After the Champlain Towers South collapse in Surfside in 2021, Florida passed new laws for condo buildings. They require regular structural inspections and fully funded reserves for major repairs. For investors, that means higher dues and special assessments in many older buildings, and more homework before you buy a unit.
Milestone inspections
- Which buildings. Condo and co-op buildings of three or more habitable stories.
- When. Once the building reaches 30 years after its certificate of occupancy, then every 10 years.
- What happens. A licensed engineer or architect inspects the structure. If there are signs of substantial deterioration, a second, more detailed phase follows, and the association must start repairs.
Structural integrity reserve studies
Associations of buildings three stories or higher must have a structural integrity reserve study at least every 10 years. It covers the roof, structure, fireproofing, plumbing, electrical, waterproofing, windows and exterior doors. Owners can no longer vote to waive or reduce reserves for those items, so many associations have raised dues or levied special assessments to catch up.
What to check before you buy a unit
- The milestone inspection report and whether a second phase is under way
- The most recent reserve study and how far the reserves are funded
- The current budget, recent dues increases and any planned special assessments
- Board minutes from the past year, which often show repairs and assessments before they are announced
- The association’s rules on rentals, including minimum lease terms
- Any litigation involving the association
How it affects financing
Conventional lenders often will not lend in buildings with large deferred repairs, open safety issues or low reserves, so many South Florida condos are non-warrantable. A DSCR rental loan can still finance a non-warrantable condo, but the dues and any special assessment count in the payment, which affects the ratio.
| Item | Monthly |
|---|---|
| Rent | $2,900 |
| Principal and interest | $1,550 |
| Property tax | $520 |
| Insurance on the unit | $90 |
| Condo dues | $650 |
| Total payment | $2,810 |
| DSCR | 1.03 |
Common questions
Yes, through our DSCR rental loans. We review the association’s budget, reserves, milestone inspection and special assessments.
For buildings of three or more stories, once the building reaches 30 years after its certificate of occupancy, then every 10 years.
Not for the structural items covered by the reserve study. Those reserves can no longer be waived or reduced.