I am quite saddened by the needless loss of life but otherwise have very mixed feelings.

In looking at some of the images from various buildings with an amateur's eye (including but not limited to the collapsed one) , it seems clear there are major problems that don't go away on their own. Who else should have spoken up? How about the contractor who was there a few weeks earlier who took disturbing photos of obvious problems? Should he have called the city?

When a homeowner's board, which is supposed to be looking out for the welfare of all owners, gets a hair-raising report required by law calling into question the fundamental safety of the building and doesn't give it the priority and urgency it deserves (and it sits with no action for months), who's to blame? Whom do you feel sorry for?

How about the lax enforcement and monitoring of existing laws requiring inspection and recertification of existing structures. The cities know the ages of the buildings, they issue the permits. Nothing seems to be seriously done about follow up. Who's to blame?

Maybe some of the petty bickering on the hoa's will stop?

Nah...

What percentage of residents of coastal Florida live in multi-story condo buildings that are 40 or more years old? Where are these people going to go when/if they must move?

Good comment, stax, it's probably not as clear cut a situation as my quick, initial reaction might have considered .

Just to add to the muck - who was the inspecting engineering firm working for, to whom were they responsible? The homeowners board simply represents the homeowners - should the report have gone to all the homeowners? The inspection was required by the building code, was he working for the responsible agency?

After the passage of so long without appropriate action being taken, should the engineer have been required to monitor an appropriate response, with some kind of fiduciary or professional obligation to communicate to someone in some way? Shouldn't the appropriate authorities have received the report 3 years ago? Should compliance actions and follow up be more rigorous on the part of the municipal authorities?

No answers but I think it's a good bet that the processes will change, inspections and reporting will be stepped up, and more buildings will be shut down.

Each area is of course different but unless the building was in immanent danger of collapse once the report is handed to whoever asked for the report the engineer has finished their responsibility. If the building is in immanent danger of collapse the engineer is required to report it to what is here called the Dangerous Housing and Codes Violation area. They are the ones that order the clearing of buildings and taping them off.

There were at least two here that made the news cycle last winter. One was rapidly demolished. The other one it was the brick facing that had shifted away from the building wall and the residents were allowed to reenter while repairs were made.

Lifetime Florida resident here. Since Hurricane Andrew in 1992, building codes were vigorously changed and homes and condo buildings were built much safer and to stricter codes. Now, this was 29 years ago so the older buildings were “grandfathered” in under old laws. Not only that, but the law says the owners of those buildings are not responsible for repairs bringing these older buildings up to code, it’s up to the HOA/city to fund those repairs. I am sure this will change again after this tragedy. People are pointing fingers left and right and I suspect we will see many lawsuits, but unfortunately that doesn’t help or change what happened here. As far as the topic the OP brought up, yes I think this will change the condo market. I also suspect this will change the housing market here as well, as scared condo residents will want to flee condo living for single family homes. Crazy situation all around.

An inspecting engineer can report observations but lacks a crystal ball and would stop short of suggesting a building could be in imminent danger.

The report three years ago stated that major structural damage was observed and that failure to proceed with needed expensive repairs "in the near future will cause the extent of concrete deterioration to expand exponentially". That's pretty alarming language. The report also noted a "major error" in the original plans prepared by the architects and the consulting engineers for the project that was contributing to the observed problems. My quotes are from the report, easily found by anyone interested in learning more.

This tragedy happened at an ocean front building built on sand and exposed to marine elements in Florida, not in Missouri. Requirements, conditions, and enforcement vary, as you mention. None of that matters because actions recommended to be taken "in the near future" were not done. It's great that there's a 40 year recertification requirement but newspaper reporting has quickly uncovered the fact that there's widespread non-compliance by a shockingly large number of high-rise buildings in that very neighborhood and on the same and nearby streets. And they're seemingly getting away with it (to the detriment of the safety of residents) because of lax and ineffective enforcement of the existing laws

Do a search for Millennium Towers in San Francisco. High rise in a earthquake zone with substantial foundation problems. Even the uber rich have issues.

