The tragic collapse of a the condo building in Surfside, Florida, that claimed 98 lives continues to force changes in the way real estate is bought and sold all across the country. This month, Freddie Mac and Fannie May, the quasi-government organizations that back many of the nations mortgages, began requiring condo associations to answer detailed questionnaires about a building’s maintenance, repairs, and reserves to determine overall safety and financial soundness as part of the process lenders use to evaluate mortgage applications.
On Tuesday, the Miami Dade County Commission took transparency a step further and unanimously passed a new law requiring condo and homeowner’s associations to file detailed financial and maintenance records for inclusion in an online library. Currently, Florida real estate law requires sellers to provide buyers with these documents only upon request AFTER a sales contract is executed. The buyer is then given three days from receipt of the information to cancel the contract if they don’t like what they see.
Some real estate agents told the Miami Herald they’re relieved that the new database is being created. They complained that condo associations and homeowners associations often made it difficult for sellers and buyers to access the relevant documents and too often they were delivered incomplete.
One potential shortcoming of the law is that the associations are only required to file the documents on an annual basis, which leaves the possibility that the information will be outdated by the time a buyer receives it. This could lead to a buyer not being aware of such critical information as a costly special assessment that is under review or approved since the last annual filing. Note to Buyers: Still request the latest condo docs and financials when conducting a review.
Overall, the move toward greater transparency regarding real estate is a huge plus for buyers and owners, especially when sea level rise is already causing maintenance and funding challenges for condo developments located on or near the coast. Regardless of a coastal state’s laws, buyers everywhere need to take a look at condo association and homeowner’s association documents and financials before they commit to close a deal.