Condo owners hit with $100,000 assessments!
 

Florida condo owners are getting hammered with huge maintenance assessments!

They should have bought in the Villages.

I just looked at the Villages’ website. There are a couple of hundred brand new homes for under $400,000.

A reckoning is coming for Florida's condo owners as buildings face millions in repairs

There been few hammer’s used around here?

Due Diligence....

Good grief

HOAs are maintenance nightmares because of the fact that they are HOAs with socialism fees.. .

Condos are basically designed to socialize expenses,(pay in and someone else does the work) and asking people who love socialization mentality to now spend money on maintenance, runs counter to their spending styles as well as tendency towards maintenance ineptness in the first place.

Condos are huge cluster fusses. . as well as located in places where maintenance is higher than normal, (mostly near the ocean where the salt in the air and the sandy soil creates a lot of potential erosion and instability)

Not uncommon for Beach properties here. The rerbar and concrete rots over 20-30 years.

Add beach erosion adding to the deterioration of some beach side cities like Daytona.

What due diligence should they have done?

The law was passed after many people bought their condos.

Surfside
 

98 people died after the horrible tragedy at Surfside, something had to be done, and it does cost money. The owners need to pay the expenses that make things right. That includes the mandatory annual inspections and the funds set aside for possible repair issues. The front loaded financial shock should settle in a few years. Hey we pay a bond, they have to pay a similar cost for the structure they live on and in.

Before my lifestyle visit to The Villages, I contemplated maybe retiring to a condo community in SE Florida, to be close to the beach and warmer winters. So glad I didn’t end up making that retirement choice! My heart goes out to the many retirees that are being hit with skyrocketing HOA increases as well as astronomical assessments. We are fortunate here in The Villages not having to endure those issues.

New Builds
 

If you buy new construction, the cost structure and amounts are remarkably similar to your 50k bond, maintenance fees and amenities. I imagine some condo owners are financing the larger fees just like bond owners here.

A lot of retirees do not have an extra $100,000 lying around to pay an assessment. In the past week, people here were complaining about a 56% hike in district 14. As far as I can tell, no one had a $1000 increase.

And the highest bond I have seen here is under $75,000 which is payable over 30 years. It is unclear whether the condo assessments in the article can be paid over 30 years.

Agree
 

I agree, and the bond new buyers get here is pre announced before a financial decision is made. These condo owners are getting blindsided by the announcement and it’s financial impact.

A key difference is the bond is against the property and not a personal debt. You don't have to pay it off when selling the property.

When buying a condo, due diligence includes looking at the condo association's financial reports to be certain that there is a large reserve for future big maintenance items.

Many condo owners prefer low maintenance fees instead of having a sufficient reserve. But the day always comes that something big needs attention.

After we got married, spouse and I owned a condo for around 12 years. We had no amenities at all, not even an HOA meeting hall. The board met at the board president's living room once a month. But all our landscaping, snow removal, and roof repair was taken care of by the HOA. Painting the porches was our responsibility. Our condo fee was made higher when the developer - which owned and rented out around half of the properties - was given as many votes as units he owned. So he got to set the rules. He decided that property owners only had to pay one HOA fee per owner, rather than per unit. So he only paid $300/month, just like everyone else - even though he owned almost half the units in the community.

We eventually bought a freestanding house in the next town, a modest but lovely walkable area behind the main road. I was able to walk to the supermarket on nice days if I didn't have too much to pick up, or ride my bike to a dental appointment, and enjoy the old fashioned New England town green environment with no HOA at all.

Great post, when we looked at ocean front condos our first concern was age, last inspections and repairs. That was in the 2010, we looked at higher fees for maintenance budget so 20 plus years down the road there would be funds to offset major repairs. Some don't plan for major issues in retirement, that may someday cause you to return to working class

I am not a lawyer but that sounds illegal - or at least should be illegal. He had half the units and only paid one HOA fee?

Any real estate lawyers on TOTV?

You are spot on. Just Like government generally does, Florida overacted to the one condo building complex collapse and past some unrealistic laws that has caused damage to condo real estate values along the coast of Florida. Now, they are trying to backpedal some of the regulations to help the situation.

