Condo inspection laws need amending to avoid catastrophe

The tragic collapse of the Champlain Towers South condo in Surfside in June 2021 was a defining moment for Florida. Ninety-eight people died, and the devastation rippled across communities throughout the nation.

In the wake of that terrible event, condo owners and condo associations began to examine their practices of building inspections, maintenance work and maintenance reserves. And widespread support for stricter regulations and transparency to ensure condo safety led to new state laws that will do a lot to prevent future catastrophic problems in condo buildings.

But as we approach the Dec. 31 deadline for the first round of inspections mandated by those laws (SB 4-D and SB 154), it is clear they have created their own set of problems, and the state needs to reassess its approach.

Those two laws (SB 4-D, passed in May 2022, and SB 154, passed in 2023) made several changes. They require that all Florida condos more than 30 years old and taller than three stories undergo milestone inspections by Dec. 31, 2024. If significant structural issues are found, further inspections and prompt repairs are required, or the building could be deemed unsafe. 

The statutes also abolished a portion of state law that permitted Florida’s condominiums to continually defer needed improvements to their buildings if their associations voted they couldn’t afford to make them.

Precarious position

Both of those changes seem sensible, but they did not recognize there many condo owners and buildings that have no feasible way to pay for those inspections, to say nothing of the needed repairs that these inspections identified. 

As Dan Lobeck, a Sarasota-area condo association lawyer who has represented hundreds of associations told the Sarasota Herald-Tribune, lawmakers created an “impossible task with an impossible deadline.” He also “compared it to fire sprinkler mandates passed in 2004. The state law that requires high-rise condo buildings to have the life-saving equipment installed in older buildings has been delayed twice since it passed, with the new deadline to comply set for January 2024.”

However sensible it may be that all condos get inspected, there must be a realistic path to accomplish what the state law intends. For instance, because of the new laws, the demand for inspections has been immense, but the supply of qualified professionals is limited. This bottleneck has placed condo associations in a precarious position, forced to comply with a law that may bankrupt them. 

The costs of these inspections and subsequent repairs identified in them are solely the responsibility of the condo owners, many of whom are seniors on fixed incomes, making it impossible for them to pay the costs.

To be certain, condo owners and associations that deferred maintenance are reaping what they sowed. But because state law allowed deferred maintenance, until it didn’t, new state rules to fix the problem need to be realistic about how to get the inspections and repairs done. The money to pay for that doesn’t just appear because of a new state law. 

If we cling to the current unfeasible timeline and approach, the consequences will be plummeting values for condos, huge spikes in maintenance fees, many people fleeing those units, few buyers to buy them and possible massive problems with empty and abandoned condo buildings. 

Condo prices in Sarasota have been fairly stable over the past few years, perhaps reflecting few buildings with serious deferred maintenance, but statewide the impact is appreciable. We have seen many units recently dropping $150,000 or more in value. 

Meanwhile, insurers are less inclined to offer coverage for older buildings, especially those with structural deficiencies, or are dramatically increasing premiums, on top of recent years of premium hikes because of hurricane risks. This lack of insurance options makes it even more difficult for condo associations to secure the necessary funds for repairs or even maintain basic operational insurance.

Recent condo buyers are likely to be the most impacted by these developments. Unlike legacy owners who deferred repairs and benefited from lower fees, these buyers now face severe financial challenges. The sudden need for expensive repairs or the potential devaluation of their properties could leave them underwater on their mortgages and facing foreclosure. Worse, they may be forced to sell at a loss or, in extreme cases, face displacement if their buildings are deemed unsafe.

As one condo market expert recently told the Business Observer: 

“I think it’s naturally going to cause a migration. You know, if you’ve got folks that can’t afford to live in the place, they’ve got to go and find somewhere else. And as we are already hearing, in the current economic environment, buying is not an option and renting as well.

“What do you do if you’ve lost your original purchase, that two-bedroom, two-bathroom condo that was affordable five years ago for $300,000? What are you doing now if you’ve got to sell it at a $100,000 hit, and you’re barely breaking even? It’s a quandary for a lot of the fixed-income folks in our state.’"

Other outcomes

Despite the negative impact, there will also be positive outcomes for developers and future buyers. Developers may acquire and rehabilitate distressed properties, revitalizing communities and upgrading housing stock. Future buyers will benefit from increased transparency and disclosure requirements, ensuring that the structural integrity and financial health of buildings are more thoroughly scrutinized and maintained. This shift toward greater oversight will ultimately lead to a safer and more stable real estate market.

However, uncertainty remains about how these requirements will play out in practice. No one knows how many condos will be affected; the scope of the assessments; or the broader impacts on the market. 

The Legislature would be wise to maximize its options, acknowledging that the effects of this law are already reverberating through the market. This uncertainty calls for a cautious and flexible approach, ensuring that the law’s implementation mitigates the negative impacts wherever reasonable.

Additionally, the Department of Business and Professional Regulation (DBPR), which oversees the enforcement of these regulations, is likely overwhelmed by the volume of issues arising among condo associations. The DBPR needs more resources to address these challenges effectively.

Given these dynamics, the best course of action may be to stay the course but with eyes wide open. Transparency and mitigation must be central to our approach. 

The Legislature should host a Special Session to delay penalties for one year and conduct a thorough study during the session starting in March. We must balance the need for safety with the time required to evaluate the law in light of evolving circumstances.

The memory of those lost at Champlain Towers should drive us to make Florida’s buildings safer, but it should also remind us of the importance of preserving the communities that call these buildings home. 

By keeping condo owners and the public fully informed and making necessary adjustments, we can protect the physical safety and financial well-being of condo owners while navigating these challenges more effectively, without blowing up Florida condo associations.

Jeffrey Brandes is president of the Florida Policy Project and a former state senator from St. Petersburg. Adrian Moore is vice president at Reason Foundation, lives in Sarasota and writes a monthly column for the Sarasota Observer, sister paper of the Business Observer.