Condo takeovers
Condo termination. Those are fighting words to condo owners who are living in prime waterfront locations in Florida. However, it’s going on right now in Southeast Florida, all because of the collapse of the Champlain South condos in Surfside.
Developers in the Miami Beach area and all along the barrier island going north are swarming to the area in order to acquire older waterfront condominium buildings, and there are plenty of them. Hundreds of condo buildings, representing more than two-thirds of condos in the Miami area alone, are either approaching 40 years old or have reached that age and gone beyond. At that age, the county requires a recertification to make sure the property is still structurally sound.
Although the Surfside collapse is still under investigation, engineers have determined that a combination of problems likely was at fault. They have confirmed design flaws, poor construction and delayed maintenance because owners were reluctant to spend the money required to retrofit the property.
The Miami Herald recently reported in their e-edition that an investigation of the court records after the collapse revealed as far back as five years ago that contractors of a new building next door were concerned about the vibrations affecting the Champlain South building. At that time, they halted drilling, then resumed, but according to the engineers, that alone could not have been the cause of the collapse five years later.
It was recently reported by the Wall Street Journal that at least eight waterfront condo buildings in the Miami area are in sales discussions with developers. These buildings are in prime locations and developers are frequently offering to pay owners above market value for their condos. The buildings will then be demolished, and high-end residences will be built to accommodate wealthy buyers who are relocating to Florida in droves.
Developers of one of the condos going through termination are offering more than $750,000 for studio apartments that sold for around $55,000 in the late 90s. However, condo termination is not easy even when developers are offering more than these owners ever dreamed. In addition, condo regulations for every association are different and sometimes can be ambiguous. Some buildings require as few as 75% of its residents to vote in favor of termination; others can require 100%. And of course, every resident has a different take on what’s the best thing to do; many are facing the prospect of having to relocate from an area they may have lived in for 30 years and will likely not be able to replicate what they had and certainly not the view.
Developers are taking the position that they are offering a private sector solution to the problem by buying out residents who probably couldn’t afford the assessment to bring the building up to a recertification level. Owners have their equity and can move on and builders are offering high-end brand new condos built to today’s standards, revitalizing the area.
In March, the Florida legislative session ended without any new building recertification requirements. Holmes Beach is taking it into their own hands and are considering creating their own safety measures. The commissioners will again take up the issue of recertification on older buildings on the Island in an effort to protect both homeowners and visitors.
The real estate market is nothing if not fluid. Whoever would have guessed not that many years ago that condo termination would be a phrase the average waterfront homeowner would be adding to their vocabulary? So goes Florida, never a dull moment.
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