NY Times: Dozens Forced to Evacuate South Florida Condo

ElleN (Idaho)
Posts: 4,420

Posted:

Breaking News, from the New York Times today:

Residents of a South Florida condominium building were overcome with emotion ahead of the deadline to evacuate their homes on Tuesday, after a recent engineering inspection deemed the building structurally unsafe.

The building, the Majestic Isle condominium, in North Bay Village and just north of Miami, is miles from where the Champlain Towers South partially collapsed nearly two years ago. That building’s failure was one of the worst in U.S. history, killing 98 people, and prompted South Florida residents to worry about the safety of their own buildings.

On Wednesday, North Bay Village officials received a letter from an engineer, hired by the building’s association in anticipation of the required 60-year building certification, city officials said.

The engineer who inspected the three-story property on April 14 raised “serious concerns” about the building’s condition in a report, North Bay Village officials said. Residents were required to evacuate by Tuesday morning.

North Bay Village’s mayor, Brent Latham, said in an interview on Tuesday morning that the report indicated structural issues related to termites and sagging floors.

A leak from a roof drain caused a partial collapse last week, and residents from five units were evacuated, officials said.

The Majestic Isle condominium was built in 1960 and has 35 units. Some of the units are owned and others are rented, Mr. Latham said, and between 50 and 60 people live there.

On Monday night, during a special commission meeting, residents of the building took turns probing officials about their futures. A woman who was due to give birth soon asked for assistance in relocating her family. A man who had been part of the community for decades was too emotional to speak. Another woman asked when it might be safe to remove heavier items, like furniture.

More at https://www.nytimes.com/2023/04/25/us/florida-condo-building-evacuation.html

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Structural damage from termites and sagging floors don't happen overnight and neither does a roof collapse from water damage. Odds are they have no one to blame but themselves.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Meanwhile in other parts of the state:

"The fight from condo owners continues after a state law passed that increases the amount of money required in condo reserves. The law is aimed at preventing another Surfside collapse."

Condo Owners Continue Fight as Reform Bills Move Through Tallahassee

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By CathyA3 on 04/25/2023 11:15 AM
Meanwhile in other parts of the state:

"The fight from condo owners continues after a state law passed that increases the amount of money required in condo reserves. The law is aimed at preventing another Surfside collapse."

Condo Owners Continue Fight as Reform Bills Move Through Tallahassee

And because my neighbor can't afford the dues needed to have adequate Reserves, I should be forced to live in an unsafe environment?

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By CathyA3 on 04/25/2023 11:15 AM
Meanwhile in other parts of the state:

"The fight from condo owners continues after a state law passed that increases the amount of money required in condo reserves. The law is aimed at preventing another Surfside collapse."

Condo Owners Continue Fight as Reform Bills Move Through Tallahassee

Ninety-eight people died in the Surfside disaster and you’d think that would prompt condo owners to wake the hell up and do what’s necessary to care for their home.

I don’t understand the lady in the article who said her building wasn’t on a barrier island, so why does the reserve requirement have to apply to them. She’s owned her condo for 15 years – did she really think she could just go on and on without putting aside some money to pay for major repairs? Does she not realize that condo buildings are also vulnerable to things like fires and since she lives in Florida, there are hurricanes to consider???

And this isn't just a Florida issue. In some areas, there are earthquakes, tornados, floods and other natural disasters to consider, and even if you're lucky to avoid that stuff, the day does come where you really do need to fix the furnaces, electrical boxes, etc. That's life as a homeowner.

I realize people may have owned their home for years and don’t want to leave, but when you go on a fixed income, you simply can’t spend money like you used to. You get your pension and social security payment once a month and that has to last for 30 days or so to cover the heat, water, electricity, your medical bills, food, gasoline, etc. If your life evolves where you can no longer live in your home because it’s too much for you to take care of, too expensive, too dangerous (or all three), you may have a heavy decision to make.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

CathyA3 (Ohio)
Posts: 6,299

Posted:

Are Condos a Bad Idea?

This writer has some thoughtful commentary on the various issues facing condo owners and others. He cites a number of problems that we've talked about here: unskilled volunteer boards, the ability of homeowners to vote down assessment increases and/or reserve funding, apathy among homeowners, and the failure of the marketplace to capture the true risks of ownership in the selling price of condos.

