Small talk with a stranger in a lobby led to alarming news for David McKnight about the $400,000 condominium he was about to purchase in Miami last summer.
Along with 24-hour
concierge service and bayfront views, there was also a
potential $24,000 assessment waiting for him once he closed
on the deal.
“I just happened to randomly be in the lobby of the
building, talking to the doorman, and the manager came up,”
McKnight, a professional executive coach, recalled in a
recent interview about the day when he was waiting for a
pre-sale inspection of the condo he wanted to buy. “We were
just chatting. He said: ‘It’s a great building. You know
about the assessment, right?’
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T. Bernie” Bernard on Thursday, Feb. 17, 2022. The real estate broker said she’ll use industry group chats to ask for condo disclosure documents when she has trouble getting the information from building managers. Bernard supports Miami-Dade County legislation to make those documents part of a public database. |
“It’s what I call the knee-jerk reaction.
But it’s a needed knee-jerk reaction,” said Julio Robaina, a
former Republican state representative from South Miami-Dade
and a longtime advocate for tougher transparency laws for
condo and homeowner associations. “This is all about
protecting owners who want to know what the heck is going on
with their buildings.”
Florida law already requires condo sellers to turn over
financial documents and reports on assessments to buyers
once a sales contract is signed and the buyer requests the
paperwork.
Condo documents can be hard to get, even for owners
But there’s no access for real estate shoppers considering
the finances or maintenance needs of buildings where they
might make offers. And state disclosure rules don’t always
translate into buyers or even unit owners getting documents
to which they’re entitled.
“It can be hard to get in touch with property management
offices,” said Tina-Gaye Bernard, a Miami real estate broker
who goes by “T. Bernie” and represented McKnight in his
purchase.
Florida law only provides a three-day inspection period for
buyers to drop a contract after the financial statements are
provided, and Bernard said she often relies on the industry
grapevine to try and flag potential issues before closing.
“We have to go into Realtor group chats and ask: Has anyone
done a recent sale in this building? Do you know of any
issues?” Bernard said. “This is why I’m looking forward to
this searchable database. If they have to put those
documents up, I don’t have to go chasing them down.”
The Miami-Dade legislation applies to all residential condo
and homeowner associations, with no exemptions for small
complexes.
What would be required in Miami-Dade condo registry?
Each association would need to register with the county’s
Department of Regulatory and Economic Resources, and file an
annual report with the required documents.
Those include:
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A list of all officers and board members, with contact information
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Association bylaws, rules and resolutions
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A list of all capital improvement projects planned for the next 12 months
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The most recent financial statements, where “current or approved special assessments must be specifically outlined”
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The current association budget
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All reports “issued within the last 10 years on the structural status of each of the properties” governed or owned by the association
“I think this will bring more
accountability to these boards to encourage them to do the
right thing,” said Garcia, the sponsor and former state
senator who is also the chairman of Miami-Dade’s Republican
Party. “The problem we’ve had time and again with some
associations is when residents ask for financials and
budgets, they don’t provide them.”
Associations would pay fees starting at $50 for the smallest
complexes to fund the new reporting system and a searchable
county database with all of the filed forms. Forms would be
due by Feb. 1 each year, so associations would have until
2023 to file their documents. The potential for an online
library of previously private documents has some association
representatives warning of unintended consequences.
Yearly filings could lead to outdated financial snapshots
for affected complexes and communities, said Doug Weinstein,
vice president of operations in Florida for AKAM, a
residential-management company.
“Things with an association can change month to month,” he
said. “You’re going to be dealing with potentially stale
information. If it’s in the public domain and someone uses
this information to make a decision on something, what is
the liability on that?”
In Hallandale Beach, condo disclosure required
A hint of what might await Miami-Dade on the
condo-disclosure front can be found on the website of
Hallandale Beach, a Broward County city about 20 miles north
of Miami. In 2020, Hallandale became the first Florida city
to pass an ordinance requiring that condos file financial
reports to the local government.
At
hallandalebeachfl.gov, anyone interested can
browse through PDFs filed by more than 100 associations,
each with their own folder listed alphabetically, from the
121 Golden Condo complex to Yorkdale’s Carrollton Isle.
Some tidbits available: At the end of September 2020, the
Isles of Paradise ‘A’ Association had $28,366.13 in its
checking account, the Golden Bay Towers collected about
$1,900 that year from laundry machines, and Paradise Villas
may be upgrading all three of its elevators.
Anabelle Lima-Taub, the Hallandale Beach commissioner who
sponsored the legislation, said she pushed the disclosure to
fix a recurring problem of condo residents not getting
financial documents.
“Now they’re armed with the information themselves,” she
said. “They can go to their next board meeting, and ask:
‘OK, why haven’t we done this?”
For McKnight, the news of the $24,000 pending assessment
didn’t kill his condo deal at an Edgewater building he did
not want identified publicly.
He said Bernard helped negotiate an agreement with the
seller to split the future assessment, which was not
finalized by the time of his deal and had the chance of
being for a smaller amount.
Bernard said the disclosure documents she obtained after the
unit went under contract did not reveal the potential
assessment, which was related to spilled concrete that’s the
subject of a legal fight. McKnight said he couldn’t spot
anything in the records flagging the large bill that might
be awaiting him as a new owner.
“There definitely has to be more transparency,” he said.