last May, Florida Governor Ron DeSantis passed a law mandating emergency reserve funds for condominiums across the state after the tragic collapse of the 12-story Champlain Towers south of Surfside.
While lawmakers hope the condominium law overhaul will protect residents from similar events, some market pundits have warned that reserve requirements could destroy Floridians’ wallets.
“These costs, they’re passed on to the consumer in one way or another,” Pinion Enterprises Founder and CEO Joe Pinion said on “Mornings with MariaMonday. “Here comes the budget breaker: this stipulation [was] put in place by Governor DeSantis to secure lives, but it will end up bankrupting a lot of people who didn’t see that 50% hit coming.”
florida Senate Bill SB 4-D includes requirements for preventative maintenance and building inspections on buildings of three or more stories, and for condominium associations to collect and maintain structural integrity studies and reserve funds.
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Associations are required to perform a reserve cost analysis every 10 years for repair costs that meet or exceed $10,000. Associations must then mail their structural integrity studies to condo owners, who together will contribute to the reserve through an association-approved payment plan.
To fund a cash reserve, 50% or more of the total cost of condo repairs must be maintained.
Pinion explained how it could hurt financially Airbnb owners and hostswho may now have to pay additional housing costs under the new law.
“You’re talking about people who have the Airbnb and they’re like, ‘Oh, all these people with their Airbnb business, that would be great, I was going to rent this property or I’m going to own this property, and then the income real is going to eclipse what I have to pay for this monthly rent or this monthly mortgage,” explained the CEO.
Macro Trends Advisors founding partner Mitch Roschelle also warned that the reservation law will “create a dichotomy” between high-rise condominiums and single-family homes in Florida.
“It’s going to make single-family homes potentially more desirable because you can control your own destiny,” Roschelle said. “The other thing we’re seeing in Florida…after the Surfside disaster, people don’t want to be on condo boards anymore because it’s a huge responsibility.”
“You’re volunteering to give back to your community, basically, and you’re potentially liable if you decide not to fix the seawall when it was supposed to be,” he continued. “So there’s going to be a lot of upheaval in Florida.”
The Champlain towers were 40 years old and needed major repairs when he collapsed on June 24, 2021. This has led officials to consider the need to ensure the safety of other aging structures, as 98 people were killed in the tragedy.
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At the time, the Florida Bar’s Real Estate, Estates and Trusts Task Force Law Section said 912,376 condominium units in Florida more than 2 million dwellings are at least 30 years old, of which more than 105,000 are over 50 years old and nearly 328,000 were built between 40 and 50 years ago.
Overall, Florida is home to more than 1.5 million condominium units operated by 27,599 condominium associations, according to an Associated Press report.
The Associated Press contributed to this report.
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