A drone view of Diner Key Marina and residential condominiums at Coconut Grove neigborhood in Miami.Marco Bello/Reuters
Gus Carlson is a U.S.-based columnist for The Globe and Mail.
Snowbirds who own Florida condominiums probably aren’t thinking about tropical getaways this time of year. But there is some good news coming out of the Sunshine State that should make their northern summers a bit warmer.
A recently passed law will give condo residents in Florida – including thousands of Canadian owners – some relief from the high costs of government-mandated building improvements imposed after the collapse of the Champlain Towers South condo in Surfside, which killed 98 people in 2021.
The new law gives homeowners’ associations (HOA) more options for funding repair and maintenance reserves, including low-interest loans and lines of credit, and eases some safety assessments. It also allows residents more flexibility in paying monthly maintenance fees, including the ability to pause payments.
Further, the law extends the timelines for certain repairs to be made and exempts smaller low-risk condo buildings from compliance.
It will also help Governor Ron DeSantis’s administration ease a self-inflicted crisis that has sent condo values plummeting and driven some residents – particularly elderly owners on fixed incomes – out of their homes.
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To be fair, this is more a case of no good deed going unpunished than government overreach. The balancing act Mr. DeSantis undertook to improve building safety without punishing condo owners financially was well-intentioned, but the unintended consequences were disastrous.
After the Champlain Towers South collapse, which was linked to insufficient maintenance of the structure, Mr. DeSantis moved quickly to pass legislation requiring condo associations to have sufficient reserves to cover major repairs and imposing strict inspection and assessment schedules.
It was hailed as an important move to improve building safety and integrity among older buildings and send a strong message to developers who have been building aggressively along Florida’s coastlines.
But to meet the compliance deadline of Jan. 1, 2025, many condo associations scrambled to find sufficient funding. Much of the maintenance and repairs had been done on an as-needed basis, so few buildings had set aside adequate reserves. Inspections were spotty, and there were persistent whispers of corruption in the process.
The most obvious place to go for a quick financial fix: the condo owners themselves. So many condo associations jacked up monthly maintenance fees overnight, sometimes by a factor of 10.
It was not uncommon to hear stories of monthly maintenance fees rising to several thousand dollars – in some cases more than the mortgage payments on the condo units themselves.
The problem was part of a bigger perfect storm battering Florida. Rising interest rates pushed the costs of mortgages to their highest levels in years.
Property insurance costs skyrocketed. Dozens of insurers left the state, and those that remained pushed premiums sky-high, pointing to increasing hurricane activity and aggressive development along Florida’s high-risk coastal areas.
The dynamic served to drive down condo values, as buyers’ wariness rose with the costs of ownership beyond the purchase prices of the units.
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For many retirees and others on fixed incomes, the financial pressure was untenable. Some were forced out of their residences, unable to cover the costs and find buyers willing to snap them up.
Canadian owners have faced an added hurdle: a weak Canadian dollar, hovering around US$0.70, that has added a 30-per-cent premium to every cost.
South Florida, which has the highest density of condos in the state, has been particularly hard-hit. Condo owners on the southwest coast – from Naples to Tampa Bay – felt the added pain of two major hurricanes last year. Repairs from those storms are still not done.
The new law won’t solve the problem completely – or immediately. Mortgage rates have eased a little but remain high; insurance, to the extent it is available, is still expensive; and monthly condo maintenance fees won’t come down right away.
It will also take some time for the condo market to recover its value, as the changes proposed by the law work their way through the system.
But it is a start. And whether or not you like Mr. DeSantis, at least his administration concedes that the initial law in 2022 was an overreaction to the Champlain Towers South tragedy, and this latest move is an earnest attempt to get back on course.
As State Senator Ed Hooper said when the new law was unveiled last week: “Now it’s time to make the change. Elderly people are losing their condos because they could not afford to make the increase in their monthly HOA fees. That’s just wrong.”
You don’t get that kind of mea culpa from politicians every day.