In the aftermath of the Champlain Towers South condo collapse that killed 98 people in Surfside near Miami in June, the lack of state regulations regarding inspections of mid-rise and high-rise condo towers became clear.
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The downtown Sarasota skyline including Sarasota Bay. |
The supply chain
crunch that's stymied retailers, manufacturers and builders
across the country has also caused condo boards headaches
with increased prices for their own construction projects.
The labor shortage has caused delays in even simple routine
maintenance projects. And more severe weather across the
United States has prompted insurance premiums to skyrocket.
Insurance premiums are skyrocketing
While increased regulation is theoretical at the moment,
insurance premium hikes are already happening.
David W. McMahon, a senior commercial advisor for Atlas
Insurance, said the average increases for Charlotte, Manatee
and Sarasota counties this year have been 16% to 20%.
"But it is not uncommon to deliver a 50%, 60% increase as
you get closer to the water," he said.
He said this is unprecedented, even after the chaotic years
of 2004, 2005 when an unprecedented run of hurricanes
crisscrossed the state.
"I would say this is even worse" than then, he said. "Some
would even say that it is a Hurricane Andrew-level
experience because of all the other things going on."
Insurance rates are influenced by the frequency of
catastrophic events and the severity of those events,
McMahon told the audience of about 100 people.
He listed wildfires in the West, hurricanes that have struck
the Gulf coast and the East Coast, civil unrest causing
property damage in urban centers and even ice storms.
These events have become more frequent and have cost more
money in recent years than ever before.
He also said that Florida represents just 8% of all the
claims in the United States, but accounts for 76% of
lawsuits filed regarding insurance claims.
He called this the social inflation cost, which is also
driving the increase in premiums in the Sunshine State.
McMahon said the Florida Legislature attempted to address
some of the social inflation cost with changes to when and
how people can sue, as well as some regulation on
contractors solicitating customers, but it is not yet clear
if the legislation will be effective in reducing lawsuits
involving claims.
In regard to Surfside, there was an immediate impact to
insurance carriers. Some carriers decided to cancel any
policy upon renewal of any condo building five stories or
more, he said.
Some got out of any developments near water.
"It's a melting pot of differences," he said. " ... When
it's this difficult, I can count almost on one hand those
carriers that are participating. Others, for high-rises, are
running away, but I can't say it enough: If you're investing
in your high-rise, you better keep the data."
He said keeping detailed logs of all maintenance done to the
building can make a difference in finding an insurance
carrier that will issue a policy.
Michael York, business development manager with Forge
Engineering, told the audience he expects some type of
recertification process to be implemented by the Legislature
in the upcoming session. He indicated that recertification
process may be required for buildings as often as every 15
years.
"You'll likely see this come through legislation here
shortly, probably in a 15-year instead of a 40-year and it
will probably be a statewide thing," York said. "So you
better start preparing for that."
Task force recommends changes to state law
The Florida Bar created a task force after the Surfside
condo collapse that finalized a report on Tuesday that it
sent to the Legislature, recommending changes to state law.
That 170-page report included a breakdown of condo units in
the state showing that of the 1.5 million condo units in the
state, 912,000 are 30 years or older.
The report said that could mean as many as 2 million Florida
residents live in a condo that's at least 30 years old.
The report recommends requiring structural inspection
reports for all condo buildings three stories or taller, but
does not specify when those reports should be conducted nor
how often.
The report also recommends limiting the ability for condo
owners to waive reserve fund requirements and increase the
ability of condo boards to levy special assessments on
owners and borrow money to finance needed repairs.
The report has dozens of other recommendations to state law,
including changes to who would be allowed to conduct
structural inspections and rules about disclosure of those
reports.
It is unclear how drastic eventual changes to state law will
be, even after the tragedy in South Florida, as some
politicians have expressed hesitancy fearing going too far
with new regulations.
Attorney Douglas G. Christy, a board certified specialist in
condominium and planned development law with the Law Office
of Douglas G. Christy PLLC, said he believes some
"hardening" of condo laws will happen.
"I think everything is on the table with respect to that
issue," he said, though what emerges from the "sausage
making" legislative process "is anybody's guess."
Bradley F. Rosenberg, a construction defect attorney with
Angius & Terry LLP, said there's likely to be good
legislation, but also some proposed that will not be in
condo owners' best interests, specifically pointing to
attempts last year to reduce the window for defect claims
from four years to three.
He told the audience to make sure to get involved because if
they don't, the Legislature will only hear from builders.
Christy warned condo owners that any legislation is likely
to increase the costs of living in a condo and that boards
should start to anticipate those increases.
"Change is expected, obviously, and to sum it up the best I
can, change is going to cost you money," he said. "Change is
going to materialize in a lot of new requirements for you
all and those requirements will not necessarily be
inexpensive."