Higher Assessments Coming Due to Safety Reforms- Miami Herald

Simon T. Garcia authored the firm’s latest Miami Herald Real Estate Counselor” column, which is titled “Higher Assessments Coming Due to Safety Reforms After Surfside Condo Collapse,” and focuses on the growing budgets for many Florida condominium associations and how boards of directors are responding. It reads:

. . . Recent TV news reports in Orlando and Jacksonville focused on how condominium association directors and unit owners are contending with budgetary shortfalls.

The vice president of the Marbella Condominium Association located in Daytona Beach Shores discussed the coming increases in a mid-February report by Orlando’s WESH 2 News. He told the station that “this type of thing is going to be mission impossible for the average condo owner.”

An association financial consultant noted that “this was a wake-up call because what’s been going on was there are millions of dollars in repairs at certain buildings, and the condo associations are hamstrung because you have to either have the reserves or you don’t.”

A similar sentiment was shared just a few days later by an owner at the Rose Creek Condominium in Lakewood with the viewers of News4JAX in Jacksonville over a special assessment requiring some owners to pay nearly $13,000 before the end of June.

“They’re saying because of the new law, that’s what has to be done,” she noted in the news story. “But you know, the problem is that we wouldn’t be in this position now with all these structural repairs needing to be done if they were doing their due diligence for the last 20 years, 30 years.”

A local attorney shed light on the positives and negatives of the financial strains that are now facing Rose Creek and many other Florida communities.

“For people who are buying into a condominium, they will have the assurance that the association and their managers are taking care of the property,” he noted. “So, on the positive side, things won’t get deferred and put off. On the other side, the cost will be reflective of what it takes to do that, so they will go up.”

The attorney further mentioned that owners who fail to pay the special assessment could face the prospect of foreclosure.

Given the similar issues faced by many condominium communities in South Florida, these financial challenges that have been years in the making are sure to continue to arise at properties across the state. In response, associations will need to install highly capable directors who can provide effective leadership and guidance.

The new requirements for reserve studies and funding, as well as increased insurance costs and mandatory engineering inspections, are necessitating difficult and unpopular decisions for special assessments and increased monthly dues. These increases in costs for owners can naturally give rise to dissent and disapproval against board members who are simply complying with their fiduciary duty and making the tough decisions that must be made.

Directors and property managers would be wise to anticipate owners’ questions and concerns by keeping a close eye on the pulse of the community while also taking a proactive approach to maintaining transparency and communications.

When substantial increases are being considered, it is helpful to involve owners in as many board meetings as needed to garner as much understanding and consent as possible for the necessary actions.

Owners who obstinately refuse to accept unavoidable cost increases should be reminded that the association is led by fellow concerned owners who volunteer their time and efforts. They should be encouraged to share their thoughts and ultimately run for a seat on the board of directors in the next election if they are willing and able.
Another option is they could be appointed by the board of directors to serve on the association’s budget and finance committee, which is responsible for negotiating and presenting prospective annual budgets to the treasurer and board of directors. . .

Simon concludes his article which focuses on higher assessments caused by safety reforms by noting that just as with the communities featured in the recent TV news reports, it is likely that many Florida condominium enclaves will face difficult financial decisions in the months and years to come. He writes that they will need highly effective and scrupulous volunteer directors to help lead them through the challenges that lie ahead, and their unit owners should offer constructive participation by attending the board meetings and possibly stepping up to serve as a committee member or director.

Our firm salutes Simon for sharing his insights into these challenges that many Florida condominium associations are facing with the readers of the Miami Herald.