It was an HOA. It was run by a board of directors. The HOA documentation was voted on by homeowners. The developer was a major homeowner, and if only 40% of the OTHER homeowners voted on something, his major ownership's vote determined the outcome of the vote. He had 40% of the voting power, with individual homeowners carrying the other 60%. But many were absentee landlords who never showed up for any votes at all.

Many years ago when I lived in Wisconsin, the DNR in state parks moved all the camping sites bordering the edge of lakes and rivers back 50 feet to prevent erosion.

Why can't Florida and all other coastal states get wise on building so close
to water and notice the erosion problem.

Well. You have an hour at least to get to a beach, no ocean views, hardly a breeze in the humid summers. Most people who buy on the beach can afford to live there and don’t have to move to the center of the state to survive

You are going to upset some people.:):):)

I had a beautiful condo on the gulf coast before moving here. The problem is people that live in them always want to differ maintenance. Now maintenance is mandatory for safety. I bough for 320 sold for 620 and it is now worth 1.5. So I think the person who bought it can borrow against it for the mandatory maintenance. I loved my place.

Prior to the law being passed there was no requirement for the HOA to keep a specified amount of money in the reserve fund, the account used to pay for major maintenance expenses or unanticipated expenses for the property. That was the issue and the HOA financials are most of the time overlooked by the prospective owner. South Carolina is another state where there is no requirement to maintain any amount of money in an HOA reserve fund

One must consider their life priorities and what they enjoy. Also finances come into play, but if the ocean, water, and boating are your passions, then being near the water is worth the cost. ]

Most HOA boards I’ve experienced are concerned with keeping assessments as low as possible. The residents like it that way and usually squawk at even a hint of increased fees, no matter how small. That’s all fine until they start deferring maintenance and ignoring reserves. The HOA neglect of their fiduciary duty always catches up and results in either huge special assessments, insurance premiums that amount to highway robbery, tragedies like Surfside, or some combination thereof.

If you are looking to buy a condo and the reserves are underfunded, walk away!

Sounds to me like you’re describing The Villages!

Ask the residents of District 14 about the 56% increase in their district assessment for next year about what they think about “it won’t happen here”.

I looked at a condo in The Villages for sale (the Spanish Springs townhouse-style condos). I knew about the upcoming law changes so I asked the association president to see all of the documents such as the "Structural Integrity Reserve Study" now required by law. I concluded that the condo fees would jump to around $650/month per unit next year, and be $700/month by 2030. Basically you are paying through the nose for landscaping fees for what amounts to a postage stamp front lawn - because you have to pay for the upkeep of the surrounding land as well which The Villages refused to take back without the condo association paying THEM. There are some things which are fair such as exterior painting. But the roofs are costing $30,000 each which is a ridiculous price even though they are changing them to metal. So you are basically forced to pre-pay for what would have been a special assessment. If you kept the money with a money manager yourself instead you probably could make interest, and then better afford the special assessment. But giving it to the association up front to sit in an account, I'm not so sure.

What I wouldn't do is buy a condo in a high-rise in Florida, because the costs to fix anything in a building like that can skyrocket. Especially if there is a common-area HVAC system, etc.

LUV-You nailed it. Many (Most?) HOA Board Member are solely interested in keeping MONTHLY fees low and have little regard for setting aside monies to pay for the annual wear-and-tear on the "big ticket" items.

Even in our private home we set aside a modest amount to escrow for painting the house every 7 years ($50), 20-year roof ($75), 10-year water heater ($7), etc. It adds up to about $110 per month. This is like our condo/house reserve. Sure we would love that extra $110 per month to spend on restaurants and the like but we know we need to budget for those items down the road.

It's like the game of Time Bomb (I assume everyone on here is old enough to remember that one!). Low fees are fun until the replacement costs for the roof, pool, stucco, rebar, etc come due. Unfortunately, the state law burdens the people owning the beach condos today with the burden to payback the monthly reserve for all those people that lived in the condo (with unrealistically low monthly fees) for the past two decades.

It is sad, many Florida retirees are going to get financially crushed with these fees...

Exactly! So you are going to spend $1M+ for shared space with 50 other people who pinch pennies? The end is inevitable.

