What to look for when buying a condominium in Florida that requires financing?

There are all kinds of loan products out there and the underwriting rules vary considerably but generally one wants to use a ‘conforming’ loan product as these get the best loan rates. Conforming loans are Fannie/Freddie loans and when they talk about loan approval they use the term ‘warrantable’. Typically, a condo is considered warrantable if:

• No single entity owns more than 10% of the units in a project, including the developer
• At least 51% of the units are owner-occupied
• Fewer than 15% of the units are in arrears with their association dues
• The homeowners association (HOA) is not named in any lawsuits
• Commercial space accounts for 25 percent or less of the total building square footage
• The Association transfers AT LEAST 10% of its annual budget into a reserves account. So if the association collects 100k a year from its members then it must set aside 10k of that into a reserve account.

The last one is typically the problem. Many associations do not do this even though 10% is a modest amount. $50 out of a $400 per month maintenance fee would be 12.5%

Every now and then I’m showing or selling a house in the historic districts of West Palm Beach and the walls are not Concrete Block. Nor are the walls wood framed. They’re something different. They look like the color of unglazed “Mexican” floor tiles or clay roof tiles. What are these?

These homes were constructed with structural terra cotta blocks used for the exterior walls and sometimes interior load bearing walls. Some Realtors or property owners will refer to them as hollow structural tile, hollow tile block, hollow building tile, structural clay tile and structural clay load-bearing wall tile. The Palm Beach County Property Appraiser notes it as ‘ADOBE/HOLLOW CLAY BLK‘ and in the local MLS it is simply noted as Hollow Tile.

What is the history of Terra Cotta Wall Construction? In the 1920’s through about 1950 in Florida some local houses were constructed with what was considered to be a superior building material to wood frame walls. These were hollow building blocks (similar to masonry block) but made from terra cotta. Yes, that’s terra cotta like the old school pots for plants. These were stacked and mortared in place to create exterior walls and sometimes interior walls (typically the bearing wall) which were then covered with stucco on the exterior, wood lath and plaster on the interior. Although they are not as ‘strong’ as a Concrete Masonry Unit (CMU as in CBS) they are certainly superior to wood and were more expensive at the time of construction which is why they are found in more affluent older communities. They did not have steel reinforcing which is why they do not perform as well as modern concrete masonry in things like earthquakes but in Florida who cares. In a wind storm (hurricane) they would be superior to wood fame but inferior to later era concrete block (CBS) houses. In every day life they would be better at resisting termites, and don’t rot or retain moisture like wood frame. BUT fastening things like hurricane panels to them can be difficult as they tend to ‘blow out’ the back of the clay tile when hammer drilling in the anchors.

Bottom line – Clay structural tiles are better than wood frame but not as good as concrete block and stucco (CBS).

CLICK HERE to read my blog post about the definitions of some other items you may see in the Property Appraisers page.

Question: When we were not in residence, a pipe under the concrete slab in our first floor condominium unit needed repair. This pipe supplies water to our unit and to the one adjacent to ours, serving a total of 24 units. Approximately two inches of water was found in our unit. Plumbing and concrete contractors were called in by our management company and repairs were made. Jack hammering the concrete, removing 3-4 feet of sand, finding and fixing the pipe leaks in multiple places, returning the sand, and sealing the slab with new concrete were all required. New baseboard molding was installed and painted, and a small piece of drywall was installed where necessary.

These services were paid for by our condo association. A “dry-out” company was hired by our management company to remove water and deal with wet carpeting and wet floors so that the above mentioned repairs could be done. Fans and a dehumidifier were installed and remained for 5 days.

Now, here lies our problem. This incident occurred in June, and we have just this past week received a bill from our management company for “dry-out” services in the amount of $5,700. We have been told that this payment is our responsibility and NOT the condo association.

Back in June we filed a claim with our homeowner’s insurance company and have already accepted payment and have had new carpeting and flooring installed. We do not understand how some of the repairs are the condo association’s responsibility, but others are not. Your input would be greatly appreciated. – W.W., Stuart

Answer: It is a matter of negligence. The Association has an obligation to maintain, repair and replace pipes that serve the units and the common elements. If the Association had no reason to believe the pipe under your unit was going to break and cause water damage, then the Association was not negligent in failing to maintain the pipe. As such, the water break and resulting flood was the result of an unforeseeable accident. In such cases the Association must make the repair and pay for the items that the Association insures for accidents (called an insurable loss or casualty).

The Association’s casualty insurance does not cover personal items in your unit or carpeting. So, when the accident occurred, you are responsible for the items that the Association does not insure, such as drying out your carpet and personal items. That is what your homeowners insurance policy covers. Alternatively, if the Association knew or should have known that the pipe was about to break and cause damage and did not take timely action to prevent it, then the Association could be deemed negligent, and while you would still have to pay for your share of the dry-out costs, you might be able to recover the cost from the Association.

Richard D. DeBoest II, Esq., is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice.

The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC., respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.

© 2019 Journal Media Group, Richard D. DeBoest