Why Are Condo Associations Refusing To Comply With Florida's 2025 Deadline?
In this latest issue of the Miami Condo Market Intelligence Report™, we examine why some condo associations are refusing to adhere to some of the revisions of the Florida Condo Law.
Volume 2024, Issue 38 (Subscribe here)
This week’s Miami Condo Market Intelligence Report™ newsletter examines why some condo associations are refusing to comply with the looming deadline before Florida’s 2025 Condo Association Financial Cliff.
This is not to be confused with condo associations that are attempting to adhere to the law but struggling to do so due to the lack of experts available to complete the state-mandated Structural Integrity Reserve Studies (SIRS) before the end of the year.
“I've got clients that are saying, ‘I'm not complying with any of this,’” said Jose Pazos, the Founder and CEO of A-Smart Cam LLC management company in Miami during a recent interview on the fourth episode of the ”Special Report: Florida’s 2025 Condo Association Financial Cliff” podcast series. “‘Find a way around it because I'm not complying.’ It doesn't matter what you tell them.”
Any Florida condo that is at least three-stories tall and built before July 2022 is required to complete a SIRS by Dec. 31, 2024. The study - which must be conducted by licensed engineers, architects and reserve specialists - evaluates the safety of condo buildings and allocates a budget that is necessary to ensure the structures are safe.
This is creating a supply-chain issue, of sorts, as there are reportedly not enough engineers, architects and reserve specialists to conduct the studies at Florida’s nearly 28,250 condo associations with more than 1.2 million units.
For context, the tricounty South Florida region of Miami-Dade, Broward and Palm Beach has nearly 13,000 condo associations and about 610,000 units, according to a recent report.
Watch A Clip Of The Interview
The entire conversation between Miami Condo Expert Peter Zalewski and Jose Pazos of A-Smart CAM property management is available at this link.
Pazos said condo board members are betting that Florida Gov. Ron DeSantis (R) will call a special session of the state legislature or issue some order that provides relief for associations.
“They believe that the governor somehow is going to remove it,” said Pazos, whose firm handles the administrative responsibilities of more than 6,000 residences governed by condo and homeowners associations in Miami-Dade and Broward counties. “It's not going to happen. It's all about the mentality. Eventually, these folks will be taken out. These folks will be dealt with.”
Pazos said there will likely be administrative and possibly even criminal consequences for the condo association board members who refuse to adhere to the revised Florida Condo Law.
Some Florida condo associations could even be forced into receivership where a court-appointed representative seizes management control of the community.
Before the court or state regulators can - or will - potentially get involved, the market is likely to penalize these associations in the form of lower valuations on units, Pazos said.
“There's consequences to this,” he said. “You know, insurance carriers will drop you. Mortgage brokers? You're not going to get a mortgage for a condo. You're going to be limited to cash buyers.
“You're going to affect the value of everybody's unit because of your decision. These people don't care.“
Pazos added, “For investors who are the ones that are listening to this, you have to be very cautious but there's great opportunity every time there's a crisis.”
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 understand 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 now, the state’s measures were being implemented slowly but that all changes in less than 90 days when many of the measures take effect.
Beginning in January, condo associations in Florida will be 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. News reports are already chronicling condo owners selling their units at deep discounts ahead of the 2025 deadline.
It is a lot of information but we are confident our reports will assist you to better understand current market conditions in South Florida.
It is worth noting that we are sharing a portion of our research for free with subscribers to our newsletter and readers of CondoVultures.com.
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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 Market Investing Club™
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This information is believed to be accurate and complete but cannot be guaranteed or warranted.
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