Maria Tkachun and her husband shelled out $490,000 for a seventh-floor apartment with a terrace and balcony with incredible views of Biscayne Bay in South Florida in 2022.
The couple shelled out an additional $100,000 to renovate their unit in the Cricket Club condominium tower, installing extra-large Italian porcelain tiles and adding marble countertops and an island to the kitchen.
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Two years later, the pair were hit with a six-figure special assessment — a charge that condo and home owners in HOA Communities must pay to finance a property renovation or to replenish an underfunded reserve.
“This is simply outrageous,” Tkachun counted The Wall Street Journal (WSJ).
Florida Condo Associations Are Raising Fees to Meet Safety Standards
Following the 2021 Surfside condominium collapse — which killed 98 people due to construction failures — Florida is requiring stricter safety standards and more frequent inspections, while many condominium associations are increasing fees to build a larger reserve for repairs.
The Cricket Club condominium board recently proposed a special assessment of nearly $30 million for repairs such as roof replacement and facade waterproofing – amounting to more than $134,000 per unit owner.
Some owners, like Ivan Rodriguez, who liquidated his 401(k) retirement account to purchase a unit for $190,000 in 2019, I can’t pay the extra feesso they are putting their condos up for sale.
The WSJ reported that the inventory of condos for sale in South Florida has more than doubled since the first quarter of 2023, to more than 18,000 units today, due to rising insurance costs or repair fees for older buildings that fail inspections.
“I think this is just the beginning,” Greg Main-Baillie, chief executive of real estate firm Colliers, told the WSJ.
But sellers are finding few buyers. Rodriguez originally listed his unit for $350,000, but was forced to keep downsizing until it finally sold for $110,000 in April — 42% less than he paid for it.
Claudia Springgay, Fort Myers real estate agent told NBC2 she also saw 1,000 more condos on the market in May this year compared to last year, pointing to higher association fees that have “increased somewhere between 20% and 25% on average.”
“People have gotten very nervous about the fact that they’re buying a condo and they’re going to get another appraisal, and there are pending appraisals, and sometimes they go to the new buyer,” added another Fort Myers agent, Sue Christiano.
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How You Can Avoid Being Affected by a Large Special Assessment
Many older condominium buildings in Florida were able to forgo reserve financing for years – until new laws led them to increase fees for unit owners to ensure these buildings could adequately cover the costs of maintenance and repairs.
Tkachun said the first red flag was when banks refused to give her and her husband a mortgage for the condominium unless they made a 25% down payment since the building had no reserves.
It’s important to consider whether your HOA’s reserve fund is equipped to cover repairs and maintenance or unexpected expenses before purchasing the property.
You can also try filing a complaint with your council when you receive a special assessment – if you have the support of other property owners in your building or community. However, this typically only works if you can prove that the assessment is too high or is not funding a project that is necessary for health and safety reasons (like adding a pool, for example).
At the Cricket Club, residents say the special assessments have created resentment between unit owners who are willing to cough up the funds and move on and those who can’t afford the costs and are forced to sell. Some people are gathering documentation to try to find evidence that rates should be lower.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