The controversy over the Millenium Tower is about it having sunk a bit and developed a lean. At issue is its design and engineering. I'm not sure why you're suggesting that the financial circumstances of the owners of its (previously) admittedly pricey units has anything to do with it. If it were an office building or a 50+ story homeless shelter, the issues would be the same.

I have a wondering. I wonder if, perhaps, the owner-residents of the building refused to authorize the repairs because of the cost-to-each.

For years our HOA couldn't get the needed road repairs done in our subdivision because every year the Motion for the repairs was voted down by the lot owners.... no one wanted to chip in the extra money.

So, I wonder how much of this dire info was given to the unit owners, and, did they refuse to put in the money to do the work. ?????

55 parts of $15 million (or more) is....

My husband and I are having a "there but for the grace of God, go I" moment. We own a condo in an concrete oceanfront building. Several years ago, my husband recoginzed the signs of spalling in the ocean front balconies and was able to convince the owners that repairs needed to be made asap. Thankfullly the owners came on board and had the resources to pay the special assessment.

We've both been watching the news about this collaspe. From what we've read, the condo association president tried to get the board and owners to recognize the deterioration, repair the damage and do what was necessary to protect everyone's business. It sounds like owners didn't want to spend that much money. These units were owner or long term tenant occupied. I've seen nothing that suggests there were short term renters in the building. I strongly suspect that many of the owners simply didn't have the funds to pay the special assessment or the equity or finances to borrow against their unit to pay either. The condo association might have been able to get financing but that means monthly association fees would have to increase. Of course, they should have been higher ever since the building was built to create the reserves necessary to fund repairs. But higher monthly condo fees mean it is harder to qualify to finance a unit.

I believe the condo association president and many of the board members quit when the repairs weren't started when the inital report of the condition of the building was released and repairs weren't started.

It is going to be interesting seeing who is guilty when the law suits start going through the court system.

My heart goes out to all who lost loved ones and all their possessions including pets in this disaster.

"For years our HOA couldn't get the needed road repairs done in our subdivision because every year the Motion for the repairs was voted down by the lot owners"

I know this is another item that is location specific. You don't mention where this association was but in California, there have long been laws on the books requiring associations to assess future spending needs (to repair or replace major common items) and have an annually updated action plan that builds enough in reserves so that money is available when needed. A major revision to the laws (which are in the Civil Code) took place in 2014 - major re-inspections need to be done every three years and funding plans must be established and followed. For my primary residence, the major item in the budget is maintenance and replacement of the private roads and I can assure you that the moneys allocated to the reserve balances are not something anyone can prevent happening. It's required by law.

One of the benefits of the requirement for adequate reserve funds is, hypothetically, if 50% of the homeowners were to change in one year, the new ones aren't stuck paying expenses the former ones should have been required to contributed money into a reserve for, to cover what's was anticipated to be necessary in the future. .

Whether the mechanism is Florida is similar or different, you can be sure that board members who did not push for more immediate action likely will be held personally liable. There was reporting that several board members resigned over the controversy in recent years, these were probably the ones with the best judgement.

(PS edit) - I missed preceding insightful comments by jlhug, I'd composed this over a few hours)

Elmer, we had money set aside for everyday and future repairs, just not the extra thousands needed to make very costly repairs to roads. This condo HOA may have had the same problem; most people just don't have a lot of extra money to put toward expensive repair assessments... and so the final cost grows as the deterioration gets worse.

I did a little research and there were 136 units divided into $15 m would equal a special assessment of $110,294.... each! That is probably as much as many of the units were worth.

CA Kate, here’s alink to a recent sale of a 1570 square foot 2 bedroom 2 bath condo that sold for $555,000 in June, 2021. A three bedroom unit went for $760,000. I think your values for an oceanfront condo in Florida are a bit off.

Pending assessments to repair the building ran from about $80,000 for a one bed room unit to about $335,000 for a three bedroom penthouse unit.

Monthly condo fees were $956 a month for the two bedroom unit and $1,244 for the three bedroom unit. I would love to see the financials and the resale package that was provided to the buyers of these units.

