Your condo questions answered: Will insurance cover rebuilding of Surfside condo?

Many of us live in high-rise buildings in South Florida. And even if we don’t, we have to wonder about the condition of our apartments, offices and homes after the Surfside catastrophe.

We asked construction specialists and attorneys about the questions we should all be asking about the condition of our living spaces and what kinds of updates they need as they deteriorate from heat, humidity, hurricanes and climate change.

If you have additional questions about condominium safety after Surfside, email AskLois@sunsentinel.com.

Q. “I am having great difficulty getting access to the 40-year inspection report of my 46-year-old, 370-unit, 29-floor condo building on the barrier isle. The property management of my condo association has been unwilling to produce it and the local government email address l was advised to contact was fruitless. I know there are likely structural issues in this building but I am unable to evaluate how unsafe it is without access to inspection reports.” —Elisabeth Rossen, Fort Lauderdale

A. You have the right to see these reports. Boca Raton attorney Peter Sachs recommends you file a written public records request to your condominium association and another written request to the city to obtain the documents.

“If either entity denies or fails to honor these requests, they could subject themselves to paying the unit owner’s attorney’s fees, assuming she retains one,” Sachs said. “The records request to the association should also demand copies of any opinions issued by counsel and the board minutes and other financial records showing how and when assessments for capital expenditures were made. Since these are complex areas and to avoid further obstruction and delay by management, I recommend that competent counsel be retained to assist those unit owners that are concerned with retaliation.”

Q. “Can you tell me if the structural inspection requirements every 40 years pertain to townhouses? I live in a building with five attached units. Our development has about 200 units in it.” — Diana, Sunrise

A. They most likely do apply to your townhouse. According to Fort Lauderdale attorney John Uustal, “The rule should apply to her unit as long as the five-unit grouping has a gross floor area of more than 3,500 square feet. When it comes to homes, the exceptions to the inspection requirements apply only to single family residences, duplexes and minor structures that have a gross floor area less than 3,500 square feet.”

The structural inspection requirements in Broward are pretty far-reaching and apply to almost all buildings. Here are the exceptions: U.S. government buildings, state of Florida buildings, buildings on Native American lands, school buildings that fall under the jurisdiction of the Broward School Board, one- and two-family dwellings, and minor structures under 3,500 square feet.

Miami-Dade County’s rules are similar. The 40-year recertification requirements apply to all buildings, except single-family homes, duplexes, non-residential farm buildings, and minor buildings or structures that have an occupant load of 10 or less and 2,000 square feet or less, he said.

Palm Beach County does not currently have an ordinance that requires recertification of high-rise structures. But the County Commission is in the process of creating a new law on building inspections. Commissioners discussed beefing up inspection requirements on Tuesday and are expected to vote on a new law on Aug. 17.

Q. Will the Surfside disaster affect the tax assessments homeowners will receive in the coming months?

A. The tax assessments that will soon come in the mail are based on 2020 values. We’ll have to wait until a year from now to know what effect Surfside had on property values in 2021, property experts told the Sun-Sentinel’s Amber Randall.

“By Florida law, the 2021 assessments are based on conditions as of Jan. 1, 2021. So for the tax bills that will go out this November, the value is based on Jan. 1, which is best measured by sales that occurred during 2020,” said Tim Wilmath of the Palm Beach County Property Appraiser’s Office.

Some experts believe property values could slide as buyers worry about the safety of condo living. Older buildings, possibly hiding flaws, could be more at risk of losing value.

But it’s really too early to say, according to the observers.

“There might be a short dip now,” said Stuart Rohatiner, a certified public accountant with Gerson Person in Miami. “No one really knows right now.”

Q. “To address owners’ safety concerns post Surfside, our property manager arranged for an ‘engineer of record’ to address owners’ structural safety concerns. The state’s Department of Business and Professional Regulation license database shows his engineering license status ‘null and void’ but his standard inspector license active. He has signed literally millions of dollars of condo construction orders for the firm. Do you know if a non-licensed engineer can sign construction change orders on behalf of a licensed engineering firm?” — Elisabeth Rossen, Fort Lauderdale

A. It’s possible the non-licensed engineer is working under the supervision of a registered engineer, Boca Raton attorney Edward Hammel said. But he recommended you reach out to the Department of Business and Professional Regulation to make sure proper licenses are in place.

