Last May, Florida Gov.
Ron DeSantis passed legislation mandating emergency reserve
funds for condominiums statewide after the tragic collapse
of the 12-story Champlain Towers South in Surfside.
While lawmakers hope the condo law overhaul will protect
residents from similar events, some market experts have
warned that the mandatory reserves could destroy Floridians’
wallets.
"These costs, they get
passed on to the consumer in one way or another," Pinion
Enterprises founder and CEO Joe Pinion said on "Mornings
with Maria" Monday. "Here comes the budget buster: this
stipulation [was] put in place by Gov. DeSantis to secure
lives, but it's going to end up bankrupting a lot of people
that didn't see this 50% hit coming."
Florida's Senate Bill SB 4-D includes requirements for
preventative maintenance and construction inspections on
buildings three stories or higher, and for condo
associations to collect and maintain structural integrity
reserve studies and funds.
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 will contribute to the reserve
together through an association-approved payment plan.
To fund a reserve pool of money, 50% or
more of the total cost for a condo’s repairs must be
maintained. |
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A 'Mornings with Maria' panel discusses how
Florida's newest safety requirements for high-rise condos
and apartments will impact homeowners. |
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Pinion explained how
this could financially hurt landlords and Airbnb hosts, who
may now have to pay additional housing costs under the new
law.
"You're talking about people who have the Airbnb that they
thought, ‘Oh, all these people with their Airbnb business,
this would be great, I was going to rent this property or
I'm going to own this property, and then the actual income
is going to eclipse what I have to either pay for that
monthly rent or that monthly mortgage,’" the CEO explained.
Macro Trends Advisors founding partner Mitch Roschelle also
cautioned that the reserves law will "create a dichotomy"
between high-rise condos 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 that we're seeing in
Florida... after the Surfside catastrophe, people don't want
to be on condominium boards anymore because it's a
tremendous amount of liability."
"You're volunteering to give back to your community,
basically, and you're potentially liable if you decided not
to repair the seawall when it was supposed to be repaired,"
he continued. "So there's going to be a lot of shakeups down
in Florida."
Champlain Towers was 40 years old and in need of major
repairs when it collapsed on June 24, 2021. It's led to
officials looking at the need to ensure other aging
structures are safe, as 98 people were killed in the
tragedy.
At the time, the Real Property, Probate and Trust Law
Section of the Florida bar task force said 912,376 Florida
condo units housing more than 2 million people are at least
30 years old, including more than 105,000 older than 50
years and nearly 328,000 built between 40 and 50 years ago.
Overall, Florida is reportedly home to more than 1.5 million
condo units operated by 27,599 condo associations, an
Associated Press report said.