In the aftermath of the Champlain Towers condo tragedy, the real estate landscape in Florida has seen significant changes. With safety at the forefront, the state legislature enacted House Bill 5D, signed into law by Governor DeSantis on May 26, 2022. This legislation brings crucial safety measures for condominiums and cooperatives; buyers, sellers and Dalton Wade Real Estate agents should stay informed and adept at navigating these changes. Specifically, the law mandates Milestone Inspections and Structural Integrity Reserve Studies (“SIRS”) for condominiums and cooperatives with three stories or more. The deadlines for these inspections and reports, for many if not all, are scheduled to be before December 31, 2024.
Understanding the Financial Landscape:
House Bill 5D has raised red flags regarding the financial strain on condo associations and unit owners. Many associations are struggling to meet yearly assessment amounts, making it challenging to cover operational needs, let alone future repairs. This situation may lead to unavoidable special assessments, adding financial pressure on owners and potentially limiting housing access in a state experiencing substantial population growth.
Risks for Condo Buyers:
Buyers in today’s market must be vigilant in understanding the financial obligations tied to condo or co-op purchases. Older buildings with insufficient reserves and structural issues could lead to higher maintenance costs and substantial special assessments. Without thorough research, buyers may find themselves facing unexpected financial hurdles.
Practical Items to Know for Buyers:
- The Buyers Agent Should Use The As-Is Contract: During the Inspection period the buyer and selling agent can analyze the SIRS and Milestone Inspection, giving the buyer the flexibility to terminate the contract for any reason.
- Know The Forms: Buyers Agents should attach the Condominium and Cooperative Safety Disclosure to their offers, ensuring buyers are informed about the new law and potential financial obligations.
- Request Meeting Minutes: Request the seller provides 6 months of Board of Director meeting minutes in your offers to identify structural deficiencies and funding concerns.
- Buyer Beware: Encourage buyers to proactively contact the Association during the Inspection Period, obtaining all necessary reports and information.
Benefits for Condo Sellers:
Despite the challenges, sellers can benefit by being well-informed when setting prices and avoiding potential litigation. Discovering financial constraints early allows sellers to explore options and make informed decisions.
Florida’s new condo safety laws bring challenges and opportunities for buyers and sellers alike. For agents, buyers and sellers, success lies in thorough research, strategic negotiations, and proactive communication. Stay informed, implement practical steps, and navigate the complexities of real estate transactions in this changing regulatory landscape.
Originally presented by Donald Ross, Attorney, Ross Law | Ross Title, this content has been rephrased for Dalton Wade. For the original information, please click here.
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