First step is to ask (or go online) to see their Reserve Study. If they do not have one, they are in deep financial trouble. If they do have one, check the suggested reserve balance against the actual. It's pretty easy to do.

Actually, the easiest first step is to check the HOA dues payment amount. If it is amazingly low, well, there is a reason why.

Totally agree, yet there are quite a few here who have a canary when their amenity fee goes up $15 each year.........

Spot on-I have been involved with three HOA Boards (two up north and one in Florida). You are correct--most HOA Board members ONLY care about "How much is the fee going up?"

Then--they reduce services to keep the fees "as is". We had an AWESOME landscaper but the water bill, insurance and pool maintenance went up--so they dumped the great landscaper and went with a lower quality (and cheaper) company to "keep the fees the same." We want with a cheaper landscaper instead of adding fees for the OTHER services that went up.

And it shows..our neighborhood no longer looks great (we used to be on par with the Villages) and now landscape beds have no flowers, they just blow the grass into the street, the sprinkler heads are constantly damaged because they use HUGE commercial machines everywhere, the common areas are no longer trimmed (they spray RoundUp every other month to kill the grass along beside the walls rather than string-trim-so now we have a 8" brown strip at the base of the community fences and walls rather than green grass). Ugly. But we saved a few bucks....

The Board excitedly claims they kept fees the same and "when you go to sell our association fees are low! That's a selling point!" But who wants to buy when the HOA across the street is 10 years older but still looks as good as the year it opened?

Short-sighted and a slippery slope. Now we look like a neighborhood with low fees. Once of the things my wife and I loved about the Villages is how well-kept it looked--everywhere.

Kudos to the Villages--the maintenance is one of the major reasons so many people look at ten, twenty and thirty year-old neighborhoods here that still look great. It comes at a cost to the residents but it also GREATLY protects/promotes your home's value.

I disagree. If you keep the funds yourself and earn interest on it, what's to stop you from selling and moving out just before the roof needs replacing. Then the next owner gets stuck with the entire cost.

It seems to me that if the roof needs to be replaced every 20 years, then every year, whoever owns the unit should pay 1/20th the estimated cost as their fair share.

That is the purpose of a replacement reserve study.

I'm kind of confused as to how a condo owner is going to replace rebar on a building that is deemed to be old and unsafe? How does one spend their $100k new fees to fix a portion or all of the building? Or is it a demolish the building and one agrees to pay $100k for their new condo?? Makes no sense to me. If you buy a delapidated 50 year old condo what happened to "buyer beware" and inspections?

What does the $100k do for condo owners?

Condo
 

We were more fortunate with our Clearwater property. We were billed 11,200 but were told it was a one time charge to have the necessary funds in our HOA as required by the state. Hey, it was a lot less than our bond in the villages.

I am not a structural engineer, so I don't know how the concrete repairs are accomplished.

What I know is that it is pricey. All the owners contribute their $100,000 into the fund and, with good budgeting and management, hope it will be enough to preserve their condo for another 20 or more years.

Without the repairs, the condos are nearly worthless. With timely maintenance, the condo is worth much more than $100,000.

Survive?

We could have bought a condo on the east coast, but after visiting my (now late) mother-in-law, multiple times in Boca, the "Condo-Commandos" drove me bonkers...

It was like an episode from "Seinfeld"...

A buyer would know how old the roof is and use that as a negotiating point. Everyone at the condos in The Villages have voted to only do special assessments and not pay maintenance monthly and it had worked thus far.

Of course it has worked well thus far. It will continue to work well until something happens that requires the special assessment, just as it worked well for the condo owners near Miami - until it didn't.

I suspect there is a significant difference in maintenance cost between what is essentially a townhouse and a high rise building. What works well for one may not work at all for the other.

Bugs
 

Timely that I tired of catching and eating lobsters. :-) Fortunately, the short game is coming around to where I can enjoy these pretty golf courses here.

The beach condo folks are looking at some sudden, large increases in things like "reserves" funding. OTOH, there's a couple of new tall ones going up near our old one with some crazy numbers for the unit prices.

Had a tennis acquaintance explain to me that getting on a condo "board" can be utilized as a means of acquiring "kickbacks". Definitely do not miss the "condo commandos", however much fun it was to test their logical reasoning capabilities. :-)