July 22nd, 2022 6:30 PM by Linda Holley
Oh living in Florida is simply glory...but buying in an older Florida condominium may be a different story!
Since I have owned condominiums in three different Florida communities, and two more out of state, I know about unexpected expenses and special assessments condominium owners face. And I also have a real estate license, attend training classes, and have sold more condominiums than the coconut macaroon cookies I've baked.
One of my recent sales was a two-bedroom, two-bath condo, built in 1972, over-55 area, second floor with a wooded view, that sold for $241,000 in central Sarasota. It has a new HVAC and carpeting but everything else is original. I happen to know from a previous sale that the 2022 annual budget is not fully funded, so I disclosed that to my Buyer. He didn't seem mind because the price was right. I told him that the dues are $375 per month and they would definitely be going up. He said, "How much?" I told him over a period of time, at least $100 per month. I also shared that the plumbing lines are cast iron and are starting to fail. As a REALTOR, my number one duty is honesty, and I take that duty very seriously. I was very lucky to have this information because I am still in touch with former Buyers who still live there. REALTORS must disclose any materiel facts about a property that could affect the value, so I'm not one to withhold information from a Buyer to keep a deal together....I also don't want to be sued.
My latest real estate dilemma was a condo built in the early 2000's. The meeting minutes reflected the truth: last year, the operating expenses were significantly over budget projections. The association has borrowed $250,000. The project is a total nightmare with two different developers since 2006 and a new building awaiting "certificates of occupancy" from Sarasota County. The mortgage lender denied the Loan Approval and my Buyer will get his deposit back. Glad I got the reserve study and meeting minutes for the Buyers to read and understand that this community is not financially stable.
What's important for you and your REALTOR to know is that you should get a copy of meeting minutes for the past two years and the "reserve study." This is a 75+ page document with pictures and descriptions of the common areas of the condominium community covering items that the association is responsible for maintaining and repairing with replacement costs over a period of 20+ years. Your REALTOR can get the meeting minutes and reserve study. Understand it or you could be paying dearly in the years to come for deferred maintenance. Look at the dates the major replacement items need to be replaced: roofs, asphalt paving, electrical systems, clubhouse updating, and pool resurfacing. After that, look at the budget expenditures for the previous years and see if there have been cost overruns in any category.
Some call Florida "God's Waiting Room" because this is where seniors like to retire. It's about lower taxes, smaller towns, less traffic, getting to doctor's appointments fast, and arthritis. That's right, our old bones feel better in the warm heat of Florida. Problem is that if your grandparents move to Florida on a fixed income, some can and others can't afford additional out-of-pocket expenses for condominium special assessments or increased monthly condo dues. Perhaps the condo association budget has been underfunded for years? Sooner or later, someone has to pay when the pipes and electrical systems fail. No one knows the true picture of an association's solvency unless a reserve study was done. The very best condo associations do one every year. Ask about this.
Inflation is a hot topic these days, but some seniors don't understand that when one applies the inflation factor to a dollar value in the year 2000, the value will be significantly higher today. Labor and material costs go up, and condo fees need to keep up.
Some owners hope to get to heaven before their condo community goes to hell, but when that does not happen, there are some very heated owners' and Board meetings that discuss increasing the fees and paying special assessments. Owners vote and here's how one meeting went that I was told about:
"What? Increase my fees? We bought in here at $300 per month 22 years ago. I'm on Social Security! You people who want to increase our fees should just move. That's right, just leave! My husband was once on the Board...how dare you say that he didn't know what he was doing when there was never a reserve study done here? We don't need a reserve study. There's always been money for roof replacement and repaving. We've always been fully funded. I think that the President of the Board who did that reserve study has had his hand in the till. Let's take legal action again him."
Yep. And that's the truth about buying an older condo in some Florida condominium communities. Buyers beware and do your homework.
Here to help with your Sarasota, Florida and surrounding area real estate needs.
Linda Holley, Realtor, GRI, SRES, Fine Properties, 941-914-4914
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