Navigating Florida’s New Condo Reserve Laws

The tragic collapse at Champlain Towers in Surfside, Florida, not only resulted in the loss of lives but also brought about significant changes to condominium maintenance and reserves across the state. One of the key changes is the requirement for condominium reserves to be properly funded, impacting both the property’s overall value and the equity held by homeowners. The funding of assessments can have a substantial impact on the financial landscape of a condominium. While assessments related to necessary repairs or improvements can potentially increase the property’s long-term value, they can also affect its short-term marketability and the homeowner’s equity position.

New laws and regulations

New legislation now mandates structural condo reserves for items such as roofs, structures, load-bearing walls, primary structural systems, fireproofing, fire protection systems, plumbing, electrical systems, waterproofing, exterior painting, windows, and exterior doors. Additionally, any item with a deferred maintenance expense or replacement cost exceeding $10,000 is now included in the mandatory reserves. FL Statutes further allows condos to use reserve funds as collateral for loans and provides for a partial waiver for reserves not needed for more than 10, 15, or 20+ years. If a condominium lacks the necessary funds to comply with the new regulations, it can obtain a loan, which will be repaid by unit owners based on their respective interests in the condominium.

Traditionally, condo owners have been allowed to pay the lump sum owed or finance it with monthly payments, which then become a special assessment on the unit. When a unit owner sells the property, all outstanding sums are collected at closing. In the event of foreclosure, the outstanding sums become the responsibility of the new owner, when a third-party purchaser.

Special condo assessments

The new special assessments for Florida condominiums are poised to have a significant impact on property resale and purchases at a foreclosure sale in the state. Firstly, these assessments may affect the marketability of properties in the short term. Potential buyers may be hesitant to purchase a condominium that is subject to a special assessment, as it could represent a significant additional cost. This could lead to longer listing times and potentially lower sale prices for affected properties. Additionally, in the event of a foreclosure, the responsibility for paying off the special assessment falls to the new owner. This means buyers acquiring a foreclosed condominium will not only have to pay the delinquent outstanding monthly maintenance fees but also cover the delinquent outstanding special assessment amount. This added financial burden could further deter potential buyers at a foreclosure sale and impact the overall marketability of foreclosed properties taken back by servicers.

Florida continues to provide limited liability for first mortgagees who acquire title to a unit by foreclosure or deed in lieu of foreclosure when the condominium association is named as a defendant in the foreclosure. Specifically, Florida Statute 718.116(b) limits liability to the lesser of: the unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title; or one percent of the original mortgage debt. Mortgagees are protected from having the same liability as a new owner at a foreclosure sale. However, once the certificate of title issues after a foreclosure, the mortgagee will be responsible for any monthly dues and assessments accruing thereafter until the servicer sells the property. This will be something for the Servicers to keep in mind as to the holding cots after the foreclosure is completed.

Gauging a deeper impact

Overall, the new special assessments for condominiums in Florida are likely to have far-reaching effects on the real estate market. Property values, resale potential, and foreclosure dynamics are all expected to be influenced by these changes, highlighting the importance of understanding, and preparing for the implications of these new regulations and the monetary impact.


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Lourdes Sanchez Barcia

Lourdes Sanchez Barcia

Lourdes M. Sanchez Barcia is an Associate with McCalla Raymer Leibert Pierce LLC’s Litigation Group. Sanchez Barcia has more than 20 years of litigation experience specifically devoted to business and real estate litigation involving the mortgage lending servicing industries. The Florida Litigation Group handles both commercial and residential litigation for clients throughout the state. Sanchez Barcia brings compassion and expeditiousness to the litigation process. She may be reached by phone at (954) 332-9381 or email
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