There is trouble in condominium paradise for many South Florida developments:
Condominium Associations
Chapter 718 of the Florida Statutes requires condominium associations to obtain & maintain adequate hazard insurance based on the replacement cost of insured property. Failure to do so is considered a breach of fiduciary duty. But what happens when a high number of properties in a development are foreclosed? Increasingly, many associations throughout the state of Florida are experiencing difficulty paying for insurance, plus operating & maintenance expenses, as owners cease paying their monthly fees. That was the conclusion of a recent survey taken by the Community Association Leadership Lobby. Two thirds (2/3) of the respondents also reported that many banks, mortgage lenders & other lienholders do not regularly pay the monthly association fees due on their foreclosed units, forcing associations to raise the fees to paying property owners and/or pass special assessments to cover their expenses.
Because of the number of nonpaying owners, some condominium associations try to make up the budgetary shortfall somewhat from their rental tenants. In those communities, tenants or their absentee landlords, are required to pay a set amount (often one month's rent) to the association as a refundable ‘security deposit' prior to the tenant moving in. The deposit is earmarked for any future damage to common areas. However, this practice has had the unintended consequence of hindering rentals & may actually reduce the property's appeal to future buyers.
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