From retirees looking to downsize, to young professionals trying to snag a starter home, to snowbirds looking for a winter getaway, condos have long been the main choice for anyone looking to buy Florida real estate on a budget. But safety legislation passed earlier this year in the wake of the deadly Surfside building collapse could send the apartment market into turmoil.
For years, condominium associations across the state have delayed routine maintenance and budgeted for future repairs to minimize costs for unit owners.
“Whether there will be enough money to fix the building in the future is someone else’s question,” said Martin Schwartz, a partner at law firm Bilzin Sumberg in Miami who specializes in condo law.
New Florida legislation requires regular inspections of older buildings and requires condominium associations to set aside funds for building maintenance.
Some buildings have decades-long maintenance backlogs that need to be corrected.
“Out of the box, that means everybody who’s been dropping reserves, their assessment goes up,” Schwartz said.
Senate Bill 4-D passed unanimously during the special legislative session in May.
Any building 30 years or older must be inspected by December 31, 2024, and every 10 years thereafter. From then on, condominiums must undergo a professional reserve study every 10 years. They will also be prohibited from forgoing reserves.
When Scott Rasbach, 64, moved to his Paradise Shores apartment in St. Petersburg three years ago, he paid just $430 a month in maintenance. Next year he will need to pay $600 a month.
Current association president Rasbach said the condo association has raised maintenance fees by 30 per cent over the past two years to help replenish its reserves after years of neglect. It also approved a special assessment to replace some of the property’s roof. This will cost residents an average of $8,000 more.
The buildings in the worst condition tend to be home to people living on fixed and low incomes, Schwartz said. He worries the new law could make housing unaffordable for them.
“I did have a woman in the building across from me who was in her 80s and went to work in a manufacturing plant to make money paying for special assessments,” Rasbach said.
Keep an eye on trends impacting your local economy
Subscribe to our free Business by the Bay newsletter
Every Wednesday we break down the latest business and consumer news and insights you need to know.
You are all signed up!
Want to receive more of our free weekly newsletter in your inbox? let’s start.
explore all options
Others have decided to sell their apartments. Over the past year, Paradise Shores, which has had close to 50 percent of its turnover, mostly from snowbirds, can’t justify the cost of a second home with the new fees, Rasbach said.
When the new law takes effect in 2025, approximately 28,000 Condominium associations across the state will face the same dilemma as Paradise Shores. Some fear it could trigger a fire sale by apartment owners trying to cut their losses.
“If your building is hit by a major appraisal, you better be willing to drop the price,” said Greg Main-Baillie, executive managing director of Colliers Florida Development Services Group.
If too many discounted condos hit the market, it could cause prices to plummet across the board.
Some condo associations may decide that it’s not worth trying to bring the property up to par.
“For many of these aging buildings, the land they stand on is more valuable than the buildings themselves,” said Taylor Collins, managing partner and co-founder of South Florida real estate group Two Roads Development.
His firm works to end struggling condominium associations so they can buy buildings and redevelop the land. When the entire association bands together for bulk sales, condo owners can get better prices for each unit, he said.
Still, not all apartments are suitable for rebuilding. Waterfront properties and buildings in densely populated inner-city areas are more popular than those along the coast and away from development.
While the law may force some condominium associations to make tough decisions in the short term, Collins said it’s a necessary step to improve the safety and longevity of condominiums in Florida. He noted that many insurers are already updating their standards by law.
Premiums for Paradise Shores rose 29 percent last year. This year, their insurance company refused to renew the policy due to some lingering maintenance issues. Now, they are busy finding a new insurance company before the policy lapses in April.
Main-Baillie said he expects a frantic sprint for apartments trying to secure the capital and labor needed to comply with the new law by 2025.
“Unfortunately, board members don’t always have the construction management experience or knowledge to keep communities out of risk,” he said. “Engineers and contractors in this environment often take advantage of the situation.”
He said condo associations should consider hiring a professional manager to protect themselves as they head toward an uncertain future.
The Tampa Bay Times has a team of reporters focused on rising costs in our area.If you have an idea, question, or story to tell, please email at email@example.com.
. . .
Need help with housing? here is housing resources in Tampa Bay.
beware of scams: This is the method Fact Check Rental List.
Keep updating: Sign up for our free weekly Gulf Business Communicationsfeaturing insights on the economy, real estate and local businesses.
Tampa Bay Housing Boom: 10 voices from the front lines.