Skip to main content

To understand the magnitude of the condominium crisis in Florida, you need only look at the news stories of tragedies and near tragedies from the past couple of years.

On June 24, 2021, in the Miami suburb of Surfside, the Champlain Towers South partially collapsed. It sparked the nation’s attention, and opened a debate regarding a possible crisis of neglect that has been years in the making.

That tragic event was followed by the mandatory evacuation of Crestview Towers in North Miami Beach in 2021. City officials had determined that the building was structurally and electrically unsafe for occupancy.

This year, another condo has been added to that list.

Just this month, North Miami Beach city officials ordered the evacuation of the Bayview 60 Homes for also being structurally unsafe.

Keep in mind that a condo is a building structure like any other, and other buildings are showing us what happens when property owners neglect to make routine and necessary repairs. In 2021, a Clearwater parking garage stairwell collapsed causing a fatality. Like the condos that have been deemed unsafe, this parking garage is also in an area close to saltwater, which is known to erode structures.

A problem years in the making

The Florida condo crisis has been years in the making. It started with the housing bubble in the mid-2000s, during which we saw two developments fuel this crisis:

  • The housing market expanded at a record pace
  • There was a shortage of properties for sale

To fill demand – remember, this was still a hot economy where property was cheap – developers started converting apartment buildings to condos.

The problem: The first-time homeowners that bought these condo units typically didn’t have the collective funds to pay for the necessary maintenance and repairs.

The situation worsened when the economic bubble burst and interest rates climbed. Suddenly, condo owners saw their mortgage payments also go up.

How did association boards respond? By putting their buildings’ maintenance projects on hold so they could keep assessments low.

That makes for happy neighbors in the short term. But as we’ll see, what happened in the long run – and what continues to happen — wasn’t worth it.

Hurricanes like Katrina and Wilma made a bad situation worse by further damaging already potentially compromised buildings.

Condominium boards had to levy special assessments for repairs that couldn’t wait. As damaged buildings lost their value, many owners either sold their units or lost them to foreclosure.

With residents fleeing or unable to pay assessment and maintenance fees, this put the burden on the paying owners who remained in their condos. But they couldn’t bear all the financial burden required to maintain their condominiums, which led those buildings to fall further into disrepair.

Around 2010, we began to see investors buy up properties at bargain prices. These buyers were protected by the Distressed Condominium Relief Act, which kept them from inheriting liability relating to statutory warranties, unfunded reserves, and past due assessments.

Even as the market rebounded, many, if not most, condo boards continued to underfund their budgets so they could keep assessments artificially low.  Association Boards believed that their remaining owners were already facing financial burden and adding to that burden would only lead to increased delinquency and further financial damage to the Association.

What the market and profiteers couldn’t stop was the ravages of time on buildings that were not properly maintained. Throughout the 2010s, many buildings remained in a state of disrepair, which has only continued to worsen.

Then COVID-19 arrived in 2020 and further delayed any planned repairs as it disrupted the global economy. Condominiums already behind in their safety certifications fell further behind. How long could people live in potentially unsafe buildings? The world would soon find out with the tragedy at Surfside.

The condo crisis continues

It can be argued that the owners of Condos between 2000 and today have paid less than their fair share of preventative, actual and necessary maintenance.

That shortfall will and must be made up by the present owners of Condos who will, in almost all circumstances, pay more than their fair share of preventative, actual, remedial and necessary maintenance in the coming years.

The condo crisis is only going to get worse if condo associations do not acknowledge, properly address, fund and undertake the necessary repairs to these buildings that may have been neglected for the past many years.

While proposed legislation to improve building safety was not approved this year, it is very likely that in the coming years, Florida legislators will do what they believe is necessary to improve building safety.

We expect future legislative action will limit the ability for boards to fully (or even partially) waive statutorily mandated reserves. That means it will become more expensive to own a condo as budgets increase and boards impose special assessments to pay for needed repairs.

This will be a change in the right direction. Florida is home to harsh weather elements that damage our property. By making sure the condominiums we live in are properly maintained, we also ensure the long-term safety and financial security of residents.

Navigate the crisis with CondoHOALoans

Even as boards focus on gathering the funds needed to fix their buildings, they may find that simply levying a special assessment is not a solution. If owners cannot afford to pay, levying large special assessments in short time frames won’t help.

However, there are other options available. Conventional loans are among them, but they can be hard to qualify for when a condo has a poor history of maintenance.

Private lenders can also deliver the money needed to make repairs and stock your reserves. They can be a better option (for certain situated associations) than a conventional loan — if you know where to find them.

CondoHOALoans (Powered by the Statewide Community Association Law Firm of Katzman Chandler) is here to help your community find available conventional or private lending options. Our program also provides 100% free delinquent account collection during the life of your conventional or private loan.

The first step to financial health is seeing if your association has the funds it needs to pay for necessary repairs and upgrades, as well as potentially damaging events.

You can easily do this by taking our free, no-obligation Financial Health Survey. We’ll then send you a detailed report that you can share with your fellow board members.

If you have any questions before taking the survey, we are here to answer them. Contact us to schedule a FREE call or video consultation. You can also send us a message through our secure online portal.