History may show that July 1, 2010 was the day demand for Florida's over-supplied, demand-starved condominium inventory started crawling towards recovery. The market found its bottom price, and condominium associations' could predict cash flow turning from red to black.

It was the day the Florida Distressed Condominium Relief Act became law, bringing renewed trust and real estate agents with it.

In past recessions, the recovery depended on thousands of permanent buyers and small investors buying one or two condominiums at a time.

This time, the recovery depends on cash-rich 'buy and hold' investors purchasing hundreds of developer or lender owned condominiums in bulk, who plan to hold them for three-to-five years then resell them.

But the real winners will be the cash strapped condominium associations and real estate agents who can now list sell their homes and units with confidence.

"The new law sets the table for condominium associations to become financially stable, Fannie Mae to approve more projects for financing, and bulk buyers to purchase with less risk," according to Bill Worrall, who helps manage an estimated 350,000 condominium units in 1600 communities throughout Florida, Alabama and Mississippi, as vice president of The Continental Group, Inc.

Worrall believes the Distressed Condominium Relief Act will have the following immediate impact on Florida's condominium associations, lenders, and developers:

1. Associations will see their association collections improve, because the Association has the ability to collect rent from then tenant to pay the association fee if the owner does not pay it. This increased cash flow means they can upgrade their communities, thereby increasing property values.

2. Fannie Mae will approve more communities for financing, which will bring more real estate agents back into the condominium market.

3. More properties will become FHA approved, because they financially meet association and other guidelines.

4. Bulk buyers will become more aggressive, because their liability for unpaid association assessments is greatly reduced under the new law.

5. Fannie Mae will , on a case-by-case basis, approve condominiums properties they may have turned down. Thanks to tenants paying the monthly association fee, can provide financials that meet Fannie Mae guidelines.

Worrall has this advice for real estate agents:

1. Research and be aware of Fannie Mae-approved Associations. "Fannie Mae approved" means the association is approved for lender financing, which makes the property more marketable as a listing and more saleable to a when representing buyers. For non approved Associations, the buyer may be limited to a cash investor or require 20 percent down.

2. Make sure you understand the rental restrictions, if any, imposed by the Association for the investor buyers in your market. From a listing standpoint, this can help market the unit.

3. Always request an account history report from the Association showing the maintenance fee balance on the unit. This can be a helpful negotiating tool (for both buyers and listing agents). This can help if obtained and discussed before the closing, which as agents well know is where many issues occur.

4. First time homebuyers are ideal prospects for condominiums, because they are selling at such low prices and interest rates are so low. There are many renters in the market with good credit who can afford to purchase in Fannie Mae Approved properties that agents could target as a buyer 'farm." The reality is that renters can purchase condominiums today for the same amount or less than the rent they are paying.

Worrall cautions Realtors that there may be two losers caught in the middle of the process, the tenant and the individual owner as opposed to the developer or lender owner, who want to lease his/her unit.

Tenants are responsible for the monthly association fee, but the law is not clear on how much, if anything, tenants are obligated to pay the association for past due association fees owed by the landlord. This could prove embarrassing for a Realtor who may have placed a tenant in an investor's unit, and the investor, unbeknownst to the tenant, had not been paying his association fee, according to Worrall.

Worrall believes that the reality is that those owners who strategically purchased and are collecting rents without making association payments, are not around and are not going to do anything too aggressive.

This grey area will continue to drive tenants to the conventional, or apartment, market and to the bulk condo developers, because tenants know what they owe going in and that there will be no surprises, according to Worrall.

"We expect the bulk condo developer to grow much stronger, especially now that the new law reduces the developer's liability," Worrall said.

"Fannie Mae is very aggressive in finding ways to approve condominium and homeowner associations, "but they are being very thorough," They look at a lot more than financials, according to Worrall.

"They want to know all the details, including what percentage of units were sold to investors, second home buyers, and permanent homeowners. They want to know how many tenants are in the property, and much more."

If they like what they find, and the property becomes "FNMA approved", meaning financing is available from lenders. Financing brings buyers, and buyers bring Realtors back.

As value increases, thanks to Associations making improvements because they finally have the cash to do so, real estate agents are drawn to the community. Nothing can generate sales in a community faster than the local real estate community's favorable opinion of a community's value.

Published: July 8, 2010

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David Fletcher has been a Florida real estate condominium and new homes broker for 30 years with more than $3 billion in new construction sales. In 2008, Keller Williams Realty International named him a "Lifetime Achiever." Along the way he has chaired the Florida Homebuilders Associaiton Sales and Marketing Council, trained thousands of general agents and on-site agents to work together, and was a featured speaker at the National Association of Realtors. Recently he founded New Homes Niche, a builder-certified co-broker training system "to meet the growing trend we see in short sale buyers moving to new homes for a lot of reasons." Call David at 407 234 2349, , and visit his website.