Miami Building Collapse Impact on Fla. High Rise Market?

[jaxlongtimer]

Having been involved in maintenance of various residential and commercial buildings, my experience suggests one should budget and reserve about 4 to 5% of a building's replacement costs for annual and major maintenance.  Some years you won't spend much of such a reserve but other years you will go all out.  This approach would also parallel standard depreciation methods and approximate real life maintenance cycles averaging 20 years or so across the board.

In the case of Surfside, had they done so they would have had more than adequate funds to pay the $16.1 million in recommended repairs.  Why people in condo's think that they don't have to spend this ratio of expenses to value when homeowners and businesses do is beyond me.

If I were looking at some revisions to State condo laws, I would make at least this one:  A minimum annual capital reserve contribution of at least 4.0% under the administration of a third party engineering firm approved by both the condo association and the State.  When the administrating firm says "fix it" the reserve is appropriately tapped following competitive bids from qualified contractors.  If the dollars exceed a certain threshold, maybe have a second and/or third opinion from other qualified engineering firms.  This rule would also remove much of the "surprise" assessments that cause in-HOA political bickering as experienced at Surfside.

[Lunican]

Is there a government agency that audits condo board finances? The state can require certain percentages of this or that for reserves, but who enforces it in reality?

[jaxlongtimer]

Is there a government agency that audits condo board finances? The state can require certain percentages of this or that for reserves, but who enforces it in reality?

Further to a discussion of reserves and how states regulate them (or don't), see the below article that covers a lot of the issues:

https://www.nbcnews.com/news/us-news/collapsed-florida-tower-could-have-been-repaired-faster-under-repealed-n1273310

[jaxlongtimer]

This article talks about the impact of Surfside on the high rise condo market going forward:

https://www.nbcnews.com/news/us-news/surfside-condo-collapse-could-reshape-miami-s-real-estate-market-n1273306