New Florida Condo Rules: Kicking the Can–What You Need to Know!

As we discussed in previous blogs, new laws affecting Florida condominium ownership were presented in the aftermath of the horrific 2021 Surfside, Florida tragedy. Since the tragedy, the Florida State Legislature in 2022 failed to agree on a package of safety reforms which would have required inspections of older buildings, mandated monetary reserves for condominium associations, and provided public transparency for maintenance and inspection reports.  At that time, the requirement of financial reserves was perhaps the biggest issue on which the two legislative houses did not agree.  Ultimately, the legislation in 2023 included requiring “milestone inspections” of older buildings and “structural integrity studies” to determine the financial reserves that should be saved for future building repairs.

Yet, most recently, Gov. Ron DeSantis recently signed HB 913 which took effect July 1, extending the deadline requirement by one year to December 31, 2025, for structural integrity studies.  Milestone inspections were to have been completed by the end of 2024 for older buildings that are three stories or higher.

The new law, amongst other things, allows for two more years in reserve funding immediately following a milestone inspection and provides condominium associations flexibility in meeting reserve requirements.  The Bill allows condo associations to use lines of credit  or loans to satisfy reserve obligations if a majority of the owners agree. The new Bill therefore is a way to assist moderate-income condominium unit owners to remain in their homes by allowing the condominium associations to, in essence, delay fully funding the required financial reserves while attempting to finance repair costs.

The new Bill also includes how meetings and elections are conducted, how improvements are financed, how loans can be approved and what records must be maintained and where.  It also tightens oversight by the State over the condo association.

Why were such changes made to the Bill?

Questions about affordability arose with the original condominium law requirements.  Most of the older condominiums residents simply do not have the requisite financial wherewithal to pay for hefty repair and reserve costs.  Many of the condo residents have lived in their condos for decades and given the requirements of how and when the Bill was originally intended, they most likely would not be able to find affordable housing.

Additionally, units in such older condo buildings have been nearly impossible to sell due to potential structural issues of the overall building and lack of financial reserves of the overall building—not to say other reasons in general such as issues obtaining insurance.

However, some Realtors believe that some of the Bill’s provisions will make it easier for such condos to sell. How? Florida condominiums with 25 or more units must post meeting minutes and videos of board meetings. The information presumably would make it easier for lenders to determine whether special assessments would affect the ability of the owners to have the loan.

What does this all mean?

Nearly four years since the horrific Surfside tragedy, the structural integrity of our older condominiums and the question of financial wherewithal to restore repairs are still at issue. While the legislature has tried to pass bills to confront such issues, perhaps the larger concern is affordability. Condo ownership has historically been a game of kicking the can down the road where, unlike homeowners, condo owners rarely paid or saved the customary 2%-4% on the current homes’ value for repairs and maintenance.

While we all may agree that sweeping laws and enforcement have been long overdue concerning the safety and governance of condominium ownership, there will be an effect on the condominium market. How? In many older condominiums, unit owners that may be on fixed incomes and unable to provide their pro rata share of reserves needed to make  necessary repairs may inevitably sell. As a result, there may be increased condominium units on the market, causing sale prices to lower. More people may seek to rent, placing more pressure on the rental market. Finally, insurers will certainly increase their premiums on liability policies on older buildings that do not have adequate reserves as their financial exposure will invariably increase.

Bottom line:

The make-up of the overall condominium community will inevitably  shift in time, as unit owners in older condominiums may not have the funds to remain at their unit and lenders may not wish to fund. Those condominium buildings that require substantial restoration may be eventually demolished, making room for developers to build new condominiums with unit owners who are  able to place substantial amounts collectively in reserves.

For thirty plus years, Oppenheim Law has served local, national, and international clientele particularly in the areas of real estate and business law. Our sister company, Weston Title & Escrow, Inc., has provided title insurance and title related services for three decades. Should you have any questions related to a real estate or business matter, feel free to call us at 954-384-6114 or contact our firm directly at contactus@oppenheimlaw.com, and should you need assistance with a commercial or residential real estate closing, please call us at 954-384-6168 or contactus@westontitle.com.