LEGAL Q&A 30 March 2022 www.goodnewsfl.org Good News • South Florida Edition The Good News provides a monthly column with important content having to do with topics from the legal community. We hope our readers enjoy the perspective offered. This monthTripp Scott attorneys Bill Davell and Matthew Zifrony, who leads Tripp Scott’s condominiumand homeowners’ association practice, discuss the issues driving rising costs forHOAs – and fees for their members. ASK BILL: William “Bill” C. Davell, Esq. Higher Condo Fees? You’re Not Alone Here’sWhat You Can do William “Bill” C. Davell, Esq. Bill Davell: Matt, Zillow reported last summer that condo association fees had exploded over the last year – rising a full 19% year-over-year nationwide. It seems like the pain is even more acute here in Florida, especially given the large segment of our population that is retired and on fixed incomes. What’s going on? Matthew Zifrony: Bill, excuse the pun, but HOAs are caught in a perfect storm, getting hit from all sides with higher costs, some in fact related to bad weather and rising obligations. The obvious place to start is inflation. Very simply, everything is more expensive in the wake of a year of the fastest-rising prices in two generations, but especially costs of energy and electricity – which are huge for most condo complexes – staff and construction. Which relates to a second huge factor: the catastrophic and tragic Surfside building collapse, which has both surfaced and driven issues contributing to rising costs. One key issue the collapse surfaced is that condos are simply getting old. The 1980s saw a major condo building boom, and those buildings are getting to the age where erosion and wear and tear are both increasing maintenance costs and creating the need for inspections and not just structural repairs but also updates to aging mechanical and electrical systems. Those maintenance costs are directly dropping into fees now, plus creating the need to increase reserves for future expenditures. And they lay the groundwork for potential future special assessments, which in the case of Surfside would have run to hundreds of thousands of dollars. There will also be expenses related to government-mandated structural engineering inspections. These requirements are already in place in Broward and Miami-Dade, and associations in Palm Beach County have already been put on notice that they are forthcoming there. Even if they weren’t, prudent boards would limit potential liability of the kind that will befall the Board at Surfside, and insurance companies will likely demand them. BD: Which brings us to another big-time driver of HOA sticker shock: skyrocketing insurance bills. MZ: That’s for sure. Surfside is going to make insuring condo structures, especially older ones and those in vulnerable areas, more expensive than ever. But even before Surfside, Forbes had labeled Florida’s insurance market a “disaster.” Hurricanes Irma and Michael, though they skirted our region, saddled insurers with tens of billions in liabilities. Plus, I’m not going to get into great detail here, but there are a number of aspects of Florida law – assignment of benefits, risk multipliers – that turn property damage claims into a bonanza for some attorneys and a nightmare for insurers. It’s no coincidence that Florida accounts for about 3/4’s of all the United States property lawsuits. All-in-all, massive losses and increased potential liabilities are forcing most insurers to massively increase premiums and others to leave the state altogether, putting further pressure on rates. BD: Sowhat can condo owners do in the face of rising costs? MZ: The first thing is to stay informed and stay involved. Homeowners have many rights: you can attend most HOAmeetings – and even record them under certain conditions – and have the right to speak. You must receive notice of meetings, including those to consider or vote on special assessments. You can demand written notification of any special assessment which must state the specific purpose, description and estimated cost. You have the right to inspect many financial reports and the association’s official records subject to reasonable rules adopted by the association. And you have the right to advance notice of and copies of the budget, and if owner assessments are increased by more than 15%, 10% of owners can petition the board within 21 days to request a special meeting to consider a substitute budget. Unfortunately, because the stakes are so high – ongoing and special assessments literally hit us where we live – relations between homeowners and boards can get contentious and downright ugly. Shouting, name-calling and sometimes the need to call in security are not uncommon. It’s far better to remain on good terms with board members, to try to see things from their perspective – often they are trying as hard as possible to keep costs down, sometimes as in Surfside, too hard. Be curious about costs and about the potential for needed maintenance and especially upcoming special assessments to avoid sticker shock, and where possible, offer constructive suggestions and not just criticism. But if worse comes to worst, and you believe your rights are being violated, our team at Tripp Scott has firmly established our reputation as one of the state’s preeminent authorities on condominium and homeowners’ association issues. We’re happy to advise you, and equally so your board, not only on the complexities of condominium law but best practices when it comes to both management and governance. If you have any topics you think my be of interest to our readership, we encourage you to email us at [email protected]
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