How can we prevent another tragic condo collapse? – HOA EXPERTS AND ADVOCATES WEIGH IN

By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com

IAC reached out to several legal and consumer advocates across the U.S., and asked them to share their thoughts on how to prevent another tragedy like the collapse of Champlain Towers South, near Miami, Florida.

Full disclosure: for various reasons, I’m highly skeptical that legislation can fix the inherent flaws in the condominium and/or common interest/planned community model of real estate. 

Enacting legislation at this point in time, 50 years after creating statutory condominium associations is — I think — a case of “too much, too little, too late,” now that hundreds of thousands of buildings have been poorly constructed and/or inadequately maintained for 20 – 50 or more years. 

However, perhaps I’m too cynical. And I’m sincerely interested in what experts think — particularly those who advocate on behalf of real estate consumers and property owners vs. solely working on behalf of HOA-industry stakeholders.

So I gathered my list of contacts across the country, and posed the question: Are there viable solutions to prevent another disaster like the condo collapse at Champlain Towers South, in Surfside, Florida? If so, what do you suggest?

Read on for some common sense, perhaps radical solutions proposed by several HOA-governed housing consumer advocates. Note that some comments have been edited for brevity and clarity.


Debbie MacCoy

Condo homeowner, longtime citizen advocate for homeowners afflicted by faulty concrete foundations.

Background info: MacCoy and dozens of other home and condo owners from Connecticut have been working closely their state Legislature to obtain public insurance funding to replace defective concrete foundations in homes that were constructed in the 1980s and 1990s. 

Thousands of concrete foundations in the state have failed, due to no fault of homeowners. Investigators discovered that the original concrete mixture used to pour foundations contained a mineral named pyrrhotite, which causes a chemical reaction that leads to premature failure of concrete. The result, defective concrete foundations begin to crack and crumble 10-30 years after the completion of construction. Unfortunately for property owners, the quarry that supplied the concrete has long been closed. leaving them with no legal recourse against the owner of the quarry.

In response to homeowner advocate pleas for help, the state Legislature has established a captive insurance company to assist homeowners in rebuilding and replacing bad foundations, in order to preserve their homes.. 

Due to their shared ownership legal structure, condominium associations face special challenges navigating the claims system. MacCoy and her advocacy team have successfully obtained additional financial assistance for owners of condominium units. 

Here are MacCoy’s recommendations:

1.  Most of the time when a [condo] board makes a decision to repair a building due to a common interest, the unit owners can cause a delay by refusing to move out. Then the board must hire an attorney and things become delayed.  That delay can cause significant harm to everyone in the building.  Therefore, every state in the U.S. should have, at the state level, a condo ombudsman, that allows disputes such as common interest repairs between the unit owner and board member to be dealt with immediately, without undue expensive expenses.

2.  [Pre-sale] Disclosures – especially “material of fact” in that if there are costly repairs or assessments that are forth coming, a buyer should be permitted copies of board meeting minutes – so that they can make an informed decision on the unit. 

3.  INSURANCE COVERAGE mandates mitigation for things it doesn’t cover, for example, foundations are not covered unless it’s a sudden or abrupt collapse. If you have a crumbling foundation and the insurance doesn’t cover it – the duty of the association is to repair/mitigate the damages because if the association doesn’t mitigate and there is a sudden collapse the insurance has that loop hole to get out of covering a sudden collapse. 

In our situation the cost to mitigate our buildings is $10 Million Dollars, in the almost 40 years of our buildings, we have never had a reserve to cover such an enormous expense.  The State in which the insurance commissioners have allowed insurance companies to write out coverages should be prepared to cover such a disaster, because associations can’t, for the most part, raise $10 Million as BANKS refuse to loan to associations, where their market value has dropped significantly due to the disrepair of the buildings.  Most condo unit owners can’t raise $60,000 – $100,000 per unit owner to repair big common interest expenses such as foundations.

