On June 24, 2021, along the southeastern coast of Florida, a tragedy was about to unfold. The signs were adding up for years but – despite calls for action from experts – homeowners of the Champlain Towers South condominium failed to act in time.
The 12-story, 136-unit structure in the beachfront community of Surfside – along with the lives and futures of the people inside – collapsed in the middle of the night into an unfathomable pile of steel and concrete. The worst residential building disaster in U.S. history took many people by surprise – as well as 98 souls on that horrible day a year ago.
No official cause for the partial building collapse has been issued and investigators say a final report will take at least another year before one will be released. Some suspect ignorance played a significant role in the disaster.
An engineering report from 2018 discovered “major structural damage” and “abundant cracking” in the building. Independent reporting uncovered records of water intrusion from a leaking swimming pool as contributing to the degradation of reinforced concrete beams in the basement-level parking garage. After reportedly seeking multiple expert opinions and competitive bids for the work, homeowners at the 40-year-old building approved a $15 million project to address the issue but the work had yet to begin.
In hindsight, delays to examine the issue, seek a consensus plan of action and finance the job may be the ultimate reasons for this preventable accident. Deferred or delayed maintenance can have deadly outcomes.
In a survey of building managers, homeowner board members and contractors working within community associations across the country, 81% reported encountering unanticipated infrastructure issues in their condo community over a recent three-year period. That’s according to 2020 research from the Community Associations Institute (CAI).
The research showed that among the leading issues were water intrusion in windows and siding, deteriorating balconies or fences, or failing pipes or roofing. Like our nation’s aging infrastructure, many mid- and high-rise residential buildings are at – or near – their lifespan of 50-75 years and require critical – and frequent – attention.
What’s most troubling is how the community associations responded to the need for action. From the CAI research:
“Most of the communities encountered ongoing situations that initially were addressed with minimal work because they did not fully understand how long the problem existed and the extent of deterioration. In many cases, the underlying cause of the problem was known, however the community delayed correcting the cause because association decision-makers wanted to attempt a minor repair to control the damage, or they needed time to develop a financial plan for the repairs.”
The Champlain Towers collapse was a significant wake-up call to residents in high-rises and those who finance the purchase of those homes. Fannie Mae and Freddie Mac have temporarily halted granting the purchase of mortgages secured by condo and co-operative units with significant deferred maintenance and urged lenders and appraisers to document special assessments that may reflect greater risk to the building’s structural integrity.
(At the same time, some HOAs across the U.S. have refused to complete lender-required questionnaires regarding deferred maintenance. This apparent lack of transparency has led condo purchases to fall through.)
A special assessment is a surcharge to homeowners within a community to either address a repair or replacement – elevator, roof, security system – or to help boost the Homeowners Association’s financial reserves for future needs. In Washington, buyers receive a packet of information known as a resale certification, which should include details of these assessments as well as discussions in HOA meetings about the possibility of special charges.
Response to the Champlain collapse was swift in Florida. Within days of the disaster, engineers in Miami-Dade County were ordered to conduct a structural review of all buildings undergoing the mandated 40-year safety recertification process, just as the Champlain was at the time of the collapse. In May, the governor signed a law that requires all condos at least four stories tall to be recertified when the buildings turn 30 years old (or 25 if the building is within three miles of the coast) and every 10 years thereafter.
Among the many items for building engineers to investigate is whether the HOA conducted a reserve study within the past three years. The study is intended to provide condo owners with a current understanding of the property condition and bring to light immediate and anticipated issues that should be resolved.
When issues are addressed early, owners reap significant savings and property values are typically maintained if not improved. A current reserve study also demonstrates to lenders and underwriters that the ownership group is following industry standards to conduct an independent review of the structure and (hopefully) adhering to recommended maintenance schedules. (Although it has been discussed by state legislators, Washington does not require recertifications of residential towers when they hit a certain age.)
In addition to sharing HOA-related documentation with buyers when making an offer on a condo or co-op, our state has laws to keep building developers accountable for newer construction. The condo defect law can hold developers liable for the first four years – and issues usually arise. This often leads to developers choosing the less-risky route of building anything but a condo.
Seattle has more than 850 condo/co-op communities – as small as two units to as large as 698. A majority of the structures were once apartments before being converted to for-sale properties, many of which are several decades old and may not be aging gracefully as you and I.
When learning about a special assessment, buyers should be less concerned about the cost and issue. They should study the response from the property manager as well as the HOA board to the need for maintenance and repairs. Was there a “put a band-aid on it” approach or did owners quickly hire experts and get multiple bids to address the matter?
Buyers should know about the soundness of the building and due diligence from condo leadership before making an offer. When in doubt, walk away!
As we learned from the tragedy in South Florida, taking effective action is critical.