Insurance hikes just first hit for Surfside,
Florida condo owners
Article Courtesy of The Kimberly Miller
By Kimberly Miller
July 9, 2022
"Condo living as we knew it in Florida will no longer
exist. I can assure you, as much as these reforms are needed, it will
pry a lot of owners out of their homes because the costs are going to be
Jan Bergemann, president of the statewide property owner's advocacy
group Cyber Citizens for Justice, which has lobbied for increased condo
The specter of Champlain Towers South came in an email alert this month
for residents of a West Palm Beach waterside condominium.
Insurance on the 12-story building across from the Lake Worth Lagoon
increased 82%, requiring a special meeting to hike the budget and jack
up dues. It was a blow for the association, which had planned for just a
25% rate jump on top of a 25% increase the previous year.
"Everyone is shocked," said Mary McSwain, who bought her one-bedroom
unit in the 51-year-old Portofino South Condominium in January. "I'm
just getting near retirement and I thought this was going to be my dream
place but I'm getting priced out."
McSwain, 67, said her dues are going from $914 a month to $1,347 - a
monetary burden that means she will work more and longer instead of
scaling back her job as an attorney.
While it's impossible to tease out exactly how much of the insurance
increase was a reaction to the collapse in Surfside, Portofino property
manager Robert Gardner said "of course" some of it is a consequence of
the tragedy that killed 98 people in the early morning darkness of June
Insurers in general statewide were already on the ropes before the tower
fell, the collapse was a knock-down punch.
Gardner had just three companies willing to give him a quote after the
association got notices its insurance would not be renewed under the
same terms. The reasons for denials ran the gamut - the building's too
old, it has cast iron pipes, there's no sprinkler system, the roof is 21
"It goes on and on," Gardner said. "It's just nuts right now."
And it's likely to get more expensive for owners under the new condo law
approved during a special legislative session. The new law took effect
when Gov. Ron DeSantis signed it May 26 but most safety provisions do
not kick in until late 2024. It requires maintenance accountability
measures on older condos three stories or higher, such as engineering
inspections and dedicated reserves to pay for fixes.
For the 140-unit Portofino South, the insurance pinch is first.
And it comes as the Portofino owners are looking at another hit, too.
Unrelated to the Champlain Towers collapse, Portofino also must by law
install a sprinkler system by Jan. 1, 2024 - an expense that will cost
at least $7 million.
The new, post-Champlain law requires a structural integrity reserve
study to determine how much money is needed for future major repairs to
be completed by Dec. 31, 2024. Following completion of the report, condo
boards must reserve funds for projects identified in the report and
cannot use those reserves for other purposes.
"Condo living as we knew it in Florida will no longer exist," said Jan
Bergemann, president of the statewide property owner's advocacy group
Cyber Citizens for Justice, which has lobbied for increased condo safety
regulations. "I can assure you, as much as these reforms are needed, it
will pry a lot of owners out of their homes because the costs are going
to be huge."
West Palm Beach attorney Michael Gelfand, who served on the Condominium
Law and Policy Life Safety Advisory Task Force set up after the Surfside
collapse, said there is a concern people will not be able to afford what
Years of lax state oversight, weak regulations, and volunteer condo
boards reluctant to levy heavy dues on their friends and neighbors have
allowed buildings to deteriorate, he said. Champlain Towers South had
about $706,000 in its reserves as of January 2021, according to a review
the year before by the company Association Reserves. But it needed more
than $10 million for projected repairs.
"After decades, the real cost of housing will be recognized for those
who actually own and occupy condominiums," Gelfand said. "If people
can't afford it, they will have to move. That is not an easy thing to
say, but that is what it comes down to."
He suspects some condominiums will vote to sell out to developers in
lieu of paying millions of dollars in assessments. The process, called
condominium termination, isn't new but may attract developers with plans
to demolish buildings and replace them with new construction. With the
real estate market still humming in South Florida, beachfront properties
are in high demand.
An April Wall Street Journal article notes that a handful of Miami-area
condos have already sold to developers.
"We are going to see the vultures come in, and in some situations, they
will make an offer that can't be refused," Gelfand said.
With the insurance market in shambles, some condominiums have turned to
the state-run Citizens Property Insurance Corp. for coverage. In Palm
Beach County, the number of condominium associations covered by Citizens
in buildings 40 years and older increased 64%, from 402 to 662, between
April 2021 and May 2022. On buildings younger than 40 years, policies
increased 70% from 144 to 244 during the same time period.
Portofino South was able to find private insurance this year and Gardner
hopes the insurance legislation passed during the special session will
help next year. "But I have no idea what's going to happen," he said.
Some Portofino residents are paying more for their individual unit
insurance as well as the association increase. Vicky Ross, 79, was
canceled from her private carrier earlier this month and had to enroll
with Citizens, which included a $500 rate hike. In addition, her
association dues will go up $433 a month.
Throughout Palm Beach County, the number of personal residential
condominium policies written by Citizens increased 61% in buildings 40
years old and older between April 2021 and May 2022. In buildings
younger than 40, it went up 43%.
"All I know is at the end of the month, I won't have the little surplus
I had before," Ross said.
Portofino South condo owner Margaret Daley, 82, has been a full-time
resident of the building for eight years but has been visiting it since
it opened in 1971 when her parents bought a unit there. A former
association vice president, Daley said the building has been well
maintained, was just painted and recently completed a restoration
She's had no concerns about its safety, even after the Surfside
collapse. While she doesn't like the higher costs, she's not overly
Still, Portofino association President Gregory D'elia is nervous about
how owners on fixed incomes will pay for the increases, and he's angry
with lawmakers for letting boards get away with putting off repairs for
so many years. He'd like to install new elevators, but instead he has to
budget for the sprinkler system, which was originally required to be
completed by the end of 2019 but had its deadline extended to the end of
"My frustration is the Legislature turned a blind eye to this," he said.
"Where were you all this time so that Champlain didn't happen?"
The unknown is what scares others, including McSwain, who said for now
she'll dip into her savings to pay the extra costs.
"I just don't know how many more increases or special assessments there
can be," she said. "A couple of people in our building are on fixed
incomes and they said they just can't absorb this."