4.  We need a NATIONAL QUARRY STANDARD limiting deleterious expansive minerals that cause the break down of concrete such as:  Pyrite, Pyrrhotite, Marcasite, Muscovite – these destructive minerals should be limited at the source.  Every State in the United States should demand that every quarry sourcing aggregate for concrete submit a GSR – Geological Source Report – to the State Geologist – before the aggregate can be approved.  There are structural failures happening all over the world due to deleterious minerals in the aggregate which makes up 70% of the mix for concrete.  

5.  Building Inspections should be sooner rather than later.  It takes 10-15 years for concrete mixed with deleterious minerals to start showing signs of distress. By 20-30 years the signs are more prevalent, therefore periodic inspections at 10, 15, 20, and 25 years should be implemented.  Proactive comes at a cost, but reactive comes at a higher cost to everyone – not just those it affects, but to society as a whole.  

6.  Insurance Industry has been let off the hook far too long. They shift the duty to mitigate on the insured rather than the insurer. However, if the insured can’t raise, for example, $10 Million, and banks won’t lend the funds, then the State needs to step in and help defray the costs, as it is the state’s insurance commissioners that are signing off on these “exclusions” leaving folks blindly vulnerable.   The Insurance Industry continues to collect high costing premiums for less and less coverage and they are doing it right under our proverbial noses.

7.  Construction Industry, Banking Industry, Insurance Industry, and Real Estate Industry continue to go unscathed, and their retrograde response to disaster is take three steps back from the disaster and allow – tax payers, you and I, to pick up the bill – meanwhile they are fattening their bottom line while we are nutrient deficient.  In disasters such as the condo collapse in Florida, every industry needs to come to the table and offer assistance, and, if they have to, bring them kicking and screaming and tell them dinner is served when each brings a dish to the table.

Debbie MacCoy

Building Inspections should be sooner rather than later.  It takes 10-15 years for concrete mixed with deleterious minerals to start showing signs of distress. By 20-30 years the signs are more prevalent, therefore periodic inspections at 10, 15, 20, and 25 years should be implemented.  Proactive comes at a cost, but reactive comes at a higher cost to everyone – not just those it affects, but to society as a whole.” 

Debbie MacCoy, Condo homeowner, longtime citizen advocate for homeowners afflicted by faulty concrete foundations.

Mike Novak

CPA, licensed in Nevada and Illinois, CMA, and CFA Charterholder; Co-Founder and Co-Managing Partner of Common Interest Advisors, LLC

Background note: Mike Novak is a former owner of a condominium in Chicago, who has long advocated for greater transparency of financial records.

The first problem is most common interest realty association assessments understate the true cost of community living. Instead of maintaining intergenerational equity, the Association boards are deferring assessment increases by waiving or reducing reserves. 

The other problem is community living is not for first time home buyers or elderly/disabled owners living on fixed incomes. In fact, once the Association’s business model breaks, they won’t find suitable replacement housing. 

As for proposed legislation, I recommend the following:

1. Truth in Community Association budgeting. Boards must adopt budgets that maintain intergenerational equity. This means fully funded reserves, and everybody pays their fair share. 

2. Truth in Disclosure. The Association must disclose the amount of its reserve fund liability to prospective buyers and owners. Prospective buyers must be aware of the risks of buying their common interest home.

Mike Novak

“…most common interest realty association assessments understate the true cost of community living. Instead of maintaining intergenerational equity, the Association boards are deferring assessment increases by waiving or reducing reserves.

Mike Novak, CPA, licensed in Nevada and Illinois, CMA, and CFA Charterholder; Co-Founder and Co-Managing Partner of Common Interest Advisors, LLC

Evan C. McKenzie

Attorney, Author, Public Speaker, and Consultant, Oak Park, IL  60304 Administrator of Privatopia.blogspot.com

Background note: McKenzie is the author of several books on HOA-governed communities, including Privatopia and Beyond Privatopia. He is also a publisher of several papers on privatization of public services, and a noted public speaker on these same topics.