Q. “The insurance on single family homes generally includes having your home built at today’s ‘replacement’ value; that is, if you have a catastrophe to your personal residence, the insurance company pays to rebuild it. What happens in the event of an incident like at Surfside? Where does the money come from to rebuild the entire condo because the insurance condo owners carry includes contents (appliances, flooring, walls, clothing, etc....everything within the walls), but the homeowners’ association actually carries insurance on the building?” — Steve, Delray Beach

A. The courts are going to get involved in this issue at Surfside, because the owners (survivors and estates of the deceased) will at some point vote to terminate the condominium since it’s been totally destroyed, Boca Raton attorney Peter Sachs said. Already, a receiver, or court-appointed lawyer, is handling financial matters.

There’s money in the land underneath the condominium, Sachs said, and there is also the condo’s insurance policy.

“I’m guessing between the two there still won’t be enough to rebuild,” he said. “If that is the case, I’m predicting the condominium will be terminated and the monies divided between the creditors and the claimants, and the balance, if any, to be divided up among the unit owners. The unit owners also should negotiate cash settlements with their homeowners’ policy insurers. This is a unique situation but that’s how I believe it may pan out.”

Q. How will Surfside affect the condo resale market?

A. Real estate experts are expecting the condo market, red-hot before the collapse, to stabilize in the coming months as potential buyers grow skeptical of older condos, knowing they likely will need lots of repairs.

“All things being equal, condos could take longer to sell than they would otherwise. There’s a lower likelihood of successfully marketing your property, and we could see a short-term price effect,” Florida Atlantic University real estate economist Ken H. Johnson told South Florida Sun Sentinel reporter Amber Randall.

In May, condos reached their highest sales prices since 2012, according to RedFin, a national real estate brokerage. The median sale price for a condo in Palm Beach County was $225,000 in May, compared with $180,000 in Broward and $325,000 in Miami-Dade.

These prices may mark a peak, some experts said, at least in the short term.

“I can see property values falling in buildings until they renovate them to put them into a safe structure, not just something that is cosmetically nice to look at,” said Bobbi Ocean, executive vice president at Galleria International Realty in Fort Lauderdale.

Q. “Shouldn’t condo buildings have enough in reserves to make the repairs needed to maintain the building? There oughta be a law!”

A. There oughta be, but the laws in Florida are pretty weak. Condo associations must maintain reserves for repairs or replacement costing more than $10,000, such as swimming pools, roofs and balconies. But the law gives the owners an out: Funding for the accounts can be waived by a majority vote of owners, according to Sun Sentinel reporter David Lyons.

“No Florida county other than Broward or Miami-Dade even requires condo buildings to make 40-year inspections for older buildings, meaning potentially disastrous situations can worsen for decades,” Lyons said.

The board at Champlain Towers South, the collapsed building in Surfside, compiled a list of $15 million in needed repairs for the roof, support columns and other projects, according to various reports. The likely assessments to owners: $80,000 to $200,000.

You can see why owners would balk at these assessments, but now we can see that these repairs are essential, especially in Florida, where heat, humidity, sea air and climate change can deteriorate buildings before we realize it.

Q. “Are high-rise hotels and motels, office buildings, tall-spired churches, and nonprofit retirement independent living residences (like John Knox Village), as well as assisted-living and critical care residence high-rise buildings subject to the 40-year structural inspection requirements?” — Ben Gooden

A. According to Fort Lauderdale attorney John Uustal, structural inspection requirements in Broward County apply to all buildings, except for U.S. government buildings, state of Florida buildings, buildings on Native American lands, school buildings that fall under the jurisdiction of the Broward School Board, one- and two-family dwellings, and minor structures under 3,500 square feet.

In Miami-Dade County, 40-year recertification requirements also apply to all buildings, except single-family homes, duplexes, non-residential farm buildings, and minor buildings or structures that have an occupant load of 10 or less and 2,000 square feet or less, he said.

