DeSantis Signs Law: Up To 1.5 Million Florida Condo Owners Could Be Forced to Move

Good intentions come with unintended damage, and now lot of people are being force to sell their properties, even though selling will be hard too since the new buyers will have to shoulder the cost of the new laws. And we thought housing was already too expensive in Florida.

DeSantis Signs Law: Up To 1.5 Million Florida Condo Owners Could Be Forced to Move
https://www.msn.com/en-us/money/rea...64182a0b82d4ce68bf108e480c8250f&ei=16#image=8
The Florida state legislature is committed to enforcing these new regulations, leaving condo owners with little choice but to comply. Failure to address these requirements will not be an option

A financial crisis looms for many Florida condo owners as the deadline approaches. The new regulations are expected to drive up association maintenance fees, potentially leading to financial strain for many. Condo owners have a limited time to take proactive measures to avoid falling into financial hardship as a result of these changes.

Facing rising costs and potential financial ruin, many condo owners may need to consider selling their units. While selling individually may not be feasible for many due to distressed building conditions, selling collectively to a developer could be a viable option.

 

I didn't see from the link what the new regulations are.

 

It sets strict regulations to condo associations of any multi-family building (3 floors or higher) that will force them to conduct all kinds of inspections and ensure HOA reserves are fully funded, plus comply with a long list of other things. The requirement to ensure reserves are fully funded is the part which will force many to sell their property, because their HOAs are way behind in their reserves and the only way to get up to date is to collect from the condo owners. Some buildings are looking at over $100 000 per condo unit (the example in the article was $134,000 per unit) in assessments, and not everyone can afford that, especially when they get nothing in return.


HB 1021 Florida
CS/CS/CS/HB 1021 — Community Associations
https://www.flsenate.gov/Committees/billsummaries/2024/html/3512

 

Well, all the safety regulations are a good idea, but maybe they should be phased in to make sure there aren't the bad effects you mention.

 

Yes, all this is because of that building collapse few years back. Like I said, good intentions often come with unintended consequences, although in this case the consequences should have been quite obvious.

There is another controversial part in it regarding condo-hotels, and they are already suing the government over that one.

 

Story starts with slide 1 here: https://www.msn.com/en-us/money/rea...do-owners-could-be-forced-to-move/ss-BB1orJG0

I hate these multi-slide news presentations with interstitial advertising slides.

 

Basically, it brings Florida's HOA rules and regulations into compliance with most other state's wrt to maintenance, inspection requirements,bas well as cash reserves requirements. This law was actually passed a few years ago when that building partially failed because the roof top pool was leaking for decades but the HOA kept deferring maintenance because elderly apartment owners hoped they'd die of old age before a critical failure happened.

That is the story with a lot of beach front high rises in Florida. Most were built from the 1960s to 1990s and sold to elderly retirees as a warn place in the sun to spend their golden years. Retirees liked that taxes were low and wanted to keep HOA fees low as they are on fixed incomes. Fast-forward to the 2020's and now many of these buildings are 50 years old with decades of deferred maintenance. Someone was always going to get stuck the having to pay for all that deferred maintenance.

The new law which was passed two years ago but which took effect this year says no more kicking the can down to road and that HOAs have to have engineers inspect the buildings, do needed repairs, and have a legally binding plan to rebuild cash reserves to fund the HOAs legal requirements. So a lot of elderly retirees are going to get hit with large but necessary costs. The smart ones started selling when the law passed two years ago.

 

Stand by for a big drop in real estate values in coastal Florida.

 

Unfortunately yes, and that's not the only reason. Home builders built too many new houses and now they are not selling. For-Sale listings are up 300%.

As for this condo thing, it's not just coastal Florida, but any older condo building in Florida, including places like Orlando. Of course vast majority of Floridians do live near the coast.

Florida Housing Market 'Getting Crazy' as Inventory Triples
https://www.msn.com/en-ph/money/rea...h4pEI1U4rLJPxTfgM0_aem_ZmFrZWR1bW15MTZieXRlcw

"This housing market downturn in Florida is getting crazy," Gerli said in a post. "There's ZIP codes where inventory has nearly tripled from its level last year."

He went on to say that the rise of listings was a "sign of a major selloff. And indicates prices are likely to drop in the [second half of this year.]"

 

The thing is this law was originally passed several years ago and kept getting delayed (now it has again been delayed until the end of the year) to give HOWs more time to take corrective measures and to get into compliance. Some have used the extra time to raise HOA dues and start building cash reserves and to start the process of getting into compliance while others have refused hoping for ever more delays.

What often happens is the elected HOA board votes to raise HOA dues to start building reserves to pay for inspections and deferred maintenance but then elderly homeowners vote them out saying they can't afford to higher dues as they are retired on fixed incomes. At the end of this year that all ends. The smart ones already sold and even the semi-smart ones are now selling. The dumb ones are just sitting and waiting and they are going to get hit with a huge bills for 30+ years of refusing to do basic maintenance on the building.