Here is my summary of the main ideas I am working on–I will be writing this up more fully for an academic article soon:

1. All developers must establish ample initial reserves for every condo/hoa project they build. That amount will be determined by an independent expert from a list maintained by the state. I’m talking about millions of dollars for these condo towers, but it would vary depending on the nature of the project.

2. All condo associations and HOAs must have a reserve study done or updated every three years. It must be done by an independent construction industry professional chosen from a list maintained by the state.

3. The current reserve studies from every community association in the state must be posted on a government website for full public access.

4. Develop a rating system for condo/HOA financial health (as proposed by California attorney, Tyler Berding), post it on the [condo/HOA] website, and include it on all real estate listings, as they do with school district information, etc. At the very least, post the percentage the association has actually funded of the recommended level of reserves. All this is to be available to the whole world. This will put market pressure on associations to fund their reserves adequately. It will be good for their property values. 

5. The federal government needs to establish a program for federally-insured low interest loans–by private banks–to older associations to make up for deferred maintenance and deal with unanticipated impacts of climate change. 

6. The current protections for developers against construction defect lawsuits, and for insurance companies, need to be substantially reduced so that they can be held accountable for defects in initial construction.

This would be a good start.

Evan McKenzie

Note to readers: here’s a real-life example of government providing low interest loans to support a cash-strapped condominium association:

Sprawling condo complex seeks ‘last resort financing’ through city, by John Gessner Sun This Week, May 12, 2021

All developers must establish ample initial reserves for every condo/hoa project they build.

The current reserve studies from every community association in the state must be posted on a government website for full public access.

Evan C. McKenzie, Attorney, Author, Public Speaker, and Consultant

(Pixabay.com)

Jeff Schumacher 

Licensed Real Estate Broker at Keller Williams Realty Bothell, Greater Seattle Area

In my opinion, there should be a law that buildings 30 years or older should be inspected every 6 months for HOA repairs and building strength.

Jeff Schumacher 

Tyler Berding, Esq.

Principal of Berding & Weil, Construction Defect trial attorney, expertise in building envelope issues, soil claims, and building-product failures

Deborah, You are right to be skeptical. The existing condo model is flawed but the flaw is baked in and, as you say, has been around long enough to be the legal basis for thousands of buildings. The “flaw” as I see it, is the inherent conflict between the short-term interests of present owners vs. the long-term obligations of the corporate association to future owners. The former do not see themselves as permanent residents of the complex—while the latter has long-term legal obligations assigned to it by the governing documents—in perpetuity in most cases.

Because assessments are voluntarily set by the board of directors who are also present owners, it is far too easy to succumb to political pressure to keep expenses, and thus assessments, low—often much lower than necessary to meet future maintenance and repair obligations. What happens is that necessary maintenance is “deferred” if the cost of it would require additional contributions from present owners. And that is just the maintenance that experts have recommended based, usually, on visual-only observations.

The damage that led to the collapse of Champlain Towers, while partially observed in 2018, no doubt was occurring for decades where it could not be seen without a direct, intrusive inspection. The same was true of the collapse of the balcony in Berkeley, California in 2015 that killed six students—nothing visible that would have signaled a necessary repair. 

By the time the Champlain Towers damage was noted in 2018, there likely was deterioration of critical structural components that were not visible—deterioration that had been occurring for forty years. It is even unclear whether the building could have been saved if the 2018 recommendations had been implanted. I’m sure it will take several years of litigation to sort that out.

The unwillingness of present owners to raise enough to stay even with deterioration, both visible and not visible, results in those costs being passed on to a string of subsequent owners until it can no longer be ignored and the then existing owners, perhaps 30 to 40 years later, end up with a massive expense or a tragedy.

