I don’t know about you, but my vision of retirement has always involved living in a luxury condominium on a beautiful Florida beach. All of my neighbors in this daydream meet at the pool each day for happy hour at sunset, and there are more smiles and laughs to go around than the actors have in all of those Big Pharma commercials combined.
Unfortunately, instead of the standard dream of my golden years, I am now forced to reconcile with the fact that condo living as we previously knew it has changed. After the Surfside condominium tragedy, our state and local leaders took a hard look at aging condominium buildings and what safety measures should be put in place to protect condo residents. Legislation was then enacted that mandates extensive inspections, with stricter guidelines for older buildings and those within a close proximity to salt water. This new legislation and the required inspections were necessary, but this additional due diligence is also expensive. If an issue is found during the inspection that necessitates repairs being made, the cost to complete such a project could easily be in the hundreds of thousands of dollars. These costs are typically passed on to the condo unit owners in the form of special assessments.
How is this new legislation impacting the condo retirement dream? With the higher cost of insurance as of late, many unit owners have already been dealing with increased assessments even before considering the new inspection requirement. The reality is that most retired individuals on a fixed income are unable to afford the assessments needed to maintain the building. We are talking about hard-working people that spent their entire lives trying to make their retirement dream a reality. These unanticipated costs were simply not factored into their retirement budget. And who can blame them? None of us saw this coming.
For those that are lucky enough to have additional retirement savings on top of their fixed income, some tough decisions still need to be made. For example, does a person dig into their savings to fund repairs to an aging building with no guarantee that additional assessments will not be required in the future? Or do they sell while they still can and find a new living situation with less risk? Instead of enjoying their retirement dream, uncertainty lingers, and owners are now being forced to navigate the turbulent waters of the resulting condo crisis.
It should be noted that the Florida statutes allow for condominium termination, which is probably the most realistic first step on the pathway to demolition. Under state law, current unit owners would receive a buyout that must be “at least 100% of the fair market value of their units” and that “shall be determined by an independent appraiser selected by the termination trustee.” Even though there are mechanisms for compensating current owners in a termination scenario, it doesn’t mean that the owners are all going to agree with the figure. It’s possible that a significant amount of litigation will result from disputes over the amount of compensation received, as well as other aspects of the termination process.
For those of us still in the workforce, the realities of these changes are making the beach retirement dream more of a retirement fantasy that will probably never come to fruition. As it relates to retired residents, the recent changes are creating more of a retirement nightmare. This is a developing story, and it will take several years to really see how the new legislation ultimately impacts condo living in Florida. The scarcer the resource, the more likely that people will fight over it. It’s safe to say that they aren’t making any more oceanfront land in Florida, so many condo owners won’t be sailing away quietly into the night if forced to vacate their slice of paradise. In the legal community, we anticipate that all of this means a significant amount of litigation related to all aspects of this process. Only time will tell how the story ends.
David J. Miller is the managing partner of David Miller Law, PLLC (davidmillerlawpllc.com) in Largo and also assists in an Of Counsel capacity with Lucas, Macyszyn & Dyer Law Firm (lmdlawfirm.com).