Florida condo owners are anticipating higher costs as new regulations take effect in the new year

MIAMI (AP) — Florida condo owners are expecting higher costs from condominium associations in the new year, a result of a Security law passed by the state legislature in 2022.

It requires associations to have sufficient reserves to cover major repairs and to conduct a survey of reserves every ten years. Because of the law, older condominiums — mostly found in South Florida, according to state records — face significant increases in association payments to fund reserves and repair costs.

Gov. Ron DeSantis signed the bill in response to the partial collapse of Champlain Towers South, which 98 people killed in Surfside in June 2021. New regulations require condominium communities for buildings with three or more stories to file an inspection report by Dec. 31 that focuses on structure, maintenance and expected costs of repairs or renovations.

The report is just a small part of the larger problem surrounding condos and real estate in Florida Insurance crisis. A May report from the Florida Office of Insurance Regulation found that the average homeowner’s insurance premium is about $3,600, about $1,000 more than the national average, according to the National Association of Realtors.

In Hallandale Beach, condo owner Kelli Roiter feels sorry for people struggling to pay the higher fees, but she said she supports rules requiring associations to set aside reserves for repairs if it means that their seaside building, built in 1971, receives the necessary repairs.

She said her building, a few miles from Champlain Towers South, had some of the same problems that were visible before the building collapsed.

“I’m afraid this building is going to collapse,” Roiter said. “Some nights I wake up, hear a creak and jump. And then I remember: No, no, no, we are safe. But am I safe?”

Rick Madan, president of the Biscayne Neighborhoods Association, which represents 22 homeowners’ associations, said the law creates conflict between homeowners by forcing buildings to have full insurance and creating a blanket solution that doesn’t address the crisis holistically.

Madan said the law puts newer condominiums in the same category requiring reserves, inspection reports and recertification as much older buildings, at the expense of the condo owners.

That’s particularly hard for people retiring on fixed incomes in South Florida, Madan added.

“They’re forcing us to do all these reserve studies. They force us to fund our reserves more, so we have to raise more money,” Madan said of the Florida legislation. “Plus, you don’t give us any flexibility on the insurance side, where the insurance companies are basically making so much profit because they’re writing a $100 million policy that they know they’ll never have to pay a claim.”

Democratic Sen. Jason Pizzo, who represented Surfside at the time of the collapse, said he agreed with Madan’s position on property insurance.

Pizzo and state Sen. Jennifer Bradley, a Republican, held a condominium summit in early December where they urged transparency among associations about needed projects for repair costs to prevent structural damage.

Pizzo told The Associated Press it is important for associations to maintain this transparency with condo owners to ensure that increasing payments are actually related to repairs and not utilities, and that it is within reason for the safety of residents time frame takes place.

He said it’s understandable to be concerned about the likely costs, but that’s why objective inspections of older buildings are necessary.

Nearly 90% of Florida’s 1.6 million condominiums are more than 30 years old, and Pizzo said it’s concerning that critical inspections haven’t taken place.

“They will receive a milestone inspection, and they may identify an immediate need for repair or replacement through that,” Pizzo said. “It’s not really by law. This is done through common sense.”

Luis Konski, a Miami attorney who handles construction and commercial liability cases, said previous condo regulations kept fees low by failing to save money for future repairs and then left owners with special assessments were faced when repairs finally needed to be made. Konski said this encouraged many associations to ignore necessary but expensive maintenance, which likely led to the Surfside building’s collapse.

He said he wasn’t sure the state had provided enough staff to actually ensure associations were complying with the new rules. Pizzo expressed similar concerns, saying the state Department of Business and Professional Regulation may need legislative changes to allow it to begin reviewing structural integrity and inspection reports while continuing to oversee all areas of business in Florida, including licensing and enforcement rules. regulate.

Konski said that if associations continue to delay maintenance through inaccurate surveys and minimal oversight, it will only be a matter of time before another disaster occurs.

“The question is: Are you saving money or are you saving lives?” Konski said. “You can’t do both.”

Real estate agent Rebeca Castellon, who owns a condo in Coral Gables, said she agrees with the idea of ​​requiring homeowners’ associations to set aside reserves for future repairs, but acknowledges that the timing is bad when the increased fees coincide with higher insurance costs and recent inflation.

“I think part of the challenge is that there’s a tsunami of things right now that make it really challenging for condo owners,” Castellon said.

The condo market has cooled due to the uncertainty created by additional fees and regulations, but Castellon said condos are still the most affordable form of home ownership and the new regulations will simply provide buyers with more information in the future.

“It wouldn’t surprise me if buyers in the future asked to see the structural inspection that the towers are currently undergoing and take that into account as to whether or not it is the right property for them to move forward with.” “Do “You an offer,” said Castellon.

Real estate agent Gatien Salaun, who owns a waterfront condo in Miami Beach, said the recent decline in average sales prices appears to be largely due to buyers negotiating with sellers to defray some of the costs.

“They’re just asking for discounts that are exactly the same amount they’re going to have to pay over the next 20 years, 30 years, I guess,” Salaun said. “And sellers are a bit stuck when it comes to negotiating with the buyer or just covering the costs themselves.”