What’s needed, at a minimum, are regular inspections, both visual and intrusive, at least every ten years, and ideally every six, to determine the condition and longevity of critical structural components. Reserve studies as mandated by some states are almost always limited to visual inspections of accessible components only and do not reach the components that failed in Berkeley, and likely were part of the disaster in Surfside. Regular intrusive, as well as visual inspections could and have been mandated through legislation. California just did it in response to the Berkeley incident. The statute can be found at California Civil Code Section 5551. I wrote most of it.

As we said above, the model is basically flawed, and probably cannot be corrected retroactively.

About the rating system I’ve discussed with Evan McKenzie and others: We would create, maybe, a 1-10 rating based on a number of factors—whether the association has professional management, do they have regular board meetings, do they have a professional reserve study, regular inspections, etc. We did a mini version of it in the form of a quiz that is presently on our website at: https://form.jotform.com/82666866362167. The idea is to attempt a uniform rating system that can give potential buyers and present owners a better idea of how the operation and condition of their complex compares to the industry as a whole—kind of like the APR rating given to mortgage and other interest rates.

Tyler Berding, Esq.

Note: Berding and partners have posted an entire discussion of non-destructive testing (NDT) and invasive testing here: https://www.berding-weil.com/articles/hidden-damage-life-death-and-legislation.php

Excerpt:

Engineers can investigate hidden portions of a building in several ways. “Non-destructive” testing (NDT) is often used to map the extent of damage—particularly rot or corrosion. There is a technology that can determine the extent of moisture intrusion using infrared cameras in certain types of buildings. Another is a borescope, a small camera inserted through a hole in the outer skin. Concrete and steel buildings often require more sophisticated methods of detecting internal damage. For example, ground-penetrating radar can assess corrosion in rebar or beams covered in concrete.

“Destructive” testing, where portions of the building are removed or opened, gives the inspector a direct view of framing, shear walls, and waterproofing. Hidden decay or corrosion of metal components may also appear during a routine repair of other elements. Concrete can be cored to reach and inspect embedded and corroded rebar. Outward signs of decay or corrosion, to a trained engineer, can help direct intrusive inspections.

Inspections must start early in a building’s life when water intrusion leading to deterioration can be identified and repaired economically. Waiting until a building is thirty or forty years old, after rot and corrosion have taken over to look for critical damage, is almost a guarantee that the inspection will find a lot of it.

Berding & Weil, LLC

By the time the Champlain Towers damage was noted in 2018, there likely was deterioration of critical structural components that were not visible—deterioration that had been occurring for forty years. 

What’s needed, at a minimum, are regular inspections, both visual and intrusive, at least every ten years, and ideally every six, to determine the condition and longevity of critical structural components.

Tyler Berding, Esq., Principal of Berding & Weil, Construction Defect trial attorney, expertise in building envelope issues, soil claims, and building-product failures
Pixabay.com free image, unknown condominium and apartment buildings

Fred Fischer

Homeowner Advocate, member of AZHOC (Arizona Homeowners Coalition)

The main reasons why the Surfside failure occurred are fairly well understood, it started with its defective governance foundation, compounded by a lack of oversight or safety regulations and lack of member protective regulation by local governments and the State.

In my opinion, there is no pathway to good solutions for the members under the present privatized housing governance scheme, because we are discussing a defective product (privatized housing) governed under a CONTRACTUAL scheme at its core that history proved unworkable and abandoned long ago (1776). Consequently, until local and state leaders stop supporting and mandating the contractual governance of housing, little will change for the members.

The solution to the Surfside disaster could/should be that Housing/Condo Associations be eliminated in their present one-sided contractual form. By returning the owners’ property rights lost under the contracts, and increasing the member’s/owner’s participation and voting rights, along with a greater level of local and State authority/oversight over any housing governing body. When it comes to housing, it should never be hands-off by local and State governments like private Housing Assocation have been.

Fred Fischer

The solution to the Surfside disaster could/should be that Housing/Condo Associations be eliminated in their present one-sided contractual form. By returning the owners’ property rights lost under the contracts, and increasing the member’s/owner’s participation and voting rights, along with a greater level of local and State authority/oversight over any housing governing body. When it comes to housing, it should never be hands-off by local and State governments like private Housing Assocation have been.