Elmer, I just did a quick search and can't find anything that says that condo associations are required to maintain reserves. I did find this from a legal firm that seems to specialize in condo law. They do have to have a reserve study completed every three years. If you do have a cite, I'd appreciate it. I totally agree that condo and HOAs need to have reserves to pay for maintenance and repairs. I personally think the board members are a bunch of idiots if they don't fund reserves for many reasons.

Where our condo is located, the association has to do a reserve study every five years and evaluate whether or not reserves are adquate or even required. BUT, there is no legal requirement that forces the association to actually have reserves.

Our condo association/homeowners association laws (called the Davis-Stirling Act) are pretty detailed and are intended to protect both homeowners and the actions and powers of their associations as needed to look out for the common interests.. In particular, a "reserve funding plan" is required by law, It involves a periodic assessment of future expenditures needed for major items and how the moneys required will be built up over time. This information and the annual assessments must be disclosed to all homeowners annually. For more immediate and pressing problems not anticipated, of course special assessment procedures and rules are also prescribed.

I'm sure Florida and other states have their own rules. California's laws (about most things) have tended over the years to be more comprehensive and detailed than elsewhere so I wouldn't speculate how things are elsewhere. I do know that for our two homeowners associations, consultation with their law firms specializing in condo law is a regular and ongoing activity through the year. Seemingly on matters of "what do we need to do": as well as "what can we do or not do".

Condos -- or our nation -- this is a result of "Letting 'George' do it." Lots of wakeup calls for everyone right now.

What does that mean, chisue?

@Elmer J Fudd - are they actually required to fund the plan or just report its deficiency? I was under the impression they don't actually have to have the money, or any real plan to get the money, they just have to report the deficit on a per dwelling basis.

I understood it to be more of a full financial disclosure than any real requirement for active planning and repairs.

ETA: I want to clarify or correct, "real plan to get the money." I know they must develop a funding plan, but that plan can simply be a special assessment when needed. So today's owners can simply keep deferring the maintenance rather than properly funding through annual increases.

Elmer J Fudd, please show me a cite in the Davis-Stirling Act that says the condo association has to fund the reserves. I can't find one. I did find this which specifically says there is no statute that requires associations fund their reserves. . I'm relative certain that we all agree it is best practice to include an amount for funding the reserves as part of the monthly condo fee, but that doesn't equal being legally required to fund them that way. The reserve funding plan may to have special assessments every time the association needs money for major repairs.

Reporting and discussing the deficiency should happen at every board and condo association meeting. And, it should be part of the resale package given to any potential buyer.

Sadly, safety and maintenance practices are developed and improved by tragedy.

I suspect we will see many changes in the near future and California's requirements are certainly a step in the right direction, but I believe another step is necessary. In my opinion, we have to remove the benefits of deferring critical maintenance. Currently, many of these systems just reward deferring payments to special assessments, which themselves get deferred. We end up with critical maintenance required in ten years that still hasn't been approved twenty years later.

On a way more personal than appropriate note, I have been putting off my first colonoscopy largely because it sounds like a wholly unpleasant experience, so rather than criticizing those who defer necessary maintenance, maybe I should call the doctor's office now...

I saw a Bloomberg article today about how the collapse will further bifurcate the market, driving up demand for new and high end homes for those that can afford them, and depressing even further the prices of aging units owned by those who may already be struggling and/or can't afford to fund repairs.

It can be hard to get people on board to fund infrastructure repairs until suddenly a bridge, road, or building collapses.

CA Kate, here’s a link to a recent sale of a 1570 square foot 2 bedroom 2 bath condo that sold for $555,000 in June, 2021. A three bedroom unit went for $760,000. I think your values for an oceanfront condo in Florida are a bit off.

I guess my idea of the cost of a one-bedroom was more than a little off. 🙃

Pending assessments to repair the building ran from about $80,000 for a one bed room unit to about $335,000 for a three bedroom penthouse unit.

Still, a lot of money for many people. Definitely not pocket-change.

