s. 1, ch. 77-221; s. 8, ch.
77-222; s. 3, ch. 78-340; s. 9, ch. 79-314; s.
11, ch. 91-103; s. 5, ch. 91-426; s. 8, ch.
92-49; s. 861, ch. 97-102; s. 4, ch. 2015-165.
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