The collapse of the Surfside condo in Florida is causing fallout for owners, leading to a potential "condo cliff."

• Buildings older than 30 years, such as the Champlain tower, must undergo special inspections, make repairs, and set aside funds for future maintenance before the deadline at the end of this month.
• Many retirees on fixed incomes who own condos are facing millions of dollars in costs.
• Some owners are considering selling their units instead of complying, while others are leaving and some are seeking investors to rescue them.

In the aftermath of the 2021 deadly collapse of a 12-story condominium tower in Miami, Florida, state lawmakers enacted new regulations for older condominiums. Buildings at least 30 years old, like the Champlain tower that fell, must undergo special inspections, make repairs, and establish reserve funds for future maintenance. The deadline for compliance is this month's end.

As inspections commence, the bills are being settled. For certain associations, the expenses amount to millions of dollars, and many condo owners, who are retirees living on a fixed income, are responsible for the payments.

Capital-intensive rules apply to approximately 1 million units, prompting some owners to consider selling, others to abandon, and others to seek financial assistance from investors.

Peter Zalewski, a longtime real estate analyst and founder of Condo Vultures in Miami, refers to the condo market's decline as the "condo cliff."

Zalewski stated that the current situation can be compared to what occurred during the Great Recession, where buildings were effectively "zombie" units with a small minority bearing the financial burden for those who couldn't or chose not to pay.

In South Florida, which includes Miami-Dade, Broward, and Palm Beach counties, three-quarters of all condo units for sale are over 30 years old and subject to new rules. During the summer season, sales were down 21.5% year over year, and the average price was down 2.4%. In the third quarter of this year, active listings increased by 60% compared to the same period the previous year.

According to a recent report from the Palm Beach Post, special assessments for repairs have reached up to $200,000 per unit owner, and repair bills have totaled as much as $15 million.

Zalewski stated that the current situation involves the arrival of reports, the preparation of maintenance fee budgets, and many boards' reluctance to acknowledge the total cost. The bills will be sent, and individuals will receive their monthly payment booklets in January. Thus, the present moment is a tranquil period before the upcoming storm.

Florida Gov. Ron DeSantis called for a special session to address the condo association financial cliff in September. Nevertheless, legislative leaders opted to postpone any changes to the law until the regular session in early 2025, citing the need for a more comprehensive understanding of the financials involved, as reported by the Palm Beach Post.

Miami real estate agent Stefania Ancona states that the pool of buyers is currently very limited, forcing sellers to either pay the new assessments upfront or lower their prices. However, there is an alternative option for sellers: investors.

Ancona stated that the Bay Garden Manor condo building on West Avenue in Miami will be sold to a large investor and demolished to make way for luxury waterfront property.

"It's possible that foreclosures or short sales may occur, but I haven't seen many yet because investors are purchasing buildings in desirable locations," she stated.

Zalewski stated that the summer season saw a 2% decline in condo prices, and this is only the beginning.

"Zalewski stated that the area only began receiving information about the dangers of buying in South Florida in September. Uninformed buyers took advantage of lower prices in the summer, believing they should purchase immediately to own a piece of the area. However, there is now a significant amount of regret among buyers."