Palm Beach County does not currently have any ordinance that requires recertification of high-rise structures. But, “in light of the Surfside tragedy, officials have reported they are in the process of reviewing their rules and regulations.”

Q. “Is there any website that lists the reports or determinations of violations and related warnings of all those buildings in Florida subject to the 40-year structural status requirements, and whether they are in compliance making required repairs and improvements to fix major damages that affect the life of the structures and the safety of residents?” — Ben Gooden

A. Unfortunately there’s no such website, Uustal said.

Q. What kinds of questions should condo owners, likely with little knowledge of building construction, be asking now?

A. Ask about the age of your building, when the last inspection was and what kinds of repair work are planned in the near future, said Boca Raton attorney Peter Sachs, who is certified in condominium and planned development law. You will also want to know how much money is in the building’s reserve fund and if and when an extra financial assessment is coming, he said.

You have the right to inspect your building’s records, which would include finances and repair work. Florida law requires that condos maintain their official records for seven years.

Q. “In light of the collapse, what advice would you give to homeowners’ association members concerning their duties to the unit owners? Would the HOA members typically have insurance which would cover them by the type of lawsuits you expect may be filed? Given what we know about the Champlain Tower collapse, do you foresee that unit owners of other pre-2002 condos who sell their units will have new disclosure requirements to prospective buyers?” —Denny Doyle

A. According to Fort Lauderdale attorney John Uustal, HOAs need to take precautions now to prevent another catastrophic incident in Florida.

“This danger may have been less foreseeable before the collapse of the Champlain Tower, but not anymore,” Uustal said.

He said each association should examine its insurance policy and make sure it is “as broad a policy as possible.”

Disclosure requirements revealing the condition of a unit to a prospective buyer remain unchanged, but buyers are going to be more alert to structural issues, he said.

“Hiding a dangerous condition, or lying about it, is not just illegal, it’s immoral,” he said.

Q. Who’s at fault when there’s a serious structural problem in a building? Is it the architects, the builders, the engineers, the inspectors or city officials? Or all of the above?

A. The architect, builder and engineer are all potentially culpable, as is the condo board if they do not act to fix the problem, Sachs said.

He said the architect would be responsible if there is a serious design flaw, and the engineer if the calculations, supervision or drawings are deficient. The builder would be to blame if corners were cut on materials or if construction failed to comply with the building code. The builder may also be liable for the failings of the architect or engineer.

The board, too, has obligations to residents, he said.

“The board has a fiduciary duty to act in the best interests of the unit owners. If the board is negligent and fails to act, or unduly delays, it may be held liable,” Sachs said.

But city officials are off the hook, according to Sachs.

“The city officials are protected by the doctrine of sovereign immunity,” he said. “Barring criminal conduct (the building official accepted a bribe to look away from a potential problem), it is highly unlikely that a city or its employees would be held legally responsible.”

Q. How often should structural engineers inspect high-rise buildings?

A. Miami-Dade and Broward require inspections when a building turns 40, but there’s no similar mandate in the rest of the state, Sachs said.

The boards that supervise the buildings should take the initiative and conduct a thorough inspection at least every 10 years, and more often is better, said Yaniv Levi, president of Coast to Coast General Contractors in Hollywood.

“It would behoove the association to do it yearly or bi-yearly,” he said. And he recommends the building get a new coat of paint, which also serves to weatherproof it, every seven to 10 years.

Q. How quickly should buildings fix leaks and other water intrusions?

A. Immediately, Levi said. “As soon as the leak is identified, they should find the source of the intrusion,” he said. “If you catch it early, it won’t develop into something major.”

Q. How can I find out if my building was constructed under the highest safety codes?

A. If it was built in 2002 or later, you should have the best building codes or close to it. If your building was constructed before 2002, it likely does not meet the highest standards unless it was damaged by a storm and had to be upgraded.

After Hurricane Andrew in 1992 mowed down entire blocks of cheaply built houses, Florida adopted a statewide building code that has become a national model. So when Hurricane Wilma struck Fort Lauderdale 13 years later, new downtown buildings, such as the 42-story Las Olas River House, held up well. Older buildings constructed before the building code sustained severe damage.

