Florida condos falling into disrepair
Condominium associations in Florida are suffering as the depressed real estate market and recession is affecting their budgets.
Cash strapped condo owners who can't afford to pay their monthly fees for the upkeep of the buildings are increasingly defaulting on payments leaving the associations without enough money to carry out repairs and general maintenance.
One example is a 1940s Miami Modern building in Miami Beach where rust is poking through the peeling paint on the railings, pest control has stopped and the palm trees are no longer being fertilized.
The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the two-story building are delinquent. Last year the association had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.
As the property crisis deepens dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.
'I call it a death spiral. It's a catastrophe in the making,' said Miami Beach city commissioner Jerry Libbin.
Nearly half of Florida's 18 million residents live in condo or homeowners associations, communities where owners pay monthly fees for common expenses like cleaning, landscaping, pool maintenance and building insurance.
When a unit owner stops paying monthly fees, which can range from $150 in a small building to over $1,000 in a luxury tower, a condo board must collect money from other owners to make up the shortfall. Rising fees or special assessments, or levies, can drive other vulnerable owners into insolvency.
No one seems sure how many condo buildings are in trouble but the number of calls to Florida's condo ombudsman has increased tenfold in recent months.
According to Jackie Diaz-Sampol of condo management company CADISA delinquency rates are running at 30 to 35% in half her buildings and associations are cutting back pool and hallway maintenance, trimming services and firing maintenance staff.