A simple way to think about a Florida condo assessment is that the assessment represents each unit's share of the costs incurred by the condo association. These are often due on a monthly or quarterly basis.
The 2022 Florida Statutes 718.103(1) shows: “Assessment” means a share of the funds which are required for the payment of common expenses, which from time to time is assessed against the unit owner.
FS 718.115 further expands on common expenses, what they may include, what may happen when expenses are unpaid, how expenses are collected, and other related points. Condo expenses can include: insurance, elevator repairs, pool supplies, utilities, and landscaping. These types of expenses are commonly referred to as "operating expenses".
In addition to operating expenses, Florida condo assessments can (and must per FS 718.112) include a component for reserves. Refer to the page on reserves for more but a very simple way to summarize reserves is that reserves cover capital expenditures that exceed $10,000.
One example of an expenditure that would be covered by reserves vs operating expenses is roof replacement. A roof replacement project might occur every 10 to 20 years and cost tens of thousands if not hundreds of thousands of dollars. Compare a roof replacement to pool supplies, which might be incurred every day and total hundreds to a few thousands of dollars a year. Reserves handle expenditures like roof replacement. Operating expenses handle expenses like pool supplies.
Some Florida condo buyers wish they had looked at more than just the current assessment amount before making a decision to buy a condo. Some additional aspects of the assessment to consider may include:
The most recent association financial report, often published monthly, provides the most current representation of the financial health of the association. Determine whether the current budget is on target.
Questions to ask can include:
Some condo buyers owners and buyers think that it's better to keep assessments "lower". Sometimes a relatively low assessment is a sign of large problems. For example, an association that waives reserves or uses an outdated reserve estimate or relies on "optimistic" reserve estimates may find that when it's time to make repairs, for example, replace the roof, that the association does not have the necessary funds. This can create a huge impact on condo values since buyers may expect to pay a "below market value price" to adjust for future higher assessments.
FS 718.103(24) shows “special assessment” means any assessment levied against a unit owner other than the assessment required by a budget adopted annually.
When would a condo association incur a special assessment if the association budgets for operating expenses and reserves?
Association boards sometimes pass special assessments when an unexpected event takes place that requires funds that are not available in the budget or in an account that the association could use to fund the need. Examples include:
Some Florida condo buyers wish they had known about what special assessments the association incurred over the last several years and why.
Prospective Florida condo buyers should, if they don't understand condo association assessments, engage licensed and reputable attorneys and advisors to guide their buying decision.
Does condo size matter? Should smaller condos pay the same assessment as larger condos? As condo assessments continue to grow as the cost of living in Florida condos continues to increase, condo owners sometimes try to find creative ways to lower their share of the costs. One idea that owners of smaller condos consider is to have owners of larger condos pay a larger portion of the assessment.
This article, Changing Allocation Of Assessments from the Shipp Law Legal Blog, Law Office Ryan S. Shipp, shows that "One area of contention that surfaces between unit owners, is how assessments are allocated between different sized units. Allocation of assessments are set forth in the declaration of condominium."
The article further references Florida Statues 718.110, stating that "Different from the traditional amendment to a condominium declaration, the only way to change how assessments are allocated is for the Association to abide by Florida Statutes 718.110."
Here is what that section showed when this blog post was written, with what appears to be the relevant portion highlighted:
(4) Unless otherwise provided in the declaration as originally recorded, no amendment may change the configuration or size of any unit in any material fashion, materially alter or modify the appurtenances to the unit, or change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium unless the record owner of the unit and all record owners of liens on the unit join in the execution of the amendment and unless all the record owners of all other units in the same condominium approve the amendment. The acquisition of property by the association and material alterations or substantial additions to such property or the common elements by the association in accordance with s. 718.111(7) or s. 718.113, and amendments providing for the transfer of use rights in limited common elements pursuant to s. 718.106(2)(b) shall not be deemed to constitute a material alteration or modification of the appurtenances to the units. A declaration recorded after April 1, 1992, may not require the approval of less than a majority of total voting interests of the condominium for amendments under this subsection, unless otherwise required by a governmental entity.
You can find the current version of the FS 718.110 statues at leg.state.fl.us
National and local news media have reported that Florida condo fees are going up, up, up. Rising condo insurance fees can lead some condo owners to complain that "something" needs to be done to keep costs affordable for them.
Why are Florida condo costs and condo association fees rising?
In 2022 and 2023, news media reported the following as drivers of rising condo fees:
Here are examples of some of these types of stories: (Note: Some of these stories seem to misrepresent condo associations as HOAs). Learn about the distinction between Condo Associations (CA) and Home Owners Associations (HOA) on the Associations page.
An internet search will show additional reasons for rising Florida condo fees. These reasons include the following, and others may exist:
It's important to note that these factors can vary across different regions within Florida, and the specific market conditions at a given time can also influence condo costs. These regional differences may provide a solution to those condo owners faced with rising condo fees.
Florida condo owners and prospective condo buyers can respond to rising Florida condo costs in several ways. Here are some actions that people can take:
Remember that individual responses to rising condo costs will vary based on personal circumstances, financial capabilities, and long-term goals. It's important to assess your situation and make decisions that align with your needs and resources.
Prospective Florida condo buyers should, if they don't understand condo association assessments, fees, or anything related, engage licensed and reputable attorneys and advisors to guide their buying decisions.