If you’re considering buying a condo in Florida, then you’re gonna wanna pay attention to this video.
Everyone saw what happened in Surfside a few years ago, and because of that tragedy, the state of Florida recently passed a law that is now starting to massively change how condos are managed and the process of buying a condo in Florida.
Hey, my name is Alex Kaufmann and I’m a real estate agent in Miami Beach . I’m gonna be talking about some of the massive changes that are coming to the condo market in 2023 and in 2024 in Florida.
So whether you’re already a condo owner or you’re thinking about buying one, make sure you watch this video until the end to find out exactly which documents you need to get in order to protect yourself.
So starting in 2025, new Florida state law will require condo boards of buildings that are three stories or higher to set aside money to cover the cost of future major repairs, not for cosmetic stuff like new carpet, paint, lobbies, and you know, stuff like that.
But for major items like plumbing replacement, concrete restoration, impact windows, roofs, et cetera, to figure out just how much money to set aside condo boards are being asked to hire companies to do what’s called a structural reserve study, which analyzes the association’s finances and the potential repair costs.
The study has to be done before the end of 2024, but the new law doesn’t actually state when the required reserves have to be in the reserve account. So there’s a little ambiguity there.
Florida has 50% more associations that do not have the recommended reserve amount than any other state. This is because previously under state law associations could choose to waive reserves and just deal with the problems in the future.
They did not have to collect for them.
Many condo owners decided to do this to keep their monthly payments lower, and the buildings have delayed the necessary repairs and upgrades way longer than they should have.
Either a building collects a small amount of money monthly to put aside for a rainy day, or they do what’s called a special assessment where they do a one-time fee to everyone in the building for large sums of money for a specific project when they’re required.
Usually this special assessment can be paid over a bunch of months or years. And if a seller sells the unit, they’re required to pay that in full, usually from their sale proceeds.
This is what happened in Surfside.
The building that collapsed needed to collect $10M, over $10M, but it kept pushing it off because the people who lived in the building didn’t want to increase their fees.
Now, many of the buildings that had delayed the maintenance and haven’t been collecting money monthly to put aside in reserves are facing major special assessments of 40, 50, 60, even a hundred thousand dollars or more.
There are always the horror stories you hear about buyers closing on a condo and finding out 30 days later that there’s a special assessment for $50,000 and the buyer had no idea and now they have to pay it.
So to prevent that, our team requests all the documents that we would need to determine if there are any upcoming assessments.
Sometimes management companies make this info a lot more difficult to get than it should be, but they are required to give this to the seller if the seller requests it.
So we always put the onus on the seller and the listing agent to get these documents and provide ’em to us before we start doing inspections or spend any money for the buyer.
It is important to get this info upfront. Otherwise, if you’re the buyer, you could spend over a thousand dollars on inspections, appraisals, association application fees, et cetera, only to find out that right before closing, you know, there’s special assessments, there’s issues in the building with insurance, and the deal’s gonna die.
We don’t wanna waste our buyer’s money, so we do this on behalf of our buyers to make sure that they are protected.
Unfortunately, not everyone who buys a condo works with our team.
So if you’ve made the unfortunate decision to have a different realtor, help you buy a condo, make sure you’re getting the following information from the condo association or the seller.
Number one, the declaration of condominium and all of its amendments.
Number two, the articles of incorporation of the condo.
Number three, the bylaws.
Number four, the rules and regulations.
Number five, the association budget.
Number six, the year end financial information.
Number seven, the frequently asked questions and answers document if the condo has one.
Number eight, Condo Association Common Area Insurance for hazard, flood and wind.
And number nine, the minutes of the last four association meetings.
So it’s not enough to just get this information, but you actually have to read through it and make sure you fully understand what it means. This is where a professional realtor can really come in handy.
Most importantly, look through the budget to see how much is being collected monthly towards reserves, and look at the year end financial info. See how much has already been collected and is sitting in an account specified for reserves.
Ideally, you wanna see that an association has at least 10% of whatever they collect every year sitting in a reserve account. Make sure you read the minutes of the condo board meeting to see if they’re talking about any future assessments or other work that needs to be done in the building.
Doing these tedious things upfront and slowing the process down until you get everything can save you tens of thousands of dollars in unplanned expenses and potentially save your life.
For more info about Special Assessments, click this link.
So if you’re thinking about buying or selling a condo in South Florida, we are the condo experts. Make sure you give us a call or shoot us a text or send us an email. We got your back when moving in South Florida.