Does Florida Need A Citizens 2.0 Insurance Option For Vintage Condo Buildings?
In this latest issue of the Miami Condo Market Intelligence Report™, we examine the possibility Florida might need to create a Citizens-like insurer of last resort option for older condo buildings.
Volume 2025, Issue 3 (Subscribe here)
For this week’s Miami Condo Market Intelligence Report™ newsletter, we examine the possibility that Florida may need to create a new Citizens Property Insurance-like entity to provide coverage for the thousands of Vintage condo associations that are at least 30 years old in the sunshine state.
For anyone who doesn’t know, Citizens is the Florida-backed insurer of last resort for qualifying homeowners who cannot get coverage from private companies.
Citizens, as it is commonly referred to, was created through a merger of the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA) in August 2002, according to Wikipedia.
The original catalyst that got Florida into the insurance game was the Category 5 Hurricane Andrew that struck South Miami-Dade County in August 1992.
The storm’s devastation - valued at $26.5 billion - resulted in more than one-third of the private insurers in Florida being “bankrupted, while others stopped writing or renewing property insurance policies in the state,” according to Wikipedia.
Fast forward to this week when Florida Gov. Ron DeSantis (R) called a Special Session of the Florida Legislature that is set to begin on Jan. 27.
By calling this Special Session some six weeks before the regularly scheduled March 2025 legislative session, any changes made to the Florida Condo Law by the state legislature would “take effect immediately,” according to the NBC affiliate WPTV in West Palm Beach.
If changes were to be made during the upcoming March 2025 legislative session, the revisions would begin in either July and/or January 2026.
A key focus of this month’s newly called Special Session will be for legislators to search for solutions - or at least partial relief - for cash-strapped condo owners who are being hit by skyrocketing maintenance fees and hefty special assessments in the wake of the Surfside condo collapse.
Much of the unit owner angst is the result of the findings being recommended by licensed engineers and architects in their final reports called Structural Integrity Reserve Studies (SIRS). These critical life-safety examinations were required to be completed by Dec. 31, 2024, under the revised Florida Condo Law.
In the aftermath of the June 24, 2021, collapse of the Champlain Towers South in the town of Surfside on the barrier island of Miami-Dade County, everyone from residents to building inspectors, politicians to bankers understands better than ever the importance of ensuring that no Florida condo building ever collapses again.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida Legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until 2025, the state’s measures were being implemented slowly in hopes of giving condo associations adequate time to prepare.
Beginning this month, condo associations in Florida are now required to start collecting money from unit owners to place into reserve accounts that will be used exclusively to fix, maintain and improve the structural integrity of residential buildings that are at least three-stories tall.
People are dubbing this moment as the 2025 Florida Condo Association Financial Cliff as it is expected to result in significantly higher costs for unit owners. For months, news reports have been chronicling how condo owners are selling their units at deep discounts ahead of the 2025 deadline.
This brings us back to the Special Session scheduled for the last week of January.
What will private insurance companies do if the Florida Legislature decides that condo associations and their respective unit owners should be given an extension to complete their SIRS and/or begin collecting reserves to pay for the necessary maintenance, fixes and upgrades outlined by the experts?
If it is anything like the moment after Hurricane Andrew more than 30 years ago, Florida could quickly find itself in the business of having to insure older condo associations to ensure that unit owners do not default on their existing mortgages and ultimately lose their homes.
It is common for conventional lenders to require condo buildings to carry insurance as a condition to finance units.
In this scenario, it could quickly turn out that the only way to keep some of these older condo buildings afloat - and homeowners in their units - is for Florida to provide the necessary insurance just as it now does for residential units under the current Citizens program.
This is what we are referring to as Citizens 2.0.
Immediately after the Surfside disaster, I said on CNBC that this was a seminal moment for Florida real estate that was comparable to Hurricane Andrew.
So far, I am confident that I can make an argument that I was correct.
A Citizens-like insurance option for Vintage condo buildings in Florida would make it undeniable that the Surfside tragedy was another milestone event that forever altered the real estate industry.
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If you are seeking information on condo resales in South Florida, please visit CondoVulturesRealty.com or call the office at 305.865.5859.
— Peter Zalewski, Founder of the Miami Condo Investing Club™
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Miami Condo Cliff Index™ Update As Of 01/14/25
Here is the latest update to the Miami Condo Cliff Index™ as of Jan. 14, 2025. The index is updated every Tuesday.
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An Insider's Take On State Of Miami Condo Buildings After Surfside Tragedy
Chief Building Engineer Carlos Villanueva of SeeWhyConsultingLLC.com will offer expert guidance and actionable strategies for assessing the physical condition of condo towers, whether you're a resident or a prospective buyer.
The views and opinions expressed in this report is for general informational purposes only. It is believed to be accurate and complete based on current market trends but cannot be guaranteed or warranted as circumstances change without notice. It should not be considered as financial, legal, tax or investment advice. This content should not be relied upon as the sole basis for making any financial decisions. Before making any investment or financial decisions, you should consult with a qualified professional to determine the suitability of any investment or strategy for your individual circumstances and goals.
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