This article on changes to condo reserves in Florida was recently published. In May 2022, Governor Ron DeSantis passed a new law designed to protect condo owners after the collapse of the Surfside Condominium Building. The law sets statewide standards for more frequent inspections and requires condo boards to set aside funds for essential repairs. The new law affects condo projects that are over 25 years old, requires structural inspections and structural reserve studies for condo projects over three stories, and will no longer be able to partially fund reserves.
But while the new law was born out of good intentions, it is putting a strain on the wallets of some apartment owners.
Florida's Senate bill, SB 4-D, includes preventive maintenance and construction inspection requirements for buildings over three stories, as well as a requirement for condominium associations to study and collect and maintain a structural integrity reserve. Under the new law, condominiums cannot have unfunded reserves; they must maintain at least 50% of the condominium's total repair costs to fund the reserve pool.
Associations are now required to perform a reserve analysis every 10 years for repairs costing $10,000 or more, after which the association mails the structural integrity survey results to unit owners, who then jointly contribute to the reserve through an association-approved payment plan.
From a real estate perspective, there may be a temporary downward impact on prices of condominiums that are over 25 years old if there is a large influx of units on the market because owners do not want to deal with the impact of the new law. I think it is possible that owners of these condominiums will want to move to villas, townhouses, or single-family homes. Condo boards come with a lot of responsibility, so many people do not want to participate anymore.
“You're basically volunteering to help your community, and if you decide not to fix a breakwater that you should have, you could be held liable,” he continued. “So that's going to cause a lot of chaos in Florida.”
“The Champlain Tower was 40 years old and in need of major repairs when it collapsed on June 24, 2021. 98 people died in the tragedy, and officials are considering the need to make other dilapidated buildings safer.” Source
What if you want to buy a Florida condo?
It's no secret that these changes to Florida's condominium laws are coming. And there's good reason for it. No one wants to live in an unsafe building, and unfortunately, no one wants to see condo fees increase, so some boards have put off making necessary repairs for so long. Now condo owners may have no choice but to make the repairs.
If you're buying a condo, do your homework: If you're considering a building that's more than 25 years old and has three or more floors, it's wise to request meeting minutes from the condo association for the past six to 12 months to see what has been discussed regarding special assessments or increases to condo fees.
Are you at the upper end of your budget for a condo with condo fees included? It may be wise to budget for a slightly cheaper unit and factor in the possibility of condo fees increasing as 2024 approaches.
What if your condo community doesn’t have enough funds to cover future condo fee increases or special assessments that may occur?
If you cannot afford the high condo fees and special assessments that may be levied by your condo community, it may be wise to sell immediately. However, if the special assessments have already been decided by the board, you may have to pay the assessments from your closing proceeds in order to close the sale. This is something you should discuss in detail with a licensed Florida real estate agent like me.
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Leanne Jamerson
Broker/Owner of Corcoran Dwellings