About this last item, he points out something that should be obvious when you think about it: when units are sold, the home inspections usually only deal with "drywall in" issues, not those of the building structures of the entire community - even though condo owners do own fractional shares of these structures. Not sure what we can do about it, since a more thorough inspection would involve time and expense, and inspections have to be carried out in a short time frame. (During the recent home buying frenzy, buyers were waiving inspections and even buying property sight unseen.)

States like Florida are not unique - they're just ahead of the curve due to the coastal climate and exciting weather.

SheliaH (Indiana)
Posts: 6,964

Posted:

Someone else noted in a previous conversation that the only communities that really need HOAs are townhouse and high-rise communities because they have shared walls. I’m beginning to think it might be true.

Unfortunately, we’re still stuck with unskilled homeowners (and some who are kinda sorta skilled but with a not-so-nice agenda or are just power-tripping) to run the show. I always emphasize continuing education, which is a start, but even that doesn’t guarantee the right decisions will be made. Sometimes you do all the due diligence possible and still, it turns out to be a bad decision. As long as you took all steps to try to make the best decision, I don’t think you should be slammed for that.

Like the author of this article (thanks for posting the link), I don’t know what the answer is. More legislation to protect homeowners (that should be the goal of laws that mandate minimum funding and inspection standards) may be needed, but I fear things will get considerably worse before it gets better. There's plenty of blame to go around - this isn't just a matter of do-nothing politicians, apathetic homeowners, greedy developers, inept property managers, and so on. To fix this will require everyone's cooperation, but as long as people only have this "it's all about MEEEEEEEEEEEEE and screw everyone else" attitude, this is what we'll be left with.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By CathyA3 on 04/25/2023 11:15 AM
Meanwhile in other parts of the state:

"The fight from condo owners continues after a state law passed that increases the amount of money required in condo reserves. The law is aimed at preventing another Surfside collapse."

Condo Owners Continue Fight as Reform Bills Move Through Tallahassee

I am guessing this describes the new state law:

https://ssclawfirm.com/news-events/in-the-news/new-reserve-requirements

Excerpt:

Not only are associations now legally required to have reserve studies completed, but they will also soon be prohibited from waiving or reducing funding for many of the reserve items in their annual budgets. For decades, condominium and cooperative associations have been legally required to include reserve accounts in their annual budget. However, associations were permitted, by a majority vote of the unit owners, to waive or only partially fund reserves, irrespective of the particular reserve item. Beginning December 31, 2024, however, unit owners will no longer be legally permitted to make that decision for the structural reserve items required to be listed in the [Structural Integrity Reserve Study; a.k.a. "SIRS"]. [The new law also requires a SIRS every ten years for buildings three stories tall or higher.]

Similarly, effective December 31, 2024, associations will no longer be permitted to use reserve funds collected for the structural items listed in a SIRS for any other purpose, even if a majority of the owners vote do so. This prohibition does not take into account associations that have historically “pooled” their reserves into single accounts. Will associations now be prohibited from pooling reserves, or will they be required to maintain separate accounts for the reserve items listed in a SIRS? The legislation does not specifically address this question.

The battle to keep assessments low that many condo owners are taking to the legislatures mimics the battle they would ordinarily take to their boards. Lawmakers face the same pushback as HOA directors: Raise owners' assessments, and risk not winning election again.

I think the silver lining is that the new law passed unanimously. Wow.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By CathyA3 on 04/25/2023 11:46 AM
Are Condos a Bad Idea?

Excerpt

When a board of directors can set assessments at whatever level is politically comfortable, without adequate consideration, or even knowledge, of long-term maintenance needs, systemic underfunding can result. What the members want are the lowest assessments possible, and directors often accede to those demands. When these factors conspire to underfund maintenance, they will drastically shorten the service life of a building.

Very much like the resistance to upgrading the national electric grid (among other things) or ignoring that Lake Powell's and Lake Meade's levels were falling at a rate that would result in water rationing.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By ElleN on 04/25/2023 2:36 PM

Posted By CathyA3 on 04/25/2023 11:46 AM
Are Condos a Bad Idea?

