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What Does The Champlain Tower Collapse Mean For NC / SC Condos?

With the collapse of the Champlain Tower South (a part of a condominium located in Surfside, Florida) in June of last year, there has been a search for answers.  Condominium owners want to know whether their building is safe, and boards of directors want to ensure they take appropriate steps to prevent another disaster similar to the one in Florida.

Although the ultimate reasons for the collapse may not be known for years, it is likely that some problems that may have contributed to the collapse are not unique. As a result, the Community Associations Institute (CAI) has published recommendations relevant to the tragedy in Florida. These recommendations focus on three main areas that any condominium can address: (1) maintenance, including deferred maintenance, (2) inspections, and (3) funding reserves and associated financing issues.

Legislatures across the country have begun looking at requiring inspections by structural engineers to help prevent a repeat of the Surfside disaster. But, there are always costs associated with these steps and even unforeseen problems (such as a scarcity of qualified engineers to inspect all the buildings needing inspection adequately). 

In order to know how much to save, all condominiums should obtain and update a reserve study. A reserve study essentially maps out the estimated costs over a period of time (usually for the next 10-20 years) to give the association a clear idea of how much needs to be saved—and how much assessments should be done to meet that goal. But, many states have no requirement for reserves at all. For example, there is no state-required amount in North Carolina and South Carolina that must be placed in reserves for a condominium (although the governing documents for a particular association may require it, and FHA condo approval guidelines also set a minimum, currently 10%). 

There is also no state-mandated procedure to automatically approve and require owners to pay for needed repairs. Often the current owners in an association vote “no” when it comes time to approve increases in dues or special assessments that would address essential needs. Many owners complain that they shouldn’t have to pay for something they say won’t benefit them directly (like a roof that won’t be installed until years later). But, putting away reserves for these future costs is part of living in a condominium (or really any community association). Among other things, it isn’t fair to future owners to have to pay the full cost of repairs because prior owners failed to save. 

Much of this boils down to educating condominium owners about the nature of what they own and the need to be proactive in saving for needed repairs. It is also critical to not defer structural and other essential repairs. While state legislatures continue to search for appropriate ways to address all these realities, the onus for protecting owner investment in their condominium and protecting their well-being falls on the owners themselves and their board members (and can be assisted by community managers, attorneys, and other professionals). 

While no condominium can change the cards they are dealt in terms of original defects, some of the reasons for the collapse in Surfside may have been preventable, and other condominiums would be wise to learn from the lessons taught in Florida. Since it may take time for any meaningful legislation to pass—and there is no guarantee that anything will pass—many community associations have opted to amend their governing documents to require the steps recommended by industry professionals. Amendments requiring reserves, authorizing the board of directors to adopt a special assessment to fund needed repairs, and requiring reserve studies and professional inspections are being considered by condominiums across the nation.

Content provided by Law Firm Carolinas. Original article can be found here.