Florida Condo Owners Dump Units Over Six-Figure Special Assessments

Mishtalk ^ | 5-13-24 | Mike Shedlock

[dynachrome]

Have a Florida condo? Can you afford a $100,000 or higher special assessment for new safety standards?

After the collapse of a Surfside Building on June 24, 2021that killed 98 people, the state passed a structural safety law that is now biting owners.

Not only are insurance rates soaring, but owners are hit with huge special assessments topping $100,000.

[dynachrome]

Condos will be a lot cheaper.

[Paladin2]

It’s difficult to beat a Mule and 40 acres.....

[Gaffer]

Walk away and take the hit.

[dynachrome]

exxon station near my location

[dragnet2]

Not only are insurance rates soaring, but owners are hit with huge special assessments topping $100,000.
_______________________

It’s all to ensure your safety. The government is always concerned with your safety.

[Maskot]

Definitely. Ain’t no condo worth your fiscal health. Eff them

[Angelino97]

It’s all to ensure your safety. The government is always concerned with your safety.

Red state.

[cuban leaf]

My attitude has always been that when you buy a condo, you are buying air. The air between the walls. And you get to share responsibility with other owners that are often of “questionable” reliability.

Two things I’ve avoided my whole life (I’m 70) Condos and HOA’s.

[Alberta's Child]

I’ve worked with clients on condominium projects in several states, and I’ve learned that condominium law has some peculiar nuances that sometimes result in strange, costly, and even unfortunate circumstances.

There are three important considerations for any owner in a condominium arrangement:

1. When you buy a condominium, you are surrendering much of the control over your property to a governing body comprised of your fellow owners.

2. Condominium boards don’t have a lot of discretion in their actions. They are obligated to follow the law even when it involves costly expenditures for the association’s common elements.

3. The association’s insurance carrier has far more influence over a condo board’s decisions than it does over independent homeowners. Unlike the owner of a detached home, a condo board has a fiduciary duty to the owners that require it to carry out certain duties that may be unpopular and/or costly.

[xoxox]

They are, I can tell you that.

And many of them, like ours, for example, couldn’t be further in terms of structural risk than the tragic one that kicked off this knee-jerk legislative reaction that was, undoubtedly, demanded by our elected representatives’ paymasters in the insurance lobby.

In the long run, however, some buildings will be better; condo boards (as we have learned the hard way) are textbook examples of everything that’s wrong with committees and “fiduciaries.”

But don’t me started.

We’re living it, but, God willing, we’ll survive, and our buildings will be worth that much more when done.

[xoxox]

They didn’t see themselves quite so obliged before hand, it seems.

[Alberta's Child]

You might be buying “air,” but it comes with a property title and really is an asset. That gives condo owners leverage and flexibility that they wouldn’t otherwise have.

[Alberta's Child]

1. Who is “they?”

2. Obliged to whom?

[catnipman]

two words: due diligence ...

[catnipman]

“Two things I’ve avoided my whole life (I’m 70) Condos and HOA’s.”

indeed ...

[Alberta's Child]

State law previously allowed condos to waive reserve funding year after year, leading many buildings, including the nearly 50-year-old Cricket Club, to keep next to nothing in their coffers.

I’m really surprised that a state law would allow such a thing. In my state a condo association is required by law to keep a fully funded reserve in place.

[RainMan]

In the past, the Condo HOA could put to a vote of the owners if they wanted to do maintenance on major items, and most voted no, which created the issue. The new law states that 1) HOA must have reserves to cover the cost of maintenance and major known issues and 2) the HOA must pay a 3rd party to assess the complex, identify and assign costs to the major issues, and provide a timeline of when they must be fixed before they become critical. This means that most HOAs must collect millions in reserves. It is not that the condos will become cheap, it is that they will become unsellable. You will not be able to get financing or insurance on them if the HOA does not have the adequate reserves. It will become cheaper to write the building off and demolish it and start over, than to fix a lot of buildings. I would not buy some of them if they were free.

[RainMan]

Zero leverage if the building has to be leveled. Your title becomes a title to unimproved air, and if a new building goes up in that air, you dont own it.

[Alberta's Child]

There’s nothing worse than a condo development filled with old people who are hell-bent on running the place as cheap as possible because they’re 70+ years old and have no interest in paying to replace building elements that will last for 40-50 years.

I suspect this scenario is far more common in Florida than in most other states.

[Alberta's Child]

The smartest thing some of these condo boards could do right now is go out and get a long-term loan to cover these enormous capital expenditures. In most states, condo boards have so much power to collect assessments that banks consider them almost as risk-free as lending to the government.