Being proactive a must for condo associations
The horrific tragedy of the Champlain Towers South collapse in Surfside has impacted condominium associations for similar towers nationwide, as many condo owners across the country are now raising questions about their own buildings’ structural safety and financial health.
In addition to the shared grief and remorse with the families and friends of all the victims, those who live and work in aging condo buildings have also begun to feel more concerned about the funding of reserve accounts for major repairs and replacement projects. All buildings deteriorate over time, so associations should always set aside funding on an ongoing basis to mitigate and remediate any structural elements that require attention.
As they begin reassessing their associations’ commitments, condominium boards of directors will generally try to avoid special assessments demanding additional funds from all the unit owners. They will need to consult with legal, financial, engineering and insurance professionals to strike a balance between the funding of reserves and the use of special assessments when they become necessary from a life-safety standpoint.
Condominium association directors and unit-owner members would also be well advised to come to terms with the new reality that future buyers will now have many more questions and concerns than in the past about the financial health of the association and current state of the actual property from the ground up.
Some will surely request that sellers provide them with the minutes from prior board meetings, information on any past or planned special assessments, the status of renovation and remediation projects, past changes to monthly assessments over the years, the findings of past reserve studies and the status of current reserve funding. They are also now more likely to conduct a thorough visual inspection of the entire property prior to making a written offer.
Associations should also take note of the fact that reforms after Surfside are sure to come. At our law firm, we have been calling for new regulations that would require engineers to report serious conditions to local building departments, as such red-flag warnings would take discretion out of the equation and immediately trigger building inspections, permits and repairs.
We are also advocating for new federal/ state government aid and/or low-interest, federally backed loans for condominium associations that must engage in major structural repairs.
My firm partner Ivette Machado Blanch is currently voicing our viewpoints and recommendations as a member of the Florida Bar’s new Condominium Law and Policy on Life Safety Task Force. The group is working to assist Florida lawmakers in reviewing the state’s condominium association laws to develop and recommend legislative and regulatory changes that would help prevent a similar collapse from ever happening again.
The state’s insurance industry will also have a great deal of influence in shaping the coming reforms. Citizens Property Insurance and the other major carriers are already lobbying lawmakers to require greater vigilance and funding for structural and life-safety issues by condominium associations and their unit owners.
Nobody likes being asked to pay more for the services they are already receiving, but inflation and the cost of living are always rising. Condo boards and the unit owners they represent should accept the reality that major repairs and remediation projects are unavoidable as buildings age.
So it is essential that they reserve enough funds for these critical projects and make structural and life-safety issues a priority over aesthetic renovations. If that requires yearly increases in an association’s monthly maintenance fees and levying special assessments over the course of several years, then such adjustments must be viewed as necessary to maintain property values and, most importantly, keep residents safe.