This blog has previously discussed the June 24, 2021 collapse of the 136-unit Champlain Towers South  project in Surfside, Florida and Fannie Mae’s response by issuing Lender Letter (LL-2021-14) which directs lenders to gather information from owners’ associations about potential unsafe conditions.

South Carolina has many aging condominium projects, particularly along our coast. And we have an earthquake fault line to consider. Do our local homeowners’ association boards face expensive repair and reserve dangers like those in Florida? Should condominium purchasers consider the financial impact of possible major assessments to address delayed repairs? Should legislation be proposed to address these issues?

My husband and I have considered downsizing to a condominium in Columbia, but after spending some time with this repair and reserve issue, I would have to spend extensive time with the financials of any project that might interest us. And the high-rise projects at the coast face more difficult repair issues than those in the midlands because of salt, sand, water, and wind.

I’d like to recommend a podcast episode to lawyers who may be interested in this topic. And I believe all dirt lawyers who represent owners’ associations and even condominium purchasers should be aware of the legal and financial concerns that were clearly brought to the surface by this tragedy.

The podcast is entitled “Collapse: Disaster in Surfside” produced by Treefort Media and the Miami Herald. The podcast series discusses the collapse, the personal experiences of escape and failure to escape, the media coverage, the legal maneuvers, the insurance issues, and many other matters. The heart wrenching conflict between the victims who lost family members and those who lost their homes was difficult to absorb. I won’t ask you to listen to all of that.

But Episode 8 summarizes the legal and financial issues, and I highly recommend that episode.

Our horizontal property regime legislation is deficient at best. Reserves for repairs are discussed in our  HPR legislation but not required.

Once these huge, often high-rise projects are completed, there is no legislative future inspection requirement. The county in South Florida where Champlain Towers was located has a requirement to inspect tower projects after forty years. Forty years is a long time! Champlain Towers’ forty-year inspection had found the potential problems, but there were no “teeth” requiring the repairs to be made. The property owners of Champlain Towers were aware of the need for extensive repairs, but they continued to kick the can down the road to avoid the expense.

After the collapse, Florida’s legislature considered an act which would have required reserves and inspections, but the effort failed because of the fear of chilling South Florida’s development frenzy. My guess is that South Carolina would face a similar roadblock.

Some condominium projects have served as affordable housing in certain geographic locations and as affordable second homes and rentals in resort areas. The podcast suggests that tacking on the annual cost of reasonable reserves may threaten this affordability. Think about elderly individuals who live in their dream coastal condominium. Taken to a logical conclusion, these projects, properly run, may become available only to the wealthiest among us.