12390475082?profile=RESIZE_710xMayfair condo board President Joanne Chester says: ‘We are really hoping the state will somehow intercede to help us with this.’ Tim Stepien/The Coastal Star

Nightmare numbers: Insurance up 300%, reserves at only 10%

Also in the special report: Condo costs: A sudden storm |South Palm Beach — Southgate|Highland Beach — Coronado

By Mary Hladky

Boca Raton’s Mayfair condominium is caught in a perfect storm.

Insurance rates have skyrocketed. New laws require condo association boards to conduct structural inspections and make any needed repairs. And by next year, Mayfair must fully fund its reserves to pay for them.

On the most basic level, that means the cost of living at the 60-year-old Boca Raton building at 1401 S. Ocean Blvd. is increasing substantially. Insurance costs alone jumped 300% over the last two years.

The Mayfair is hardly alone; condos across South Florida face similar financial pressures.

Mayfair President Joanne Chester said the board needs financial help, although no solutions from the state are imminent.

“We are really hoping the state will somehow intercede to help us with this,” she said. “It will be really difficult for people living here to continue paying the maintenance that has to go up.”

Perhaps the state could offer long-term low-interest or no-interest loans, she said, or provide financial assistance that condos could apply for.

“If the state would help us with that, that would be incredible,” she said. “Our state needs to help us. Our governor needs to step in.”

Mayfair’s board knows that insurance is all but impossible to come by. The previous insurer, Lloyd’s of London, pulled out of the market two years ago. The board used multiple insurers for one year because no single carrier would assume the entire risk. Mayfair is now insured by Citizens, the state’s insurer of last resort.

“There are not many insurance companies that want to deal with this area,” Chester said. “Not many even want to get us a proposal.”

Faced with the ballooning cost, the condo board had no choice but to raise maintenance fees. In 2022, the quarterly rate per unit was $3,588. Last year, it was $4,709. This year, it is $5,038.

Owners “are not happy about that at all. It is more money out of their pocket,” Chester said. Owners also worry that the high fees will make it harder to sell their units.

But that’s just the tip of the financial iceberg.

A state law enacted after the catastrophic 2021 collapse of a condo in Surfside requires condo associations to conduct reserve studies every decade to make sure they have adequate resources to finance needed structural repairs. Starting next year, they will no longer be able to waive a requirement that they put money in reserves.

At present, Mayfair’s reserves are only 10% funded.

Board members are calculating how much full funding will cost as they begin drawing up the 2025 budget.

What Chester does know is this: “Now that we have to fully fund, that would be a giant increase in maintenance to pay for that. We really think the state should kick in and help with that,” she said.

And then there’s the additional requirement to inspect the five-story, 55-unit Mayfair.

The Mayfair submitted required structural and electrical engineering reports to the city in November and is awaiting word on whether the condo will get a building recertification — a designation that the building is safe.

Chester said the reports show that the Mayfair is structurally sound. But repairs, such as concrete restoration, will have to be made and she does not yet know the total cost.

Separately, the condo needs to be repainted.

Still to be determined is how owners will pay for reserves and repair costs.

Already, however, increased maintenance fees are proving too much for some owners.

Chester knows of people, including some at the Mayfair, who are selling their units “so they don’t have to face this financial hardship.”

Paradoxically, people are still buying units. Chester thinks that’s because some buyers are affluent, paying in cash, and are not bothered by the fees.

Others, though, “are coming from out of state and are not aware of everything that is being imposed on us.”

Chester foresees a grim future for many condos.

“My opinion is a lot of condominiums will have to be dissolved,” she said. “They will have to become apartment complexes. Most people in condos are retired. I think a lot of condos will be dissolved because owners can’t afford to live in them.”

 

 

 

 

 

 

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