You are ready to purchase that condo. The building is beautiful, the amenities are incredible, the location is perfect and it’s in your budget.
Or so you thought…
Introduction
Purchasing a condominium comes with a host of considerations, not least of which are the hidden costs that can catch even the most prepared buyers off guard. As the real estate landscape evolves in the aftermath of the 2021 Champlain Towers building collapse in Florida, prospective condo owners must be especially vigilant about understanding the full scope of ownership expenses immediately and in the future. In this article, we’ll delve into the hidden costs associated with condo ownership shedding light on the changes and legislation that have emerged in the wake of this tragedy.
Building Inspections
In response to the Surfside building collapse, several states and municipalities have proposed or implemented more rigorous and frequent building inspection requirements. This might lead to increased costs for condo owners, as more comprehensive inspections could unveil previously undetected structural issues. While these inspections are essential for your safety, condo buyers should factor in potential costs related to repair work and structural assessments. The age of the building and location will dictate the timing for these inspections.
Stricter Maintenance and Reserve Fund Regulations
Think of Reserve Funds as the Association’s Savings Account to cover the costs of major repairs, replacements and capital expenditures beyond the scope of regular maintenance. In the aftermath of the disaster, some jurisdictions are enacting legislation that requires condo associations to maintain higher reserve funds for unforeseen repairs and emergencies. While this is a positive step to ensure the safety and sustainability of condo communities, it could lead to higher HOA fees or potential special assessments for unit owners. Be sure to review the Condo Documents to fully understand the physical and financial health of the building.
Insurance Premiums and Requirements
Insurance companies are reevaluating their coverage policies for condominiums, which could result in increased premiums for both building and individual unit coverage. Despite the fact that the recent natural disasters (Maui Fires and Hurricane Idalia) were in Hawaii and Florida, insurance companies are increasing premiums throughout the country. Condo buyers should be prepared for potential shifts in insurance requirements and costs, especially for properties located in regions prone to natural disasters. As insurance rates escalate, a larger percentage of the monthly dues are allocated to this coverage. Will building services be reduced as a result? Or will the maintenance fees increase next year? Buyers and Sellers need to understand these issues.
Engineering Reports and Assessments
Post-Champlain Towers, some areas are mandating regular engineering assessments of older (25+ years) buildings to identify potential structural issues early on. These assessments could become part of routine condo maintenance, leading to increased fees for building evaluations and necessary repairs.
Enhanced Emergency Preparedness
In response to the disaster, some condo associations may invest in improved emergency preparedness measures, such as updated evacuation plans, enhanced communication systems, and better training for residents and staff. These improvements, while essential for safety, could be funded through increased HOA fees as well.
Conclusion
The 2021 Champlain Towers building collapse serves as a poignant reminder of the importance of understanding the hidden costs associated with condo ownership. While the tragic event has prompted legislative changes aimed at improving building safety and transparency, these changes may also introduce new expenses for condo owners.
As you embark on your condo ownership journey, it’s crucial to stay informed about recent and upcoming changes in legislation, building codes, and insurance requirements. By factoring in these potential hidden costs, you can make a well-informed decision and prioritize the safety and longevity of your condo investment.
Buyers and Sellers both need to be fully aware of the building’s unique situation. As a Seller, will you be able to afford the increasing Maintenance Fees? Perhaps now is the time to sell. As a Buyer, are these expenses factored into your budget? It is crucial for both current and prospective condo owners to make well-informed decisions when navigating the complexities of real estate. We recommend you enlist the expertise of knowledgeable, experienced and trusted agents. These Building Advisors can provide insight, guidance and assistance in understanding market trends, property values, legal considerations and the hidden costs that determine your decision to Buy or Sell.