Excerpt

When a board of directors can set assessments at whatever level is politically comfortable, without adequate consideration, or even knowledge, of long-term maintenance needs, systemic underfunding can result. What the members want are the lowest assessments possible, and directors often accede to those demands. When these factors conspire to underfund maintenance, they will drastically shorten the service life of a building.

Very much like the resistance to upgrading the national electric grid (among other things) or ignoring that Lake Powell's and Lake Meade's levels were falling at a rate that would result in water rationing.

Which in turn *raises costs* over time. The average person really doesn't understand how this works.

I think many lawmakers actually want to do right by their constituents, but they're trading long-term financial health for expediency: Future Homeowner isn't here to advocate fro himself, but Current Homeowner is hollering.

I think what it boils down to is that many people can't afford their homes, and condos are especially good at hiding this reality. Community associations are actually the costliest way to own property because people are also buying services as well as all of the legal and financial infrastructure of a corporation. Overall, a small single family home outside of an HOA is the cheapest way to own a home. But people don't see this, and the Big Money interests who profit from having community associations are not going to tell them.

And speaking of lakes' falling water levels, I read recently that Arizona is one of the fastest growing states in the country. These new residents do understand that the Colorado River is drying up and that they're well downstream from the source, yes? Apparently not.

this is our entire county in a nutshell. We want stuff, we want it now, and we don't want to pay for it.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By CathyA3 on 04/26/2023 6:00 AM
I think what it boils down to is that many people can't afford their homes, and condos are especially good at hiding this reality. Community associations are actually the costliest way to own property because people are also buying services as well as all of the legal and financial infrastructure of a corporation.

For me this is the profundity of the month. It had not occurred to me that people look at a condo's monthly assessment, believe the assessment has been carefully calculated to pay for the upkeep of roofs, roads and more, and think "What a bargain!" They do not think about how (1) the reserve account may be grossly underfunded, especially in this day and age of large inflation, a labor shortage, and deleterious weather patterns; (2) like 1/6 to 1/3 of their assessment pays for management; and (3) the board is constantly trying to cut costs and looking for shortcuts that are hazardous to the infrastructure's maintenance.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By ElleN on 04/26/2023 6:39 AM

Posted By CathyA3 on 04/26/2023 6:00 AM
I think what it boils down to is that many people can't afford their homes, and condos are especially good at hiding this reality. Community associations are actually the costliest way to own property because people are also buying services as well as all of the legal and financial infrastructure of a corporation.

For me this is the profundity of the month. It had not occurred to me that people look at a condo's monthly assessment, believe the assessment has been carefully calculated to pay for the upkeep of roofs, roads and more, and think "What a bargain!" They do not think about how (1) the reserve account may be grossly underfunded, especially in this day and age of large inflation, a labor shortage, and deleterious weather patterns; (2) like 1/6 to 1/3 of their assessment pays for management; and (3) the board is constantly trying to cut costs and looking for shortcuts that are hazardous to the infrastructure's maintenance.

The problem will get worse and community associations will become even more expensive if we ever get to the point where we require a certain level of knowledge and professionalism from board members. Right now we kind of "expect" it and pretend that it's there, but without acknowledging the cost of actually obtaining this knowledge and professionalism.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By ElleN on 04/26/2023 6:39 AM

Posted By CathyA3 on 04/26/2023 6:00 AM
For me this is the profundity of the month. It had not occurred to me that people look at a condo's monthly assessment, believe the assessment has been carefully calculated to pay for the upkeep of roofs, roads and more, and think "What a bargain!" They do not think about how (1) the reserve account may be grossly underfunded, especially in this day and age of large inflation, a labor shortage, and deleterious weather patterns; (2) like 1/6 to 1/3 of their assessment pays for management; and (3) the board is constantly trying to cut costs and looking for shortcuts that are hazardous to the infrastructure's maintenance.

Yup. Apparently these people forget that maintenance increases are why their rent increased every year or every other year. They bought a home to get away from that, but it's been said people should budget 10% of the cost of the home as maintenance and increase that by a small percentage every year. Another two reasons why math is hard for some people - and we desperately need consumer education in school. And civics so they'll have a better understanding of how a representative government is supposed to work. 99% of the time condo owners never heard of a reserve study or reserve funds, and always forget upkeep costs money. Upkeep will cost more money as the community ages, labor increases (because of shortages, lack of trained people and/or contractors who want to pay as cheaply as possible), and so on.

