Michael Milillo thought his home in the Flagler House condominium in West Palm Beach would be his last.

Coastal breezes drift through the 74-year-old’s unit hugging the Lake Worth Lagoon, where his view includes sand-fringed Fisherman’s Island and the salmon-colored tower of former President Donald Trump’s Mar-a-Lago club. He and his wife bought the two-bedroom condo in 2013 for $150,000.

“And we thought we were set,” Milillo said. “Then they show up.” Milillo’s aging condominium — a three-story art deco artifact from the early 1960s — is one of an untold number of South Florida buildings developers are soliciting as they hunt for waterfront deals in the wake of new laws that followed the 2021 Surfside condominium collapse. The new statutes, which were enacted to ensure the safety of condominiums and thwart future tragedy, include approaching deadlines for building inspections and the specter of costly fixes that associations won't be able to dodge. For some condominium unit owners, buyout offers from developers are a lifeline from unaffordable inspection, repair and reserve fees that may have been mounting for years, or even decades. For others, it’s an unwanted petition, but one they may not be able to refuse. "I love my unit and don't want to be thrown back into the real estate market and have to live out west," Millilo said. "Even though they are giving a sizable amount of money, it's not enough to replace what we have."

The waterfront Flagler House condominium in West Palm Beach is being courted for purchase by developers Kolter Urban and Phil Perko as older buildings face steeper insurance costs and new safety laws linked to the Surfside condominium collapse.

 

A majority of the estimated 40 Flagler House condominium owners have signed “memorandums of purchase agreements” with a limited-liability company related to Kolter Urban and the Jupiter-based Perko Development.

“We are three stories where they could potentially go to 10 or more,” said Pavlos, who bought his unit in 2015 for $170,000.

And it’s not just that Pavlos doesn’t want to personally lose his waterfront home. He’s also sad to see the erasure of the lingering vestiges of Old Florida along the coast.

In 2019, a clutch of dated one-story apartments just north of Flagler House was bulldozed for a new seven-story condominium named The Crystal. The entire building sold in 2022 for $16.92 million.

West Palm Beach homes along South Flagler Drive near the Flagler House are selling for between $4.9 million for an existing 2,000-square-foot house to $39.5 million for a newly built seven-bedroom home directly on the water.

“They are pricing normal people out. Even higher-income people are priced out,” Pavlos said. “But the clock is ticking.”

In response to the collapse of Champlain Towers South, state lawmakers passed new legislation requiring inspections for older buildings and that reserves be fully funded. Previously, condo boards could waive or reduce reserve dollars to limit increases in special assessments or association fees.

The new law says condominiums three stories high or higher and that were 30 years old or older as of July 1, 2022, must have a “milestone” structural inspection before the end of the year. Subsequent inspections are required every 10 years. A second milestone inspection report is required if any “substantial structural deterioration” is identified during the first inspection, according to state law.

A condominium must provide proof within a year of the second milestone report that repairs have been scheduled, are underway or completed.

The pending costs come on top of skyrocketing insurance rates as a confluence of concerns over the older buildings, natural disasters, such as hurricanes and flooding, and turmoil in the insurance industry roil providers.

“For many of the condominiums in South Florida, they have woefully ignored the practical maintenance and repair of their buildings,” said Michael Gelfand, a board certified real estate and condominium law lawyer. “Especially for maturing condominiums, associations may have been patching things up ad hoc and ignoring the signs of systemic failure that are costly to fix.”

Attorney Jeff Margolis with Berger Singerman law firm in Fort Lauderdale said just hiring the engineers or architects to do the milestone inspections can be expensive.

“Although the intention was to bolster the structural integrity and increase the safety of older condominiums, the owners will be faced with increased financial burdens, and the only option may be to sell,” Margolis said. “Developers will come in and take advantage of that.”

Neither Pavlos or Milillo were aware of whether a milestone inspection had been completed, or of pending assessments. The president of the condominium association board did not respond to a message. Also, messages left for the condominium management company were not returned.

Milillo, who spends part of the year in New Jersey, said people often comment that the Flagler House reminds them of Key West, and admire the mid-century breeze-block balustrades on the second and third floor balconies. Originally an apartment building called Flagler Manor, the building was touted in a 1962 edition of The Palm Beach Post Times as having "all-electric kitchens and year-round air conditioning."

It became a condominium in 1984. Less than half of the units are homesteaded in Palm Beach County property records. Declaring a residence a homestead means owners consider it their primary home.

“It does need work, and John and I are willing to pay for it,” Milillo said about Flagler House. “But I don’t think some of the other residents want to pay for it or can pay for it.”