Florida lawmakers made a choice after the 2021 Surfside building collapse: to protect human life instead of continuing to allow condominiums to defer important maintenance that could put more people at risk. With 98 lives lost at Champlain Towers South, that choice was a no-brainer, and a slew of new regulations and requirements will come due soon.
The unintended result is that some condo dwellers might be in for a sticker shock. State law now bans condo associations from waiving financial reserves for building maintenance, a common practice among associations. By January 2025, they will have to conduct “structural integrity reserve studies” to determine how much money must be set aside to complete structural repairs such as roofs, load-bearing walls and fire-protection systems.
These new requirements, along with the skyrocketing costs of property insurance, could create a perfect storm and make condo living unaffordable for many Floridians. Officials in South Florida are sounding the alarm, saying that foreclosures will start to happen. That was a topic of concern during a recent Broward County legislative delegation meeting, where elected officials said they are hearing from residents who cannot afford another special assessment, the Sun Sentinel reported.
Hit the hardest will be residents of buildings that have not kept reserves. As condo lawyer Ryan Poliakoff told the Herald Editorial Board, many condos “were living off borrowed money.” Costly choices made 10, 15, 20 years ago to waive a rainy-day fund will now come due, and those picking up the tab might not even be aware of it unless they have kept up with their association.
We have known that a time of reckoning was coming since the Herald Editorial Board proposed in July 2021, a month after Surfside, to change state law that allowed condo boards to waive reserves with a majority vote of residents present at a meeting. What no one predicted then was record inflation, high interest rates and, above all, that Florida’s insurance industry would tailspin into a crisis. Poliakoff said he’s heard stories of condo insurance premiums rising by a whopping 100%. He’s not exaggerating.
This doesn’t mean we should blame lawmakers for toughening regulations. On the contrary, we should commend them for making such difficult decisions in the aftermath of a crisis. Incoming House Speaker Danny Perez, R-Miami, was adamant about the reserve requirement and didn’t want to pass legislation without it.
There’s a reasonable debate over whether the state should take responsibility for people’s financial decisions. But with more than 1.5 million condo units in Florida, lawmakers should look for ways to avoid a new affordability crisis. In July 2021, the Editorial Board suggested lawmakers look into low-cost, government-backed loans to help homeowners, but that hasn’t happened — and it’s unclear how much that would cost Florida taxpayers.
Even more important is that the Legislature try again to fix our broken insurance system, but it’s unclear if there’s any political will for that.
This year, the Legislature made changes to clarify and ease the impact of the reforms they approved in 2022. Among the changes was the required inspection of residential condo buildings of at least three stories — up until then only required in Miami-Dade and Broward counties — that were at least 30 years old, or 25 if they were near the coast. This year’s tweaks moved the timeline for coastal buildings back to 30 years while giving local governments the authority to require inspections sooner. The new law also extended the deadline for the completion of reserve studies.
Rep. Vicki Lopez, one the sponsors of this year’s legislation, said she met with condo owners over the summer and will file a new package of reforms that will mostly target unscrupulous condo associations — another issue that requires attention. The Miami Republican said her upcoming bill will, among other things, crack down on fraudulent condo elections, give more regulatory power to the Department Of Business and Professional Regulation and require condo associations with more than 25 units to upload their records onto a website.
Lopez may address finances once the bill is filed, but she believes the new reserve requirements will be a “one-time big hit” and condo association have options such as taking out loans. She said she’s still assessing how many condos will have to build up reserves from zero.
“I want to wait and see what I’m dealing with,” Lopez told the Editorial Board.
Lopez is right: We have yet to see the full impacts of these post-Surfside reforms.
We hope that waiting doesn’t turn into procrastinating and, eventually, ignoring a new crisis. Lawmakers have been proactive so far and they owe it to Floridians to stay that way.