When I was on the board, I always likened the reserves to a type of IRA - just as you pay into your IRA to cover future expenses after you retire, the reserves are there so the homeowners won't have to come up with several thousand dollars or more to replace the roof or repave the streets. And yet, people still talk about this pay-as-you-go nonsense - pay-as-you-go makes sense in some instances, but most people don't have several thousand dollars lying around for a special assessment due to, say tornado damage. This is also why we have homeowner's insurance (yes, I know some of that's also a racket!) People like to think they'll be long gone by the time those chickens come home to roost but now are finding out the hard way life has its own sense of timing.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By SheliaH on 04/26/2023 7:57 AM
- and we desperately need consumer education in school. And civics so they'll have a better understanding of how a representative government is supposed to work. [snip for brevity]
When I was on the board, I always likened the reserves to a type of IRA - just as you pay into your IRA to cover future expenses after you retire, the reserves are there so the homeowners won't have to come up with several thousand dollars or more to replace the roof or repave the streets.

Hear hear, regarding consumer education, and well-put, regarding how to think about reserves. Boards need to pound on this time and again: "Mr. Taylor, the reason we have $700,000 in the bank account right now and are still increasing the assessments this year is because the roofs will need replacing in two years and this will cost $1.5 million dollars."

I do think people en masse are getting more educated on how reserves work. Perhaps this is a natural outcome of aging infrastructure after the condo boom that began in the 1960s (due to mortgages becoming available for condo purchases, if memory serves?). As well, financial institutions like insurers and lenders (who trusted mere volunteers to operate as professionals with certifications in accounting, infrastructure and law) are surely behind the push to get educated on reserve funding.

SheliaH (Indiana)
Posts: 6,964

Posted:

Your last sentence is basically what our board president said last year at the "annual meeting". We didn't make quorum, but the board had a reserve study done and invited the specialist to make a presentation, so we went ahead with it. I knew from my 10 years on the board that we were and still are horribly underfunded, so our president said beginning in 2022, assessments would increase by a maximum of 5% every year indefinitely (this is the most our documents allow without a homeowner vote and you know how a higher increase would go).

If the banks are pushing for more education on reserve funding, I hope that also leads to them considering assessments as part of the mortgage application so they can determine if the person can really afford the home, as Cathy noted earlier. I know affordable housing is a major concern, and there's been enough mess with redlining and predatory lending that should prompt the financial industry and legislators to change their ways instead looking at everything else like a gigantic money grab.

Even better, I say it's past time for assessments to be folded into mortgage payments so the associations will et their money in full and on time so they can take care of the community properly (and fund reserves like they're supposed to) Consider it an extra step to protect their investment so they'll make money and get the zillion dollar bonuses executives love so much. I know Max has said there are a lot of reasons why that hasn't happened, but everything changes at some point and if the last three years of COVID taught us nothing else, it's that some (lots?) of the old ways simply don't work anymore and it's time for some new thinking and processes.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By SheliaH on 04/26/2023 10:06 AM
Your last sentence is basically what our board president said last year at the "annual meeting". We didn't make quorum, but the board had a reserve study done and invited the specialist to make a presentation, so we went ahead with it. I knew from my 10 years on the board that we were and still are horribly underfunded, so our president said beginning in 2022, assessments would increase by a maximum of 5% every year indefinitely (this is the most our documents allow without a homeowner vote and you know how a higher increase would go).

If the banks are pushing for more education on reserve funding, I hope that also leads to them considering assessments as part of the mortgage application so they can determine if the person can really afford the home, as Cathy noted earlier. I know affordable housing is a major concern, and there's been enough mess with redlining and predatory lending that should prompt the financial industry and legislators to change their ways instead looking at everything else like a gigantic money grab.

Even better, I say it's past time for assessments to be folded into mortgage payments so the associations will et their money in full and on time so they can take care of the community properly (and fund reserves like they're supposed to) Consider it an extra step to protect their investment so they'll make money and get the zillion dollar bonuses executives love so much. I know Max has said there are a lot of reasons why that hasn't happened, but everything changes at some point and if the last three years of COVID taught us nothing else, it's that some (lots?) of the old ways simply don't work anymore and it's time for some new thinking and processes.

