Agents Get Asked: Is This Condo Structurally Sound?
Vacant lot, top photo, where collapsed condo (above) once stood.
Real estate professionals across the country are grappling with concerns about the structural soundness of aging multifamily buildings more than a month after the deadly collapse of a Florida condo building where 98 died.
Just last week, it was reported that the 60-story luxury tower in San Francisco, which sank 18 inches and leaned 14 inches since opening in 2009, has sunk another inch. A $100 million fix to shore up the building has now been put on hold for a month while engineers try to figure out what’s going on.
A spokesman for the Millennium’s homeowners association said that the latest monitoring has “indicated an increased rate of settlement associated with pile installation.”
With incidents such as these, agents should be prepared to address a client’s inquiries.
“Any agent showing high-rises going forward is going to look twice at what’s really going on with the integrity of the condo buildings that they’re selling in,” says Jorge Guerra, CRS, C2EX, broker-owner of RESF Real Estate in Coral Gables, Fla.
Threat of Condo Collapse Rare
Structural engineers agree there isn’t a large-scale threat to condominiums nationwide. The U.S. follows International Building Codestandards, and it’s exceedingly rare for a residential tower to inexplicably collapse.
That’s an important way to frame a conversation with buyers who express fear about the broader implications of the Surfside collapse, says Mike Clarkson, president of the Hilb Group of Florida, an insurance brokerage that represents condo associations in the state.
Miami-Dade officials have ordered a structural review of all buildings undergoing the 40-year safety recertification process, as Champlain Towers South was at the time of the collapse.
Fielding Consumer Concerns
Real estate pros all over the U.S.—especially those in coastal regions susceptible to erosion, a possible contributor to the Surfside collapse—may be fielding uncomfortable questions from condo buyers who are uneasy and want reassurance about a building’s condition before moving in.
One thing you should never do as a REALTOR® is offer guidance or assessments beyond your area of expertise. Urge buyers who identify or suspect red flags, either of a structural or a financial nature, to consult with a qualified expert before making a purchase.
South Florida pros share tips about how to help clients get the right answers to ease their uncertainty about a condo purchase.
Maintenance Records Give Clues
When assessing the quality and consistency of building upkeep, it’s more important than ever for agents to do their due diligence. Ask the condo association for maintenance records, which should detail any work that’s been done to the property, “whether it be a new coat of paint in the lobby or a major repair,” says Ron Shuffield, president of Berkshire Hathaway HomeServices EWM Realty in Miami Beach.
However, depending on your state’s disclosure laws, buyers aren’t always guaranteed access to these documents.
“Florida law requires property disclosures only on individual condo units,” says Natascha Tello, co-broker of The Tello Team at Keller Williams Central in Plantation, Fla. “There’s no law that requires disclosure on common areas.”
If a condo board refuses to release maintenance records to your client, ask the seller of the unit your buyer is purchasing to provide a copy.
“One thing I’d be requesting is a copy of the building’s last inspection,” Guerra says. Moreover, take the time to review the minutes from recent condo board meetings to see if there are any current maintenance issues. If there are, see if there’s a timeline for when the work will be done.
“Look at the history of the condo association’s special assessments,” Shuffield recommends. “Generally, the more special assessments there are, the worse the association is at budgeting for emergency repairs.”
Costly Repairs & Condo Association’s Reserves
“Some condo associations kick the can down the road and don’t set aside money for emergency repairs,” Tello says. “But the opposite is also true: Some associations have budgeted for every single thing that needs to be done.”
Condo associations should be putting at least 10% of their assessments toward reserves—though that’s on the low end, according to industry standards. How often the association is willing to spend money on building maintenance is a different story.
“Look at how much money is set aside for each line item,” Shuffield says. “The more organized the reserves budget is, the better.”
Guerra recommends paying close attention to the cost and frequency of major repairs coming out of the condo association’s budget.
“What I’m looking for when I review a reserves budget is whether the condo association has paid attention to the structural components of the building,” he says. “A new roof, for example, is a big-ticket item that condos need to set aside reserve funds for.”
Visible Wear May Suggest Larger Problems
While cosmetic flaws don’t necessarily mean that a building has structural defects, they can be early red flags of a larger problem, says Guerra, who is also a general contractor.
“A well-maintained building looks like a hotel,” he says. “The whole building looks pristine.”
When touring a condo building with a buyer, look for signs of wear and tear, such as chipped paint, traces of leaks, warped walls, or sagging floors, in common areas. If you spot any, ask the property manager or owner for an explanation.
Condo demand is rebounding from a slowdown during the COVID-19 pandemic, and you should be ready for inquiries from customers jolted by the Champlain Towers South collapse. Remember that managing emotions in any transaction is one of your primary skills.
The more market and building-specific information you provide, the calmer and smoother the transaction will be, Shuffield notes. By doing upfront research, you will be able to address any concerns and ensure that your client’s interests will be served.