Big assessments are leading to sell-offs
The ill-fated Champlain Towers South Condominium, Sunrise, FL, June 25, 2021. Credit: Miami-Dade Fire Rescue
Almost three years after the Surfside Condo Collapse, reverberations can still be felt, now from condominium unit owners across Florida facing huge maintenance and insurance assessments from their condo associations. Following the Surfside tragedy that killed 98 people, the Florida legislature required preventative condo maintenance for all older buildings by this December 31st, 2024, and the deadline is fast approaching for Florida’s 25,000 condo associations to comply.
Specifically, Senate Bill 4-D and follow up Senate Bill 154 require all buildings over 30 years old must have a “milestone inspection” of their structural integrity conducted by a licensed engineer or architect – and then create a progress report within 180 days afterward on any needed work identified by the inspection. Not only this, but condo associations must base their budgets on findings from a property’s most recent structural integrity reserve study, meaning any that delayed or deferred maintenance in previous years can no longer do so.
A full facelift for some of these condo buildings is requiring multimillion-dollar special assessments on their residents. “Assessments of $50,000 to $150,000 per unit, representing up to 40% of a condo’s value, are becoming increasingly common,” writes Greg Main-Baillie of Colliers Real Estate in the Tampa Bay Business Journal. While condos used to be a cornerstone of the affordable Florida lifestyle, the landscape is shifting rapidly leaving the condominium community a strange ghost of its former self.
Condo HOA fees to offset those construction costs have strained many unit owners’ budgets, and when coupled with rising insurance premiums from hazardous weather, you have a recipe for widespread vacancies across the Florida condominium market. Places like The Cricket Club in Miami are offering units at 50% off their regular listing price to compensate for special assessments that exceed $100,000 per unit plus regular fees. In some such places, master condo associations’ insurance premiums have risen between 100-500% according to the Insurance Information Institute (III)– with a recent report from Redfin finding a direct correlation between falling condo prices (and sales) and the skyrocketing price of insurance and HOA fees.
“While we’re seeing great improvements in the single-family home market, the condo market still has some hurdles to overcome, certainly,” Mark Friedlander of the III told Fox 4 in Ft. Myers. “We’re starting to see that with other condo structures as well after the hurricanes, particularly Ian, where these master association policies don’t have enough coverage to cover the losses.” There is concern that as values continue to fall, some cash-strapped condo unit owners may simply walk away from their properties.
LMA Newsletter of 6-24-24
