Florida’s new condo laws are controversial, but that’s why they make sense

Nearly a million Florida condo owners are facing an important deadline at the end of the year. That’s when a law passed in 2022 requires most Florida condo associations to submit inspection reports on their properties and collect money from owners to pay for any necessary repairs.

Condo owners report that the new condominium rules are increasing fees and creating awkward assessments.

The media has received the wrath. News articles about condo owners “facing financial turmoil due to new building safety regulations” and how “debt is crippling homeowners” lead readers to believe that Florida lawmakers have imposed higher taxes on seniors and those on fixed incomes.

This is very misleading.

As research director at the University of Florida’s Bergstrom Real Estate Center, I suggest it’s important to put emotions aside and see what these laws are trying to accomplish.

Safety test

The state’s condo law of 2022, known as SB-4D, and its 2023 successor, SB-154, establish three main requirements: licensed inspections, reporting and disclosure, and accounting.

Importantly, these laws are not tax laws that directly increase housing costs for condo owners.

But by requiring more inspections, transparency and financing for repairs, many owners will face far greater costs than they have paid in the past. These new costs simply reflect more of the actual cost of living in a condo near the beach.

Under the rules, all buildings used before 1992 must complete a landmark inspection by December 31, 2024. This is an inspection of the building’s structural integrity by an architect or engineer.

The requirement also applies to buildings at least 25 years old that are within 3 miles of the coast.

If a landmark inspection finds a potential structural problem, an inspection is required to determine if structural repairs are needed. If so, the owners must approve this amendment without the option of repeal by vote.

If there is no visible damage, then the organization must report and submit the results, and that concludes the requirement.

Prior to SB-4D, landmark assessments were not required except in Miami-Dade and Broward counties. Now, they are required nationwide and must be reported to local authorities, all unit owners, and the public for consumer information.

Enough savings to fix

The new rules also require building societies to budget and accumulate sufficient reserves to cover the costs of maintaining and replacing parts of their buildings subject to normal wear and tear, such as roofs, elevators and balconies.

History suggests that many homeowners associations struggle to save enough for repairs and maintenance to keep their buildings safe and in top condition.

“Florida . . . more organizations that are considered weak [in terms of funded reserves] than any other state,” Will Simons, head of Florida and Southeast Operations at Association Reserves, which conducts reserve studies for condos and community organizations, told a colleague as part of the research article.

The Champlain Towers South condominium that collapsed in Miami’s Surfside neighborhood in June 2021, killing 98 people, is just one example. Simons’ company completed a housing audit a few months before the collapse and found that the association had very little cash.

The association holds approximately $706,000 in reserves as of January 2021. Association Reserves recommended that the association raise approximately $10.3 million to cover necessary repairs. That means the Surfside homeowners association had just 6.9% of the money it needed on hand.

The true cost of living by the sea

More than 16,000 associations representing more than 900,000 condominium units in Florida of 1.5 million are currently affected by the new rules because these units are more than 30 years old.

Buildings that are adequately maintained and have adequate reserves for future building maintenance will face nothing but more disclosure of inspection reports and continued funding of the reserve.

Many residents, especially retired seniors, find it difficult to adjust to the needs of the subsidy. In response, Governor Ron DeSantis is showing some form of relief for owners facing financial difficulties with these regulations.

The frustration is understandable, as current residents are being asked to simultaneously finance 30 years of the previous recession and set aside savings for the next 30 years. However, policy makers simply set guidelines for condo owners to establish themselves. Properties facing the biggest financial shock from SB-4D are, by definition, poorly maintained or underfunded.

It is important to distinguish the purpose of these laws from possible overreaction or fraud from charity organizations, which is an existing concern. House Bill 1021, which was signed into law in June 2024, focuses on agency management to manage this type of surveillance.

Concrete waterfront buildings, roofs, windows and elevators have a limited lifespan. These items need to be repaired or replaced to protect the safety of residents. The new rules make real condo costs more transparent to unit owners and buyers.

Bill Hughes is director of research at the Kelley A. Bergstrom Real Estate Center at the University of Florida.

This article has been republished from The conversation under a Creative Commons license. Read the first article.