Peter Schorsch
In the wake of the collapse of Champlain Towers South in Surfside, which killed 98 people in 2022, Florida lawmakers passed a bill to strengthen the safety of aging buildings. Condos across the state of Florida will be required to meet new inspection and structural integrity requirements come Jan. 1, and this new law is already having a serious impact on the market.
“They have to show their financial reserves are fully funded for maintenance for the inspections and potential future repairs,” Anita Goynes, a board-certified Realtor, told News Channel 8 in Tampa. “A lot of the associations may face repair replacement costs in the millions.”
ISG World’s recent analysis of active listings in Palm Beach, Broward and Miami-Dade counties found a surge in the number of condos up for sale, from 8,353 in the second quarter of last year, to over 20,293 a year later. Nearly 90% or 17,796 of those units are in buildings that are over 30 years old.
For many, redevelopment may be the best option. Even the Palm Beach Post editorial board last week stated “redevelopment, if properly restrained by the government, provides a reasonable alternative to letting nature run its course and hoping nothing will happen.”
But developers are in a holding pattern while they wait for a rehearing in the Florida’s 3rd District Court of Appeals on Biscayne 21 in Miami.
At Biscayne 21, 96% of the 192 units on North Bayshore Drive opted to sell to a developer, which began the process for terminating the condo association. The building is six decades old, and many owners recognized that the costs to maintain it could exceed its current value or their means to pay for it. But 10 holdouts refused to sell and instead opted to sue.
The court ruled in favor of the 10 holdouts, setting a new precedent in development law.
“It seriously diminishes the property rights of condo owners and effectively gives veto power to any one unit owner who held out from the opportunity to sell,” said Rep. Vicki Lopez, who represents House District 113, which includes part of Miami-Dade.
“If the ruling on Biscayne 21 stands, Florida condo owners are left with fewer rights and even fewer options. Just one individual could stand in the way of the desires — and what may be in the best interest — of the vast majority of owners.”
All eyes are on this case as condo unit owners across Florida consider their options. Meanwhile, developers are weighing the risk of future investments in Florida.
“This will greatly impact the risk analysis a developer must undertake in pursuing an acquisition of one of these older condominiums,” said Matt Allen, a developer at Related Group, a real-estate company that has terminated multiple condominiums in Florida.
“Without options, condo owners across the state will be saddled with financial burdens and obligations, even the possibility of foreclosure,” Lopez warned.
“The situation at Biscayne 21 is a reflection of the situation condo owners across the state are currently stuck in. Rising assessment costs and aging buildings requiring expensive upgrades to systems become a challenge for any owner, especially for retirees or young families that often occupy these units,” said Javier Marquina, one of the former owners and HOA members at Biscayne 21 who opted to sell.
“For condo owners like myself, the developer buyout was an ideal situation during a very trying time. The overwhelming support that the sale had tells me that many owners saw things the same way. All condo owners should have the same option.’
Some lawmakers have called for a Special Session to address the mounting condo catastrophe. In the meantime, folks wait on Florida’s 3rd District Court of Appeals to act so that condo owners can consider all options, including redevelopment.
