Real Estate: On Buying Condominiums in Florida

iStock_000009273608XSmallSeldom a day goes by that I do not get an email or a phone call from a Realtor in Florida. The market is brutal there, they are overbuilt with second holiday homes, sales are very slow and properties are either under-water (not worth what they are presently financed for) or are in foreclosure. The Realtors are looking north to the Canadian Consumers who are in much better shape, have less debt and who may or may not be lining up to buy at strikingly lower prices that they perceive as great “value”.

Here is my caveat: unlike Canada, where you are responsible till death or bankruptcy do you part….with your mortgage…that is not the case in Florida; walk away, stop paying the mortgage….your utilities, your Condominiums fees…no problem. In Canada, the Mortgagee would be responsible to pay the mortgage and the taxes and chase after the owner for costs until they are made whole, debts are paid or there is a bankruptcy.

That is not the case in parts of the United States. Now what happens to the Condominium that you happily bought for half the previous value…and now is part of a Condominium Corporation that may or may not go bankrupt.

When we sell you a Condominium in Ontario you have a right to review the Status documents with your lawyer. They include the projection of costs and the money reserved to pay for those costs. Condominiums are not just the units but your share of the Common areas and common elements. Most buyers spend one tenth or one twentieth of the time reviewing the documents of the Corporation. They are very important and mostly based on the building being fully occupied by owners or tenants paying monthly shared expenses.

Imagine buying in a building where half of the owners had or were walking away…and that is not all…

I also know some Canadian buyers who bought with the intention to rent between their visits and found out, after closing, that short-term rentals were not allowed in the Condominium Documents….they have owned it for years and to the best of my knowledge, have never stayed in their unit…

If you get caught up in this “Florida Condo” buying jungle, please make sure that you do your due diligence. If you fall in love with the space and the building make sure you have the Condominium documents and financials gone over with a fine-tooth comb…and get good third-party advice.

It will be worth the cost involved.

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