Mortgage companies do include HOA dues as part of the monthly outlay to qualify a person for a mortgage.

LoriM15 (Florida)
Posts: 1,009

Posted:

Quote:

Posted By SheliaH on 04/26/2023 10:06 AM

Even better, I say it's past time for assessments to be folded into mortgage payments so the associations will et their money in full and on time so they can take care of the community properly (and fund reserves like they're supposed to) Consider it an extra step to protect their investment so they'll make money and get the zillion dollar bonuses executives love so much. I know Max has said there are a lot of reasons why that hasn't happened, but everything changes at some point and if the last three years of COVID taught us nothing else, it's that some (lots?) of the old ways simply don't work anymore and it's time for some new thinking and processes.

I agree. Wouldn't it be great of mortgage companies escrowed the condo or HOA fees along with the taxes and insurance. It would make both the owner and HOA management's life a lot easier.

However, that wouldn't solve the problem for so many of our homeowners who bought 20 years ago and don't have mortgages. Many of them bought at a time where taxes, insurance and HOA fees were much lower and their home was affordable. Now their homes have become unaffordable and they can't afford to move either because rents are so high.

Here in Florida, there is going to be a huge reckoning over underfunded reserves for condos. Every condo I know underfunds their reserve to keep the fees artificially low. Our housing market here is still very hot, but I suspect there will be a flood of condos on the market in the next few years. Unless the real estate lobby gets their way - which they will - and undermines the legislation that has recently been passed.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

If I hear one more person say but I am on a fixed income, I am going to scream. The issue is their standard of living is to high for their income. The answer is live within your income even if it means living below the standard you like. Pay up or get out. I am 81 and I know all about fixed incomes.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By LoriM15 on 04/26/2023 11:45 AM

Posted By SheliaH on 04/26/2023 10:06 AM

Even better, I say it's past time for assessments to be folded into mortgage payments so the associations will et their money in full and on time so they can take care of the community properly (and fund reserves like they're supposed to) Consider it an extra step to protect their investment so they'll make money and get the zillion dollar bonuses executives love so much. I know Max has said there are a lot of reasons why that hasn't happened, but everything changes at some point and if the last three years of COVID taught us nothing else, it's that some (lots?) of the old ways simply don't work anymore and it's time for some new thinking and processes.

I agree. Wouldn't it be great of mortgage companies escrowed the condo or HOA fees along with the taxes and insurance. It would make both the owner and HOA management's life a lot easier.

However, that wouldn't solve the problem for so many of our homeowners who bought 20 years ago and don't have mortgages. Many of them bought at a time where taxes, insurance and HOA fees were much lower and their home was affordable. Now their homes have become unaffordable and they can't afford to move either because rents are so high.

Here in Florida, there is going to be a huge reckoning over underfunded reserves for condos. Every condo I know underfunds their reserve to keep the fees artificially low. Our housing market here is still very hot, but I suspect there will be a flood of condos on the market in the next few years. Unless the real estate lobby gets their way - which they will - and undermines the legislation that has recently been passed.

While at Countrywide, we looked into escrowing HOA payments. Problems that arose, frequency of assessments, annual or monthly, knowing who the management company is in the first place, then what if self-managed. If a Board changes management companies, who notifies the loan servicers?

JackieB4 (California)
Posts: 398

Posted:

Max, Great, thoughtful question.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By LoriM15 on 04/26/2023 11:45 AM
Our housing market here is still very hot, but I suspect there will be a flood of condos on the market in the next few years.

Because... ?

I am thinking Florida will not implode (seriously) for at least a decade (seriously), so the housing market will remain hot until then, with prices for everything still rising.

I keep one eye on the government's relocation program, helping lower income Floridians move to, oh m'goodness, Tennessee (the new heaven on earth, for the hurricane and flood averse). I believe Tennessee housing has heated up and is going to get way way hot within ten years.

SrqlcamG (Florida)
Posts: 2

Posted:

Due to skyrocketing insurance costs & special assessments, condo owners on fixed incomes will be forced to sell. Termination of condominium ~ another hot topic. If you are in the market for a condo & the fees haven’t gone up yearly, be in for a rude awakening.