Aging South Florida condo buildings face critical issues

MIAMI - Aging South Florida condos face critical issues, including maintenance backlogs, insufficiencies in reserves and potential financial burdens on owners due to special assessments.

Some buyers are weary, as inventory is up and prices are down.

Florida has about 1.5 million condos, with 37% of them in Miami-Dade and Broward counties.

This week, Gov. Ron DeSantis called for a special legislative session to tackle the issues that force people to leave the homes they have lived in for years.

Melina Moren lives in what appears — from a distance — to be an ordinary North Miami highrise. Upon closer inspection, CBS News Miami saw some of the issues plaguing Three Horizons South, including rusting pipes, a giant hole near the top of the 50-year-old building and missing balconies and others that needed repair.

"The condition of the building has deteriorated within the last couple of years," Moren said.

"We have a leaky roof that could be causing water damage and mold issues," she added.

Moren said she's paid over $11,000 for several special assessments over the last few years for the roof and concrete restoration projects. She's worried more special assessments are on the way.

"The damages have grown, and we need money to fix it," said Moren.

CBS News Miami contacted the association president to see if the repair projects are nearly complete or if future special assessments might be needed. She didn't respond as of Thursday.

Ketty Urban, who stepped down as the association's property manager last month for personal reasons, explained that on top of the association trying to meet upcoming safety deadlines to meet state requirements, the building is underinsured and has yet to fully fund mandated reserves.

"All these additional inspections, the reserve issues, the governance issues with records, and all these other things, plus the insurance crisis," said Urban. "It's literally a disaster."

Urban, who has worked as a property manager in South Florida for 30 years, said it is a crisis for many aging buildings.

"Very frustrating for me during my career is the fixation on trivial things that, while maybe they are important to some degree, definitely not to the degree of making sure that you don't have deferred maintenance," said Urban.

CBS News Miami asked her: "How many [condo associations] do you think over the course of your career were always trying to push for deferred maintenance, saying we'll get to those big physical issues later down the line?"

"At least 50%," answered Urban. "Now, who's left holding the bag, the owners."

Craig Studnicky, ISG World's CEO, who has been selling real estate for 45 years, said the unknown rising costs of special assessments in aging buildings scares off potential condo buyers.

"They're asking realtors: please don't take me to a special assessment building," said Studnicky.

Condo owners trying to get out appear to be selling at a discount. His firm's research shows condo sales in buildings 30 years or older in Miami-Dade, Broward and Palm Beach County are selling 20% lower than they were at the start of the year.

"They think they saw bargains, but when they get their bill for special assessment sometime next year, I think they're gonna realize they bought fool's gold," said Studnicky.

Studnicky foresees a potential condo cliff without changes to state laws to help homeowners. He points to more lenders steering clear of providing loans in problem buildings.

"If the building is in real bad shape, banks aren't gonna touch that," stressed Studnicky. "Without any modification, more than likely, the buildings will continue to further deteriorate and may ultimately one day be condemned, leaving the value of the units to zero."

Studnicky said a possible solution is for associations to consider selling their building to a willing developer. However, a case currently working through the Florida courts might make that move nearly impossible. A recent ruling prioritizes one unit owner's interests to stay and block a sale over the majority.

One local lawmaker believes the best path forward is to address rising insurance costs.