Maria Tkachuyn and her husband purchased a seventh-story apartment with a terrace and balcony offering stunning views of Biscayne Bay in South Florida for $490,000 in 2022.
The couple spent another $100,000 renovating their unit in the Cricket Club condo tower, installing oversized Italian porcelain tile and adding marble countertops and an island in the kitchen.
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Two years later, the couple was hit with a six-figure special assessment, a tax that condo owners and homeowners in HOA communities must pay to cover the costs of renovating their properties or replenish underfunded reserves.
“This is outrageous,” Tkachuyn told The Wall Street Journal.
Florida condo associations are raising fees to meet safety standards
Following the 2021 Surfside apartment complex collapse, in which 98 people died due to construction defects, Florida is mandating stricter safety standards and more frequent inspections, and many condominium associations are raising dues to build up reserves for repairs.
The Cricket Club Condominium Board recently proposed a special assessment of about $30 million for repairs such as replacing the roof and waterproofing the facade — amounting to more than $134,000 per unit owner.
Some owners, like Ivan Rodriguez, who bought his property for $190,000 in 2019 by liquidating his 401(k) retirement account, can't afford the extra fees and are instead putting their condos up for sale.
The inventory of apartments for sale in South Florida has more than doubled since the first quarter of 2023, now standing at more than 18,000 units, due to rising insurance costs and the cost of repairing old buildings that don't pass inspections, the WSJ reported.
“I think this is just the beginning,” Greg Mayne Bailey, executive director at real estate firm Colliers, told the WSJ.
But sellers are finding it hard to find buyers: Rodriguez initially listed his property for $350,000 but was forced to lower the price, eventually selling it in April for $110,000, 42 percent less than he paid for it.
Fort Myers real estate agent Claudia Springay told NBC2 there were 1,000 more condominium units on the market in May compared to last year, noting that association dues are “up 20 to 25 percent on average.”
“People are very nervous about the fact that they're buying a condo and getting a new appraisal, and in some cases the appraisal is pending and going to a new buyer,” added Sue Christiano, another Fort Myers real estate agent.
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How to avoid being charged a large special assessment
Many of Florida's older condominiums have been exempt from reserve fees for years, but the new law increases fees for unit owners to ensure condominiums can adequately cover the costs of maintenance and repairs.
Tokatjung said the first warning sign was when the bank refused to give her and her husband a mortgage on the apartment unless they put a 25 percent down payment because the building had no reserves.
Before purchasing a property, it's important to consider whether the HOA's reserve fund will be sufficient to cover repairs, maintenance and unexpected expenses.
If you have support from other homeowners in your building or community, you may also be able to file a complaint with the board when you receive a special assessment, but this is usually only viable if you can prove that the assessment is too high or that it doesn’t fund a project needed for health and safety reasons (such as adding a pool).
Cricket Club residents say the special tax has created frustration between unit owners willing to pay the money to relocate and those who can't afford it and have been forced to sell. Some residents are collecting paperwork to find evidence that the tax should be lower.
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This article is for informational purposes only, should not be construed as advice, and is provided without warranty of any kind.
