Key Points

• Buildings that are at least 30 years old, like the fallen Champlain Tower, must undergo special inspections, repairs and raise reserve funds for future maintenance. The deadline is the end of this month.
• For some associations, costs run into millions of dollars, and condo owners, many of whom are retirees on fixed incomes, are struggling.
• Some owners are hoping to sell their units rather than comply, others are walking away and still others are looking for investors to bail them out.

After the deadly collapse of a 12-story condo tower in the Miami, Florida, suburb of Surfside in 2021, state lawmakers implemented new requirements for older condos. Buildings that are at least 30 years old, like the fallen Champlain Tower, must undergo special inspections, repairs and raise reserve funds for future maintenance. The deadline is the end of this month.

With inspections underway, the bills are about to be paid. For some associations, costs run into millions of dollars, and condo owners, many of whom are retirees on fixed incomes, are struggling.

Approximately 1 million units are subject to the new capital-intensive rules. Some owners are hoping to sell their units rather than comply, others are walking away and still others are looking for investors to bail them out.

Veteran analyst Peter Zalewski, founder of Miami-based real estate consultancy Condo Vultures, calls it the condo cliff.

“I would compare it to what we saw during the Great Recession, which are actually zombie buildings. These are the units where a small minority will basically have to carry the cross or pay for everyone else who can’t pay, whether they can’t or choose not to pay,” Zalewski said.

By Zalewski’s count, in South Florida, including Miami-Dade, Broward and Palm Beach counties, three-quarters of all condo units for sale are more than 30 years old and subject to the new rules. In the normally busy summer season, sales fell 21.5% year over year and the average price fell 2.4%. In the third quarter of this year, active listings increased 60% compared to the same period last year.

According to a recent report from the Palm Beach Post, special fees imposed to make repairs have reached $200,000 per unit owner, and repair bills have reached $15 million.

“What’s happening now is these reports are coming in, budgets are being drawn up for maintenance fees, and a lot of boards don’t want to acknowledge how much it’s going to be,” Zalewski said. “All the bills will be sent out, and people will get their little booklets that say how much they have to pay each month. They’ll get them in January. So right now it’s like the calm before the storm.”

In September, Florida Gov. Ron DeSantis called a special session to address this condo association financial abyss. However, legislative leaders decided to wait until the regular session begins in early 2025 to consider making changes to the law, saying they need to get a better idea of ​​the financial aspects involved, according to the Palm Beach Post.

Stefania Ancona, a Miami real estate agent, says the buyer pool is now extremely limited, so sellers have to pay for new appraisals first or lower their prices. But there is another way out: investors.

One of those buildings, the Bay Garden Manor condo building on West Avenue in Miami, is being sold to a large investor and torn down to make way for a luxury waterfront property, Ancona said.

“I think it’s safe to say that foreclosures or short sales may occur. I don’t know yet. I haven’t seen many yet, because, again, investors are buying the buildings they feel are in a desirable location,” she said.

Condo prices were down about 2% in the summer season, and Zalewski said that’s just the beginning.

“It was only in September that the area started getting bombarded with information about the dangers,” Zalewski said. “Uninformed buyers saw lower prices [in the summer] and thought it was better to buy now so they could own a piece of South Florida. There are a lot of buyers who are regretting it right now.”