Monthly condo fees were $956 a month for the two bedroom unit and $1,244 for the three bedroom unit. I would love to see the financials and the resale package that was provided to the buyers of these units.

With these fee numbers, I too would like to see how much money was in the bank at the time of the collapse. While I realize that the costs to just maintain a 12-story, 136 unit building and pool would be high, it would seem that there should have beeen some left over for future repairs.

Bry, I totally agree with your assessment. Condo associations tend to "kick the can down the road" where it becomes increasingly expensive and more critical to get the repairs completed yesterday. It is so much less stressful and less expensive to make those repairs when they are first determined to be needed.

Having survived the prep for multiple colonscopies, the prep isn't fun but doable. Some of the prep you may drink is ghastly but drink it with a straw. You don't taste it as much that way. Be the first patient of the day if possible. And enjoy a good breakfast after it is over.

"On a way more personal than appropriate note, I have been putting off my first colonoscopy largely because it sounds like a wholly unpleasant experience..."

Oh, but the "twilight" drugs are worth the price of admission, best naps I ever took :0)

Here's a link to a webpage of a law firm that specializes in the common area association real estate area. The words cited are California Civil Code Section 5550.

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-5550#axzz2CgHrcBrn

The larger association I'm in, and the one with the larger per owner fees and costs, has a very detailed plan sent to homeowners every year. The major "component" requiring maintenance, repair, and replacement is the system of private roads, paving and drainage, but there are others too, including the pool (for much less money).

A comprehensive assessment was done by a consulting civil engineering firm with scheduled dates for required work for maintenance and repaving. The assessment is by street segment using the addresses of the houses adjacent to each segment being discussed. The cost estimates are updated annually and the entire thing is physically reinspected and redone every thee years. The board (or its advisors) prepares a financial analysis for the reserve too, to show how planned annual additions to the cumulative reserve account (the assessment of dues and at what levels) receipts in excess of annual spending for recurring expenses - security, a pool, landscape maintenance, etc) increment the reserve balance year by year so that the money needed for each scheduled future maintenance project (plus plenty of cushion, excess for unforeseen problems or price increases) will be available.

I'm not on the board now and I don't pay that close attention to it but I want to say the expenditure level expected in the next 20 years is something like 5 times one year's assessments. It's far too much to wing it or say "we'll worry about it when the time comes". I think California's comprehensive laws does both boards and property owners a big favor.

@Elmer J Fudd - The problem being that 5550(b)5 states: A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.

There is nothing in my reading of the law that requires associations to set aside money, only that they develop a plan for raising the money. That means they don't have to regularly set aside money to fix it, they can simply plan a special assessment for major repairs.

I also contend that the 30 year maintenance window makes deferment all the more reasonable. Were I on the board, I would not vote for an association fee increase for maintenance 30 years from now, and I doubt many people would. One of the problems with reserve accounts in HOA's is that you can't predict the fiscal responsibility of any HOA board over 30 years. You are likely to end up with a special assessment anyway as the board has consistently dipped into the reserve account for maintenance of common areas that were more aesthetically pleasing but not as critical.

I simply attempted to inform myself before entering into a discussion on the statutory deficiencies of HOA maintenance. My choices for informing myself about California's attempt to remedy those deficiencies were (1) The actual statute available from https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=5550, or (2) a post on a home and garden website. Even given that, I asked you for more information, which you didn't answer, because I wanted to ensure my understanding was correct.

I have given my opinion based on my reading of the statute, if that statute is being enforced in a way that isn't written in the statute then obviously that opinion is flawed but given my choices that is as informed as I can reasonably get and so I expressly qualified my opinion.

Furthermore, none of these things change my opinion in the least, I am addressing a nationwide problem with HOA maintenance procedures and regardless of how California's statute is enforced, its writing is wholly inadequate to address the problem of deferred maintenance and so as a model for other states, it fails.

ETA: If we are going to address this problem we have to address the financial benefits from deferment and probably have to go further than California by permanently restricting those funds. Again, even in California a plan to collect those funds is not the same thing as having those funds available when they are needed.

