Condo owners in Florida anticipate increased expenses as new rules go into force in the next year

Florida – Due to a safety rule that was established by the state legislature in 2022, condo owners in Florida may have to pay more in the coming year.

It mandates that associations perform a survey of their reserves every ten years and maintain adequate reserves to fund severe repairs. According to state statistics, the law has resulted in significant increases in association dues for older condos, which are mostly located in South Florida, in order to pay for reserves and repairs.

The bill was passed by Governor Ron DeSantis in reaction to the June 2021 partial collapse of Champlain Towers South in Surfside, which claimed 98 lives. According to new rules, condo associations for buildings three floors or higher must submit an inspection report by December 31 that focuses on the building’s structure, upkeep, and anticipated repair or remodeling expenses.

The research only covers a small portion of the vast problem with Florida’s property insurance and condo insurance crises. According to the National Association of Realtors, the average homeowner’s insurance premium is around $3,600, which is roughly $1,000 more than the national average, according to a May study from the Florida Office of Insurance Regulation.

Condo owner Kelli Roiter of Hallandale Beach said she understands that some people are struggling to pay the increased fees, but she is in favor of laws requiring associations to keep funds set aside for maintenance if doing so will allow her 1971 oceanfront building to receive the repairs it needs.

A few miles away from Champlain Towers South, she claimed, her building is exhibiting some of the same issues that existed prior to that building’s collapse.

Roiter expressed his anxiety that the building will fall. On some nights, I jump when I hear a creak when I wake up. Then I assure myself that we’re safe, no, no, no. Am I safe, though?
According to Rick Madan, president of the Biscayne Neighborhoods Association, which advocates for 22 condo associations, the rule is causing conflict among condo owners by requiring structures to obtain complete coverage and proposing a band-aid approach that fails to solve the problem holistically.

According to Madan, at the expense of the condo owners, the legislation requires newer condos to have reserve funds, inspection reports, and recertifications much like much older structures.
Madan continued, “That’s particularly difficult for people who retired in South Florida on fixed incomes.”

We have to complete all of these reserve studies because of you. Madan remarked of the Florida Legislature, “You’re forcing us to fund our reserves more, so we have to come up with more money.” Furthermore, you are denying us any flexibility in the insurance sector, where the insurance firms are essentially profiting greatly from the $100 million policy they sell because they are aware that they will never be required to pay a claim.

Jason Pizzo, a Democratic state senator who was representing Surfside at the time of the collapse, stated that he concurs with Madan’s assertion regarding property insurance.

During a condo summit with Republican state senator Jennifer Bradley in early December, Pizzo cautioned associations about the need for openness regarding the necessary projects for repair expenditures in order to minimize structural damage.

In order to make sure that the increasing fees are actually connected to repairs and not amenity costs, and that they are completed in a timely manner for the safety of the residents, Pizzo told The Associated Press that associations must be transparent with condo owners.

He noted that while it’s natural to be concerned about future expenses, impartial assessments of older structures are essential.

Pizzo said it is alarming that over 90% of Florida’s 1.6 million condos are over 30 years old and have not undergone necessary inspections.

Pizzo stated, “They’re going to have a milestone inspection, and it might reveal some urgent repair or replacement needs.” “That isn’t actually the result of the legislation. That is the result of common sense.

Previous condo regulations kept prices low by failing to conserve money for future repairs, according to Miami lawyer Luis Konski, who handles construction and commercial liability cases. When repairs were eventually necessary, owners were then charged with special assessments. According to Konski, this prompted numerous associations to disregard costly but essential upkeep, which is probably what caused the Surfside building to fall.

He expressed uncertainty about whether the state had enough employees on hand to ensure that associations are adhering to the new regulations. Pizzo expressed similar worries, stating that in order for the state’s Department of Business and Professional Regulation to begin examining structural integrity and inspection reports while still regulating every aspect of Florida business, including licensing and rule enforcement, legislative changes may be necessary.

According to Konski, another catastrophe is inevitable if associations can keep delaying maintenance with erroneous surveys and no supervision.

“The question is whether you save lives or save money.” “Konski said.” You can’t do both at once.

Rebeca Castellon, a real estate agent and Coral Gables condo owner, stated that while she supports the notion of mandating condo associations to set aside funds for future repairs, she admits that the timing is poor given the rising fees, rising insurance premiums, and recent inflation.

“I think that a big part of the problem is that there are a lot of things going on right now that are really making it hard for condo owners,” Castellon stated.

The uncertainty brought about by new taxes and restrictions has caused the condo market to chill, but according to Castellon, condos remain the most cost-effective way to purchase a house, and the new rules will only provide buyers with more knowledge in the future.

“I wouldn’t be shocked if buyers in the future asked to view the structural inspection that the towers are currently undergoing and took that into account when deciding whether or not that’s the right property for them to proceed and make an offer,” Castellon stated.

The recent decline in typical transaction prices, according to real estate agent Gatien Salaun, who owns a Miami Beach beachfront apartment, is mostly the result of purchasers bargaining with sellers to share some of the expenses.

“They are merely requesting price reductions that correspond to the precise amount they will be required to pay in assessments over the next 20 or 30 years,” Salaun stated. “And when it comes to negotiating with the buyer or simply covering the expense themselves, the sellers are a little stuck.”