Special Assessments – Who? What? Where? Why? You get the picture. A special assessment is SUPPOSED to be for items not budgeted for by the association board. However many associations do not set aside any money for anything other than the typical expenses so if there’s any kind of an ‘unexpected’ expense then they require a special assessment to pay for it. And, yes you must pay a properly levied special assessment. The condo or HOA recorded documents will spell out the process for levying and collecting a special assessment. And let’s face it. NO one likes to pay these BUT when many owners are presented with a budget that includes reserves for replacement for depreciating common elements like roofs, parking lots and sea walls they ‘balk’ at the high monthly fees. If a condominium has a “fully funded” reserve account then this is something which is valuable to a buyer although it typically comes with high fees than can scare them off. The Marina Tower building, in fact all the associations, at Old Port Cove is a great example of this. The fees are over 800 a month BUT they just completed all kinds of sprinkler retrofit and exterior concrete repairs with very little $$ as special assessments from owners.
Financing a Condominium in Florida
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%
Post Occupancy Agreement
A post occupancy agreement is used infrequently in Florida but it does come up from time to time. Note that a residential lease DOES survive a sale so this is only applicable when the property is not encumbered by a residential lease but rather it is the Owner who wants to remain in possession AFTER the sale. Most of the time the Buyer wants the Seller out of the Property at Closing. While this certainly makes it easier for all those involved there are occasions where it is beneficial to the Seller, and perhaps even the Buyer, for the Seller to occupy the Property after the sale is closed. The standard FAR and FAR BAR amendment to the base Contract basically lays out: Who is going to pay for the lawyer to draft the post occupancy agreement. And, when one must be approved by both parties. It’s an agreement to enter into an agreement within a certain time line…
HOWEVER, If you are a Realtor and a cooperating member of the South Broward Board of Realtors then this document will be in your Form Simplicity program and, although a pretty basic Post Occupancy, I am told that IF it is then it MAY be used…
A few things to keep in mind in a post occupancy are:
- The Buyer is (assuming it is an As-Is Contract) accepting the Property in the As-Is condition at Closing. How can it be inspected (walk through) if the Seller has not vacated the Property?
- The Seller (now the occupant) must agree to maintain the property in the condition it was received in at Closing, but what exactly is that?
- Does the association allow leases? If they only allow say one a year does this count as that single lease? What about if they do not allow leases at all in say the first year or even two, will they allow this?
- Does the Lender for the Buyer allow the Buyer to NOT occupy the Property right after Closing? If the Buyer is getting a loan based upon the Property being their primary residence then the loan/mortgage covenants will require that they occupy the property as such within (and this may vary) 60 days of Closing. Even if not their primary residence then will throw a flag as an investment property instead of a second home?
- Who will insure the Property? The Seller can no longer do this as one can NOT insure what one does not own. They can get renters insurance but the property must be insured by the new owner (Buyer).
- Should the Seller (now the occupant) pay rent? how about a security deposit for any damage? If so, who holds onto that money?
10264 Allamanda Circle, Palm Beach Gardens
10264 Allamanda Circle is located in Siena Oaks in Palm Beach Gardens, Florida. This spacious one story villa has 5 bedrooms and 2.5 bathrooms. This CBS construction home is light and bright with many upgrades. The kitchen is large with wood cabinets, granite countertops, stainless steel appliances, gas range, double oven and farmhouse sink. The home has bamboo wood flooring throughout, solid wood doors, central vacuum, spacious closets, luxury master bathroom, multiple walk-in closets and large screened-in pool area with heated swimming pool. Siena Oaks in centrally located off Burns Road and Prosperity Farms Road in Palm Beach Gardens close to beaches, the Gardens Mall, Downtown at the Gardens, Palm Beach Gardens Medical Center and I95. The community has low HOA fees which cover maintenance of common areas, lawn care, basic cable, community swimming pool and community tennis courts. This pet friendly community does not permit trucks or RVs.
Terra Cotta Wall Construction
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.
404 Sea Oats Drive C
404 Sea Oats Drive, unit C is a delightful 2 bedroom, 2 bathroom ground floor unit in Sea Oats just a short walk or bike to the beach. This unit is tiled with updated bathrooms and fresh paint. The unit has a one car garage and a screened patio with preserve views. It also has accordion hurricane shutters and a new hot water heater. Sea Oats is a great neighborhood in Juno Beach, minutes from the beach, with a community pool and tennis courts. The condo fees include your building insurance, roof, cable, common areas, garbage, water and sewer. One pet under 30lbs is permitted and one lease a year is allowed with a 90 day minimum. No trucks, commercial vehicles, RVs, boats or trailers are permitted.
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