Condo Crisis

When Florida Sen. Jennifer Bradley first checked out the condominium scene in Miami-Dade County, she called it the “wild, wild west.”

It’s true, the horror stories don’t run short here. Tales of mismanagement, profiteering and deferred repairs run amok. Recertification laws passed after the 2021 Champlain Towers South collapse in Surfside, albeit necessary, have only made things more complicated, either by revealing foundational issues underlying decades-old buildings or by providing an opportunity for corruption to boom.

Either way, condo life isn’t as pretty as some may think. That’s why lawmakers are looking to give it a total makeover.

If Gov. Ron DeSantis puts pen to paper on a couple of condo bills passed during this year’s legislative session – and Sen. Jason Pizzo certainly thinks he will – then there could be a lot in store for Florida’s more than 1.5 million condo units, more than 20% of which are found in Miami-Dade.

Those changes would include strict regulations for condo association board members, state-funded hurricane inspections and repairs, and a general wave of transparency over how maintenance projects are solicited and managed. Cue sigh of relief now.

Fixing a Broken System

Downtown Miami condo owner Christine Michaels has lived in three different buildings in the area over the past 24 years, and though she has her success stories, she doesn’t sugarcoat the worst of it.

“Condo corruption is the new cocaine,” Michaels said.

If that’s the case, then HB 1021 is the new war on drugs. If signed into law, the new legislation would serve as a complete overhaul of condo regulation starting July 1.

Bradley, who represents several Florida counties just west of Jacksonville, headed down to Aventura last month to explain the provisions outlined within the new “Community Associations” bill. She introduced its companion bill at the Senate level, despite having only about two condominium buildings in her district.

The bill outlines a series of transparency provisions, which include requiring conflict of interest disclosures by associations when approving contracts with the community association manager, the creation of a website facilitating public access to all official records for condominiums with 25 units or more, and at least four open-forum board meetings annually. Condominiums that must create websites hosting official records have until Jan. 1, 2026, to do so.

The bill also sets new guidelines to follow when approving contracts with the community association manager or a relative of such with a potential conflict of interest, which would require an affirmative two-thirds vote only after having solicited multiple additional bids from third-party providers for services exceeding $2,500.

“I think if you’re getting your unit renovated, you’ve got horror stories about your master association president giving millions of dollars to contractors, and all of a sudden new cars, new boats and new units are ending up in the building,” said Pizzo at the March 20 legislative update in Aventura. “I think that should be illegal and they should go to jail.”

The bill also expands the jurisdiction of the Florida Department of Business and Professional Regulation (DBPR) and provides $7 million to the agency to hire 65 additional employees to investigate complaints and implement new provisions. Associations suspected of willingly failing to provide records, soliciting bribes, accepting kickbacks or participating in fraudulent voting activity would have to be referred to law enforcement and charged with criminal penalties under the new legislation.

Unit owners who report complaints to government agencies or law enforcement or make public statements critical of the association would further be protected from retaliation, either in the form of increased assessments or civil action. Associations cannot spend funds to pursue defamation or libel suits against unit owners under the new legislation.

Granted, not all associations are corrupt. For those with good intentions but inadequate experience, the new bill requires that board members undertake annual training on inspections, reserve studies, elections, recordkeeping, financial literacy and more.

Michaels said that formerly, the status quo meant spending half a million dollars to only attempt to go after shady board members. Relying on DBPR with its lack of jurisdiction was basically out of the question, she added. Now, she believes, the new regulations will help desperate unit owners.

“Just because we live in a nice building doesn’t mean we were all born with silver spoons,” said Michaels. “Some of us came from humble beginnings and worked super hard to get where we’re at. We want to protect our investment.”

Hurricane Funds for Condos

The Florida Legislature also passed HB 1029 this year, which creates the My Safe Florida Condominium Pilot Program. Sponsored by Rep. Vicki Lopez, a resident of Brickell, the new legislation would allow condominium associations to acquire free hurricane inspections and apply for up to $175,000 for needed repairs.

The bill sets aside $33 million for the program, a number that Lopez said was the product of negotiations within the Legislature. She believes it’s enough for about 400 condo buildings to receive assistance.

Smaller buildings may have the advantage under the first-come, first-served pilot program, which requires a unanimous vote by all unit owners before an association can apply for the funds. That’s why Lopez suggests getting the word out now, even though applications may not be available until late summer.

In Michaels’s building, which has more than 500 owners, working on a campaign requires taking time off from work, she said, even if it is an easy sell.

“It’s hard to get people to vote and take the time … A lot of people are investors, they don’t live here, they live abroad, people are busy,” she said.

Lopez and Pizzo both admit the requirement for a unanimous vote could pose a bit of an obstacle, although, Lopez notes, “you can’t fix half the building” either.

Any data or feedback retrieved from the pilot program – including how many associations applied, how many struggled to receive a unanimous vote, how well the $33 million appropriation fared – would all facilitate legislators to advocate for needed changes to the program in the future.

Cough Up the Cash … Or Move Out?

This year’s successes are only the continuation of a focus on condo transformations pushed through the Legislature for years. Right now, condo buildings throughout Florida are likely in the middle of conducting their structural integrity reserves studies (SIRS), the requirement for which was signed into law just last year.

According to the law, which was also sponsored by Bradley, all SIRS must be completed by the end of 2024. The study must be performed by a qualified professional and should include assessments for roofs, load-bearing walls and other primary structural systems, fireproofing and fire protection systems, plumbing, electrical systems, waterproofing and exterior painting, windows and exterior doors, and any other item that has a deferred maintenance expense or replacement cost exceeding $10,000.

Condo associations will have to include cash reserves for each of those eight categories in their 2025 budgets. For those who have continually kicked the can down the road on needed repairs, it could be a lot of money – possibly 50% more than previous SIRS contributions, according to an estimate by Scott Harvey Lewis, founder of engineering consultancy firm Building Mavens.

“How many of these buildings are actually solvent?” asked real estate agent Michael Bordenaro in a YouTube video last month. “How many of them are actually going to be able to continue operating without going bankrupt essentially when these new laws kick in nine months from now?”

There were 18 condominium buyouts across Miami-Dade and Broward counties in 2023. Peter Zalewski, founder of real estate consultancy firm Condo Vultures, has predicted that number could nearly double this year.

“It’s basically the perfect storm for condos right now,” said Bordenaro.

The question is whether that “perfect storm” will pass to reveal blue skies. According to Bradley, there’s a method to the madness.

“We now have set associations on a path to have healthy reserves so that the people that live there for a few years do not get to kick their expenses to whoever’s moving in,” she said. “That upkeep is going to lead to better maintained buildings, lower insurance premiums, and a bit more comfort in the property insurance market that lending and insuring condos is a good risk, because they know that the buildings are maintained, they know that they have reserves.

“You can blame me if you want for the increased costs. Whether we passed a bill or not, costs were going up because the private market saw what we all saw … A reckoning was coming, and I think we have streamlined that reality that we’re seeing now.”

New Laws Impacting Condominiums

• HB 1021 (2024) sets strict standards for condo associations to achieve transparency and end corruption.

• HB 1029 (2024) creates a pilot program providing condominiums with state funds for up to $175,000 in repairs.

• SB 154 (2023) expands requirements for condo association reserves in 2025.