Elmer J Fudd - From the same source that you quoted and I linked to earlier:

There is no statute that specifically requires associations fund their reserves.

This is the first sentence on that page. I also read the same statute that Bry linked to and found nothing that said the reserves had to be funded. The association has to have a plan to fund the reserves which may be partly or wholy through monthly payments with the association fees or through special assessments or a combination of both. Both have consequences.

Edited to add: I, also, went straight to the actual statue which is how tax nerds research laws. I couldn't find anything in that says the reserves have to be funded. Then I went to see what other sources said in case I had misinterperted or misread something. Every one I read said there was nothing in the statute that said the reserves had to be funded.

I actually agree with your expert's advice. Actually funding reserves makes sense to me. Creating a plan to fund reserves is not the same as a requirement to fund the reserves in the immediate future. Boards and associations can decide to fund through reserves through special assessments.

You have been ignoring the quote I found from the same source you quoted above that:

There is no statute that specifically requires associations fund their reserves.

Create a plan, yes, there is a requirement. Actually fund, there is no requirement.

Your very own source disputes you, that source is from the law firm in which Lawrence Stirling, the same Stirling that the legislation is named for is the senior partner. So who should we believe, a poster on a home and garden website or documentation from the actual person who sponsored and authored the legislation? So, you are arguing that the guy who actually sponsored, wrote, and built his entire career from this piece of legislation has misinterpreted it.

I don't see you as more qualified to interpret this statute than he is and you are not going to convince me otherwise. If you have a problem with his interpretation, then call up the firm and have them correct the information that they posted.

----

Additionally, I called a friend who is on the condo board in an upscale Century City condo in L.A. (not really about this but I still asked). I will paraphrase what he told me.

They are not an investment group and should never function in place of one. When you are talking about $30 million in capital maintenance it is irresponsible for a board to collect that money over any extended period of time. The average amount his building would need to collect from residents is about double what residents would have to invest at a very modest return. I calculated that amount using a 5% rate over 30 years to be $245 per month invested versus $555 per month in increased fees.

Even then the money paid is not inflation protected so you are essentially underfunding the project the entire time. It is much better for owners to be appraised of the expected cost, their responsibility for that deficit and a time at which a special assessment will be required. If owners choose not to save they can use equity to fund the repairs and get inflation protection. He went on to say that any financially savvy board is going to pick an assessment over annual increases.

I hope you have a great day.

Who's going to have the Last Word?

After speaking to my friend, mentioned above, I am forced to revise my position. States severely limit the investments that are allowed, many limit HOA's to Federal debt and Federal insured funds, this means the interest rate is largely capped way below the market rate. So it becomes irresponsible for any association to require annual payments for major capital expenditures beyond the next five to ten years. It really isn't about the amount of money that the association needs to collect, it is the time over which they need to do it.

For example, suppose a condo with 157 units needed $15,000,000 for repairs in 20 years. They would need to increase the monthly fee by $398 per month. On the other hand, a resident would only need to save $151.50 in a DJIA benchmark fund. Is it reasonable to make a fiscally responsible resident pay double because there is a significant chance of others being irresponsible?

Given the time value of money it seems that the best way to raise funds is really special assessments. However, I do believe that California got the study idea completely correct and all expected future assessments should be disclosed to owners and a required disclosure for sellers.

I still feel we need to address the rewards of deferring maintenance. Without really thinking about it, I could imagine a system where the association files an assessment plan with the municipality who then creates a tax assessment rather than a private assessment and that assessment could be held in trust until the money was used. There are still problems with that but thinking of this solution isn't my job.

@sushipup1 - I am choosing to now ignore certain posts. I really don't know why I feel the need to prove I am correct, people here have brains and the internet. I assume everyone here can inform themselves if they want and if they don't, I am going to choose to not make that my problem.

My comment about letting 'George' do it refers to one of the the persuasive selling points for condos. An owner 'can stop worrying about home maintenance'. He naively defers responsibilty to some largely invisible (volunteer!) condo board.

As Americans, the tiny percentage of citizens just bothering to *vote* illustrates an equally foolish failure to protect a precious asset.