Assessments and Reserves

Every home on the planet needs maintenance, repairs, upgrades, renovations and improvements over time. No property is immune from this. Every homeowner knows that when a roof needs to be repaired, it’s wisest not to delay….. keeping a reserve fund for these inevitable costs is essential, whether a single family home or an apartment building.

Owners of homes have two options as it relates to funding bigger cost items: either you build up a ‘savings account’ of sorts by adding a bit extra each month into the kitty to create a reserve fund, or you keep in the back of your mind the knowledge and certainty that at some point you will have to fund a bigger expenditure another way. In condo’s and co-ops that is done via an assessment….eg: A $1 million facade repair is split amongst 100 apartment owners so that each pays a percentage of that cost based on the percentage of the building they ‘own’ based on their offering plan or number of shares.

Sometimes these costs are financed, adding to a monthly ongoing repayments/financing cost. Sometimes they are charged in one lump sum. And sometimes the HOA offers a payment plan whereby the cost is spread out over several months or even years. Many buildings around the US are facing bigger assessments as buildings age. Delayed maintenance and upgrades is often more expensive. All homeowners should factor this inevitable cost into their home costs budget. Almost all capital improvements increase the value of a property, and almost all of them can be added to your cost basis so they could have tax benefits down the road upon resale.

Creative solutions
Many HOA’s struggle with owners who cannot afford to pay large assessments: these challenges are often resolved with creative financing options. Sometimes other owners in a building may fund those unable to pay and accrue interest over time that is then repaid upon the resale of that unit. There are almost always (creative) solutions to money problems.(Compass)

Please contact me for a market report that includes properties in your area which were recently listed or sold.

More insurers coming to Florida

More insurance companies have come to do business in Florida, according to State Representative Bob Rommel.

Rommel said that the four carriers coming will not officially sell you a policy until hurricane season is over. There are three more insurers that are in the process of coming into the state as well.

“Before we got the bill, there was a fear that there will be little or no reinsurance money available for insurance carriers, which they need. Since we passed the bill, everybody has been able to get reinsurance, so I think that there is a light at the end of the tunnel,” said Rommel.

According to Rommel, he’ll continue addressing the state’s insurance crisis when legislators meet again in 2024 (WINKNews) (more…)

Naples May Market Summary

A more detailed analysis will be published shortly.

And read these articles:
Florida News
5 things people don’t know about Naples
News from District 2
Q1 Market Stats
Naples a top city for corporate headquarters post-pandemic
Naples grabs No. 1 spot on this ‘Best Places to Live’ list

Florida lawmakers eye property insurance reforms (more…)

Florida Lawmakers Pass Insurance, Condo Reforms

Property insurance reform
Senate Bill 2D includes a variety of reform measures

Protecting Policyholders from Nonrenewal: Insurers may not refuse to write or renew policies on homes with roofs that are less than 15 years old solely because of the roof’s age.
Roof Solicitations: Requires roofing solicitations to contain consumer-awareness language that the homeowner is responsible for the deductible under the insurance policy, and it is insurance fraud for the contractor to reduce or waive the deductible or file a claim with false or misleading information.
Roof Deductible: Allows insurance companies to offer a policy at a reduced rate to consumers that includes a roof deductible of up to 2% of the insured value or 50% of the roof replacement cost. Roof deductibles will not apply when there is a total loss to the structure, a loss caused by a hurricane, a roof loss resulting from a fallen tree or other hazard, or a loss requiring a repair of less than 50% of the roof.
Assignment of Benefits (AOB) Reform: Eliminates attorney fee awards where policyholder benefits have been assigned to a 3rd party.
Improving Affordability for Policyholders: Authorizes $2 billion for a new Reinsurance to Assist Policyholders (RAP) program to help insurers obtain reimbursement for hurricane losses earlier than they normally would under the Florida CAT Fund. This reinsurance is provided by the state at no cost to the insurer. Insurers that participate in RAP must reduce policyholder premiums.
Home Hardening Grants: Appropriates $150 million to provide hurricane mitigation inspections and matching grants to help Floridians afford home hardening improvements to their homestead single-family residences with an insured value of $500,000 or less. The program provides $2 in grant funds for every $1 provided by the homeowner up to $10,000.

Condominium safety reform
Florida lawmakers also addressed condominium reform by passing Senate Bill 4D. This bill provides an overhaul of the high-rise inspection law, requires more frequent recertification of safety standards and mandates that condo boards build up reserves so they can make needed repairs. Changes in the bill include:

Creates a statewide “milestone inspection” requirement for condominiums and cooperative buildings that are three stories or higher 30 years after initial occupancy, and 25 years after initial occupancy for buildings located within three miles of the coast.
Requires inspections every 10 years after a building’s initial “phase 1” inspection.
Requires an additional, more intensive inspection, or a “phase 2” inspection, if a building’s initial inspection reveals substantial structural deterioration.
Beginning in 2024, condo associations are required to conduct a structural integrity reserve study at least every ten years and prevents needed reserves from being waived.

Click here for fuller details.

Difficulty in finding homeowners’ insurance – and large rate increases when a policy has been renewed – have plagued the Florida market. One of the biggest issues has been roofs which are 15 years or more old – that has been a cause for non-renewal for many, so this new legislation should make things easier.
I shall investigate what is covered by the Home Hardening Grants and report further.

Florida Housing Market in 5 pictures
Why are Mortgage rates so high?
Florida Regulator: Insurers Can Offer Roof Deductibles
Naples First Quarter Housing Market Summary
Expansion Plans for Fort Myers Airport

Bonita Springs First Quarter Market Summary
St James City First Quarter Market Summary
Fort Myers Beach First Quarter Market Summary
Naples Park First Quarter Market Summary
Estero First Quarter Market Summary

  • Andrew Oliver, M.B.E., M.B.A.
    Real Estate Advisor
    m: 617.834.8205
    800 Laurel Oak Drive, Suite 400, Naples, FL 34108
    Licensed in Massachusetts