New safety guidelines for condominiums in Florida are causing significant disruptions in the real estate market.
These changes, implemented in response to the 2021 Surfside condominium collapse that claimed 98 lives, have led to steep assessments for some communities and an increase in the number of condos listed for sale as owners seek to avoid costly maintenance fees.
In 2022, Florida lawmakers unanimously passed legislation aimed at enhancing safety standards for condos to prevent another disaster. However, the impact of these regulations is being felt now, as nearly a million Florida condominiums face a year-end deadline for inspections and cost studies.
Across Northeast Florida, the number of condos listed for sale surged by 118% year-over-year in October.
At the Summerhouse condominiums in St. Augustine Beach, condo association president Malcolm Fabre was preparing for a Dec. 31 deadline to assess the condition of the complex and estimate repair costs when News4JAX spoke with him earlier this year. Fabre noted that many owners are concerned about potential assessments, leading some to sell their units.
“I’ve had several people call me and say they’re doing that,” Fabre said.
The financial concerns stem from SB-4D, a Florida law requiring condos three stories or higher to undergo a visual “milestone inspection” of structural integrity by an architect or engineer at 30 years of age and every ten years thereafter. For buildings within three miles of a coastline, inspections must begin at 25 years. If substantial structural deterioration is found, a second, more thorough inspection is required. Additionally, condo associations must determine future repair costs by Dec. 31, 2024, and fund reserves going forward.
Bill Hughes, who is the research director for the Kelley A. Bergstrom Real Estate Center at the University of Florida’s Warrington College of Business, explained that many condo owners have been paying less than the annual cost of living due to unrecognized asset deterioration. Now, they are forced to address these issues and save for future repairs, which may cause significant financial hardship for some.
“They’re stuck in the middle with that,“ he said.
Rory Dubin, President of the Northeast Florida Association of Realtors, believes the new regulations have prompted more condo owners to sell. Despite the increase in listings, he maintains that the market remains healthy.
“I will say that condos are still selling,” he said.
At Summerhouse, roof damage from a recent storm has complicated their inspection process.
“If we have a structural engineer come out, or these milestone study personnel, they’re going to see pieces of missing siding,” Fabre said. “They’re going to see roofs ripped off. There’s no way possible that we could pass it in that situation. But the state has done nothing about that.”
Fabre expressed frustration with the state’s lack of response to such situations, which could necessitate a second, more invasive inspection.
“They have to core into your concrete, they have to break things open, so it’s more destructive, a lot higher cost, and a lot more expense,” he said.
Later, Fabre told News4JAX they decided to defer the initial inspection beyond the deadline to the new year, and he’s prepared to face any consequences.
Fabre argues that three-story complexes like Summerhouse should not be held to the same standards as high-rises and questions the exclusion of hotels and apartment complexes from the regulations. According to Hughes, the collaborative nature of condo maintenance creates challenges not faced by hotels or apartments, which he says usually have a single owner.
“When you get groups together, they have a really hard time agreeing, particularly if what they’re having to agree upon is to make a substantial payment. If this was your individual home and you needed a new roof, then, then you would put a new roof on, particularly before or after it starts leaking, but, you would repair that roof and that and that cost would face you as a homeowner. When you’re in the condominium, you don’t see it as directly, because, you know, the roof’s not right over your head necessarily.”
The Surfside collapse served as a wake-up call to hold complexes accountable and reveal the true costs of condo living in Florida.
Dubin and Hughes told News4JAX the condo market is adjusting to the regulations. Sales are down and condos are sitting on the market longer.
Dubin said he doesn’t expect the new law to affect condo prices very much in the long term.
Hughes said he expects condo prices to stabilize by this summer and having up-to-date maintenance and reserves could actually strengthen the condo market going forward.
News4JAX reached out to the governor’s office about the possibility of calling a special session. We will let you know if we receive a response.
Source: news4jax.com