Q. What should owners do if they believe their board is ignoring a safety issue?

A. You should ask to have the issue brought up at the next board meeting, Hallandale Beach attorney Larry Tolchinsky said.

“Get it on the record that the board is ignoring the issue,” he said. “Thereafter, file a lawsuit against the board.”

Boca Raton attorney Guy M. Shir agreed that you may need to take matters into your own hands.

Call the local building or code enforcement department to report your concern, and put it in writing, Shir said.

And if you can afford it, you may want to hire your own engineer.

“In the end,” Shir said, “it’s (your) property, investment and life/safety issues.”

Q. Should condos have rainy-day accounts to pay for property improvements?

A. There’s often resistance from condo owners when a board of directors wants to add to the monthly maintenance fees, said West Palm Beach attorney Michael Gelfand, who is certified in condominium, planned development and real estate law.

“The board is caught between irreconcilable goals: perfect safety, which is impossible, and the owners not wanting their assessments to go up,” he said.

Condo associations are required by law to budget for reserve accounts for repairs of significant components, such as painting/waterproofing, roofs and paving, but frequently owners vote down these budgets as well as expensive structural work, Gelfand said.

These repairs are often expensive. In emails released by the town of Surfside, an engineer said Champlain Towers South, the collapsed building, needed to spend about $16 million to repair cracked columns and crumbling concrete.

The loan meant owners at Champlain Towers South were facing payments of anywhere from $80,000 for a one-bedroom unit to about $330,000 for a penthouse.

Beyond the legally required reserve accounts, boards of directors take an assortment of approaches. Some have no reserves at all, while others have accounts dedicated to repairs needed every five to 10 years, said Mike Ryan, a Fort Lauderdale attorney and mayor of Sunrise.

“Some condos cater to people with fixed incomes. It’s difficult for them to suddenly get hit with an assessment,” Ryan said. “It’s up to the board how they want to handle this. It’s wise for them to put aside money. If you defer too long, it becomes too costly.”

The best strategy for the condo board is often to take the monthly maintenance fees and set aside some of that money for a rainy day fund, he said. This will lessen the financial impact on individual owners when a sudden major repair is needed and the board must ask each homeowner for money.

Q. What if an owner can’t afford the assessment?

A. “It’s like a lifeboat,” Gelfand said. “If you can’t pull your weight, you’re off.” The association may foreclose on your unit. Otherwise, their accounts will run a deficit and they won’t be able to pay the bills.

Sometimes the association will borrow money from a bank to pay for these large expenditures, Tolchinsky said. “For those unit owners that can’t afford to pay, the association will likely spread the payments over time,” he said. “Up to 10 years in some cases.”

Q. “We moved from Massachusetts to the Lotus development in West Boca in June 2020. Since we made our deposit in March 2019 the market value of our home is up 86%, due to constant price increases.

I’m wondering if enough owners will now start selling their high-rise condo units that the values of these units will drop significantly. At the same time, will the prices of semi-attached condos, or low-rise units increase significantly? I can see a number of owners moving to what they will now perceive as ‘safer’ housing. I can also see a number of snowbirds deciding to sell before prices drop, then renting for the season or buying a winter home in low-rise or garden-style units.” — Arthur Missan

A. Ken Johnson, a real estate economist at Florida Atlantic University, said he does not anticipate significant effects on prices because of the Surfside collapse. He said buyers likely will perceive the collapse as a freak accident that’s unlikely to be repeated.

“I expect to see an increase in the demand for satisfactory property inspections contingent upon closing,” he said. “However, I do not see any price impact due to this horrible tragedy. Most know that this sort of thing is unlikely to ever happen again. As for a moving strategy, I don’t really see one with the average cost of a move, all things considered, being between 10% and 20% of selling price.”

Q. In terms of safety, is it better to live on a high floor or a low floor?

A. “In my personal opinion there are risks in both cases,” Tolchinsky said. “Living on the ground floor can have flooding issues. Perhaps issues with crime. Higher floors take longer to escape from the building and they have wind issues.”