 

Believe me, without a HOA this would never be a problem.

 

As an attorney whose practise involves interacting with the real estate market quite often: Its not that they built too many houses. Its that they built too many high dollar houses and not enough starter home style places.
You have a lot. Do you build a mansion on it or a starter home? Mansion profit = 500k. Starter home profit = 75k. Seems like a no brainer until you realize that someone has to BUY that mansion with actual money. No worries if credit is profligately available to every tom dick and harry. Once that dries up? Not so profitable anymore.

 

How do you propose to organize maintenance of the common areas of a several story tower style building without some form of association? I don't like them either, and I certainly would not buy a condo for that reason or a home in an HOA, but a home in an HOA and a 6 story tower on the beach with 30 units are two entirely different things.

 

I am not sure this is an issue with over building. Most of the homes built since 2008 (the great recession) have been SFHs which are completely unaffected by this law or have been infill condos in urban areas most of which are three stories or less. Even new high rise towers are not really effected that much because those buildings are relatively new and so don't have decades of backlogged deferred maintenance. The buildings affected are older highrises not always but often beach front high rises often built from the 1960s to 1990s. Specifically, it is older buildings which have HOAs which decided not to do basic routine maintenance for many years (sometimes decades) because members simply refused to pay for it.

So, yeah, badly managed older buildings are very much affected and members who spent years and years refusing to do basic maintenance and refusing to use the grace period to start getting into compliance... Well, they are going to have to pay the piper now. Those are the ones trying to sell to late which are now hitting the market.

 

How? How do you pay for common building repairs and maintenance in high rise towers without an HOA? Please explain in detail how that work magically gets done without everyone paying in.

 

The average age of a highrise in Florida is 42 years. The shiny new buildings in Miami and Ft Lauderdale don't have the problem, but the HOA fees in the new ones is around $1000 per month for 1 br condo, so they have been paying from Day-1.

 

No what's going to happen is most of these towers effected are going to get sold at a loss, some developer is going to knock most of them down and rebuild them because they're that screwed up.
The marginal cases might pull it out and make it through, but the idea of this is to turnover the owner with fresh funding so they bring it all up to code.

 

I doubt it will be a majority. Yes, the bad cases will get bought for several million dollars and replaced by newly constructed highrises but the majority? Capital is no longer cheap and interest rates are up so most will get rehabbed to be just within compliance and the owners who can't afford the higher HOA fees will either sell or get foreclosed on. Those who can afford it will buy because they want beach front apartments.

The vast majority will be salvageable and it will be far cheaper to repair than to demolish them and start over with new construction. That is just the reality in a high interest rate environment.

 

You don't get it. Whoever buys it has to get it to and keep it up to code.
If it gets foreclosed on? Same rules apply. They're all getting torn down or fixed up, and in many cases it will be cheaper to knock it down and redo it. That's what happens when you don't do maintenance on sea front properties for decades, they fall into impossible states of disrepair.

 

Except virtually none will be foreclosed on. What will happen is they will raise the HOA fees high enough to pay the repair costs plus, in some limited cases, a special assessment to cover costs. The amount in the O.P. would legally be covered under an special assessment needed to pay for repairs. Most will be much less than what the O.P. reported. It will be a very rare case which requires demolition

So, I agree, one of us is not "getting it", but it is not me. The vast, vast, vast majority of these high rise condos will simply get repaired at market rate and the vast majority of owners will simply pay it. Those who cannot afford to pay it, who will be a tiny minority, will sell. That is the reality.

 

Bidenomics. Lots of folks are losing their homes if they have a variable mortgage rates.

 

This sounds more like the type of law progressive politicians would pass than it is specifically something conservatives would be inclined to pass.

So how then can you, who presumably are on the Left, try to use this against a Republican governor, clearly with the goal of trying to score points against conservatives?

That would be like a serial rapist trying to criticize a man who pinched a woman's bottom without her permission. (to try to illustrate an analogy)

But this law, in essence, just forces condo building associations to have to collect the necessary amount of money for future repairs.
There's nothing actually so unreasonable about that.

Florida is passing this law because condo dwellers were facing sudden surprise huge bills when a problem with the building was discovered. So the true costs of living in a condo were sort of hidden from the buyers, and then pulled out on them at the last moment, years later when they weren't expecting it.

The problem is, people are discovering they can't afford to live in these condos. At least they can't afford to live there and pay for the necessary maintenance to keep the aging buildings safe.

 

We all know that developer would just knock over the building and build an even taller one in its place. And those new units are going to be even more expensive.

 

DeSantis is not conservative, nor progressive, he is authoritarian populist.

I'm not on the left, DeSantis is not conservative, and its not about scoring points. Stop projecting.

Eh......?

$134 000 per unit assessment is considered unreasonable by some people, but maybe not by you.

 

This is one the things on the long list of things of why I've always thought it would be a terrible idea to buy a condo.

I'm really having a hard time feeling any sympathy for these people. It seems to me they literally signed up for exactly this kind of problem.