Florida is the condominium capital of the world, with an estimated 60,000 condominium associations encompassing more than 5 million residential units across the state. One would think such a title would ensure that the best condominium practices and policies would be found in the Sunshine State, but, unfortunately, this is far from the case.

The poor practices and policies that are allowed to exist among condominium properties in Florida were recently highlighted for the entire world to witness, with the disastrous collapse of the Champlain Towers acting as a sobering example of the state’s flaws.

For starters, all condominium laws throughout the United States are lobbied and passed for the protection and benefit of the HOA, the board, and the management companies. Board members are given qualified immunity from lawsuits, because otherwise, no one would run for the board if they had to worry about being sued for every bad or questionable decision they make.

Unfortunately, there is zero buyer representation when it comes to legislation of condominiums. The buyers have no voice and no entity to protect their interest in obtaining a full disclosure of the property they are buying and the financial and operational conduct of the non-profit HOA to which they are about to become a member. It is caveat emptor on steroids.

In Florida, the HOA must present any engineering reports they have in their possession, but only upon request from the buyer! It is only part of their disclosure requirement if the buyer and or their agent knows that this is the law and knows to ask for it.

If this isn’t evidence of a rigged game, then who knows what is. It’s unlikely that any of the 35 buyers of units in Champlain Towers since 2016 both knew about this law, requested, and received a copy of the report, and still went through with a purchase. This makes sense, given the hundreds of lawsuits that have since been filed following the collapse of the Champlain Towers. The reality is that no one selling a unit ever wants any bad information to be revealed about a property or HOA, and this flawed law in Florida encourages obfuscation and opacity.

Another dangerous practice allowed in Florida is the ability of an HOA to vote to eliminate reserve funding completely and in its entirety. Most states require that a condominium association reserve a certain amount of the monthly dues or standard assessment fees for the capital repairs and maintenance of the property. This is to ensure that the money is reserved on a monthly basis to cover the minimal costs of necessary maintenance as the economic life of various structure(s) comes to an end, what’s often known as “remaining useful life”. (Sidebar: Regardless of the overall monthly fee, whatever is set aside a month is NEVER going to be enough to cover the maintenance of the common elements and shared areas).

Most states believe that it is an undue burden on owners and terrible financial planning to repair a property with “special assessments”, which can huge repair bills on the owners, rather than budgeting a known monthly amount to cover these repairs costs so that they money is always there to use when necessary. Although this reserve fund will rarely cover all necessary maintenance and construction, it provides a cushion for associations.

Years ago, in Florida, senior citizens lobbied for the elimination of this requirement, posing two arguments for it. First, they argued that being on a fixed income, they couldn’t afford the increased monthly dues without creating a financial hardship on themselves. Second, as elderly people, they proclaimed they likely wouldn’t be around for needed future repairs once such repairs became necessary (so why should they save for it). The legislature bought this specious argument hook, line, and sinker. Unfortunately, it continues to be the law today, although it’s likely not for much longer given this year’s tragedy.

Allowing a complete waiver for reserve funding means there are zero dollars being budgeted and saved for the by the HOA, and many associations make this election. Everyone wants low dues, even if it means poor financial condition and management of the HOA. Sellers want to maintain low dues because it helps to market a property. Additionally, buyers themselves think (erroneously) that low dues are a good thing. Do you think any buyer or buyer agent is aware of this fact and the consequence of it? Certainly not.

Another example that Florida is one of the worst states to purchase a condominium in is the number of FHA approved associations within the state. At the time of this publication, there are only 206 HUD approved condominium associations in the entire state out of 60,000. That is a 0.00343333 rate of approval, and that’s with FHA’s minimal underwriting criteria applied. This is also the percentage of the condominium units in the state that are available for purchase by an FHA borrower.

This is due to a myriad of issues, both financial and operational. The reserve waiver is a big one, but there are many other practices that violate good lending policies and sensible practices and therefore have a chilling effect on lending in these particular HOA’s.

Many HOA’s permit short-term rentals (Airbnb, VRBO), or allow them even when the rules and regulations proscribe it. This alone is a huge HUD deal-killer. HUD reviews policy and practice, not a difficult task given the ubiquity and transparency of websites that advertise rentals.

Another bizarre practice by many Florida condominium associations is the requirement that the board and or management company vet and approve any prospective tenant. For example, if you want to rent your unit, you must first get the blessing from either or both of these parties.

It’s unclear how such an invasion of privacy into one’s exclusive property rights became practice with condominium communities, but one suspects it may stem from the fact that many Florida condominium associations were formed and purchased by New Yorkers, who often love to have second homes in Florida, and whose exposure to common interest ownership was primarily through Co-op stock ownership projects.

Co-ops are well known to be arbitrary and capricious – simply because they are allowed to be. Plus, the record is chockfull of stories of co-ops rejecting prospective purchasers in their building due to celebrity, infamy, political orientation, financial standing, or any reason they see fit. Co-ops are a dying institution (and for good reason), but some of their old practices still persist, even if those practices are violative of state and federal housing laws.

Due to the laws and practices that attend condominium associations in Florida, it is by far the worst state for a one to own a condominium in. The complete lack of oversight, intentional waiver of good practices and financial planning, overreaching nature of boards and management companies, and the large number of units converge to make condo ownership a murky and dicey proposition. However, those reading this are now informed and enlightened, and so now the questions becomes: how are you going to protect yourself?