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MIAMI (AP) — Condominium communities across Florida are bracing for increased fees in the coming year, a direct result of a new safety law enacted by state legislators in 2022.
This legislation mandates condominium associations to maintain adequate reserve funds to support major repairs and to perform reserve studies every ten years. As a result, many aging condominiums, particularly those concentrated in South Florida, will see substantial hikes in association fees to cover these new requirements.
The law stems from the tragic partial collapse of the Champlain Towers South, which tragically claimed 98 lives in Surfside in June 2021. The new regulations require associations responsible for buildings with three or more stories to submit detailed inspection reports by December 31, focusing on structural health, maintenance, and anticipated repair costs.
This requirement is part of a broader concern regarding the ongoing insurance crisis affecting Florida’s property market. A recent report from the Florida Office of Insurance Regulation observed that the typical homeowner’s insurance in the state averages around $3,600, significantly exceeding the national average by approximately $1,000, as noted by the National Association of Realtors.
In Hallandale Beach, condo owner Kelli Roiter voiced her understanding for those struggling with rising fees, yet she supports the reserve maintenance mandates. She believes such measures are necessary to ensure her oceanfront building, constructed in 1971, receives essential maintenance. Roiter mentioned that her building exhibits some of the same distress signals that were evident in the Champlain Towers prior to their catastrophic failure.
“I fear for the safety of my building,” Roiter remarked. “There are times I am startled awake by creaking noises, and though I try to reassure myself, I can’t help but wonder, are we really safe?”
Rick Madan, who leads the Biscayne Neighborhoods Association comprising 22 condo associations, criticized the law for exacerbating challenges for condo owners. He argues it imposes uniform regulations on both newer and older buildings, imposing financial burdens that may not accurately reflect their unique circumstances. This situation is especially burdensome for retirees living on fixed incomes, who find themselves grappling with escalating costs.
“The state is mandating us to conduct reserve studies and replenish our funds, which necessitates extracting more money from our pockets,” Madan explained. “Moreover, we’re not receiving flexibility concerning insurance matters, allowing insurers to profit significantly while writing policies that they know will likely not incur claims.”
Democratic State Sen. Jason Pizzo, who represented Surfside during the incident, echoed Madan’s sentiments surrounding the property insurance industry. Along with Republican Sen. Jennifer Bradley, Pizzo organized a condo summit in early December, where he underscored the need for transparency among associations about necessary repair projects to avert structural deterioration.
Pizzo emphasized the necessity for condo associations to maintain clarity with owners regarding fee increases and their real link to repairs instead of amenities, ensuring that such adjustments are timely and protect residents’ safety.
Concerns regarding potential costs have been voiced, but Pizzo asserts that thorough inspections of older buildings are essential to mitigate future risks. With nearly 90% of Florida’s condos exceeding 30 years of age, he believes it is alarming that many have not undergone essential evaluations.
“Upon conducting a milestone inspection, associations may uncover urgent repair requirements that need addressing,” Pizzo stated. “This is not merely a legal stipulation; it is common sense.”
Miami attorney Luis Konski, specializing in construction and liability cases, noted that earlier regulations allowed associations to keep costs low by neglecting to save for future repairs, leading to significant financial shocks when repair needs arose. He attributes this negligence to the factors that likely precipitated the Surfside disaster.
Konski expressed uncertainty about whether state officials have allocated enough resources to ensure compliance with the new regulations. Pizzo corroborated these worries, suggesting that legislative changes may be required to empower the Department of Business and Professional Regulation in reviewing compliance effectively while managing other regulatory duties within the state.
Konski warned that if associations are able to defer crucial maintenance through inadequate surveys and inadequate oversight, it may only be a matter of time before another tragedy unfolds.
“It’s a matter of whether to prioritize savings or safety,” Konski remarked. “We can’t do both effectively.”
Rebeca Castellon, a real estate agent and condo owner in Coral Gables, supports the concept of mandatory reserve funds but acknowledges the challenges posed by simultaneously rising fees, insurance premiums, and inflation.
“Currently, condo owners are facing a surge of obstacles that make this situation much more difficult,” Castellon noted.
While the condominium market is experiencing a slowdown amid uncertainty, Castellon maintains that condos continue to represent the most accessible avenue for home ownership and believes that these new regulations will ultimately provide prospective buyers with better insights in the future.
“In the future, potential buyers may request to see the structural inspection results currently being mandated, which will play a key role in their purchasing decisions,” Castellon expressed.
Real estate agent Gatien Salaun, who owns a condo in Miami Beach, remarked that recent declines in average sale prices represent buyers negotiating for sellers to absorb some costs associated with the new fees.
“Buyers are seeking price reductions that are reflective of anticipated assessments they’ll face over the long term,” Salaun explained. “As a result, sellers find themselves in a tough position, needing to negotiate effectively or absorbing the financial burden themselves.”
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