Condo Associations Nationwide Lack Funds To Maintain Structural Integrity

The Rubble Of Champlain Towers South In Surfside, Florida, After It Collapsed In 2021.

The condo collapse in the Miami suburb of Surfside has shocked the nation, and while its root cause remains unknown, the building's lack of funding for needed repairs is a common story in similar communities nationwide.

As much as a third of condo and homeowners associations have less than 30% of the reserve funds needed to be ready for major repairs, according to data from advisory firm Association Reserves reported by The New York Times. Most states don't require condo associations to keep large reserves, and only 10 states require associations to make assessments to figure out how much major repairs would cost.

Legislative momentum for requiring deeper reserves for repairs has already started to grow in some states, the Times reports. The Community Associations Institute, a trade group for condo and homeowners associations, called a special meeting this week to discuss a policy proposal that would set a minimum funding threshold. It is also mulling a proposal requiring associations to commission expert studies to determine the amount of money needed to keep in reserve.

The 2018 assessment at Champlain Towers South created a $15M bill, which would have required owners in the building to pay between $80K and over $330K. Arguments over the bill prevented the repair from starting until earlier this year, by which time the problems had deepened and likely would have been even more expensive if the building had remained standing.

Search and rescue operations at the site of the collapse were paused on Thursday due to indications that some remaining parts of the building were at risk of collapse, CNN reports. At the time the pause was ordered, 18 were confirmed dead and 145 people were still unaccounted for.

Real estate professionals in South Florida are bracing for some form of legislation to be passed in the wake of the disaster while predicting that the cost of ownership is likely to rise as a result.

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