Norman Lerum, Attorney

Principal/Owner, Norman J. Lerum, PC, specializing in business and contract litigation, insurance coverage and personal injury lawsuits

Background note: Lerum has successfully litigated several cases on behalf of Chicago condominium owners, as highlighted on IAC in previous posts.

Here are Lerum’s reactions and recommendations:

When Illinois Condominium statute was originally written, the assumption was that everyone would be willing to spend the money to maintain their building, considering it was their home. 

But I get 20-25 inquiries per week regarding condominium associations that are not maintaining the common elements. Roof leaks, elevators aren’t working, and more. These problems start small, nothing is done, then they evolve into something significant.

It appears that’s what happened at Champlain Towers South. 

Norman Lerum, PC

Lerum shares my concern that conflicting interests are an inherent flaw in condominium associations. He points out that many owners of condo units are not residents of the community, and don’t share the same quality of life concerns as owner occupants, noting that investor owners are less likely to support fee increases and special assessments, even when there’s a glaring need for repair. 

The industry views condos as commodities.

What happens when unit owners notify the HOA of the need for maintenance or repair of the common property? Condo boards often actively oppose unit owners who criticize the board’s actions or inactions. (Brian Connolly and Michael Boucher were demonized as gadflies and ‘not team players.’)

A condo board has responsibility to repair and maintain common elements. But when problems aren’t addressed, property damage and personal injury sometimes occur.

Norman Lerum, PC

Illinois law gives a condo association the power to evict a unit owner — as if the unit owner were a tenant —  for non-payment of condo assessments. But, unlike a tenant, a condo owner cannot withhold condo fees as leverage to compel the association to address deferred maintenance or repair of the common property. 

In Illinois, the Supreme Court has ruled that a unit owner is obligated to pay condo fees, even when the condo association breaches its fiduciary duties. That puts the burden on the owner to sue the condo association to recover their losses or compel the association to act.

Unfortunately, in Illinois, when a unit owner prevails in litigation against her condo association, there’s no shifting of attorney fees. The imbalance against the unit owner in Illinois is tremendous. It’s completely unfair.

Norman Lerum, PC

In light of these recent events, Lerum recommends changes to Illinois statute. 

The current statute requires condo associations to maintain and repair the common elements, and to maintain “reasonable” reserves. But the stature makes no specific requirements to conduct regular structural inspections, or spend the money to make necessary repairs.”

Lerum cites as an example, his representation of condo owner Lisa Carlson, in a personal injury lawsuit against Spanish Court II. In that case, the condo association disregarded the elevator company’s recommendations for repairs. The condo association also failed to file the negative elevator safety report with the city, as required by law. Subsequently, the building’s elevator malfunctioned, resulting in his client’s injury. 

Lerum recommends that the condominium statute be amended to require periodic engineering inspections, to ensure each building is structurally sound. Additionally, state law must include specific legal requirements that owners actually spend the money to promptly address and repair problems identified in an engineering report. 

How many legal requirements will Illinois state legislature impose upon condo owners to make them safe?

Legislation should include:

1. A requirement that engineer reports point to conditions that would require attention within a specified period of time.

2. A legal requirement that a condo association will be liable to pay attorney fees of unit owner, who successfully sues the condo association to compel it to implement necessary repairs. 

The current statute provides no legal consequence for condo boards that ignore their duties to maintain a safe environment and preserve the building. In general, the statute needs to put more risk in the equation for the condo HOA board’s failure to abide by their fiduciary duties.

If unit owner proves breach of fiduciary duty, condo board directors should be held personally liable. Exculpatory clauses (provisions that absolve board members of liability) in condo and HOA governing documents should be deemed unenforceable.

Norman Lerum, PC

The current (IL) statute requires condo associations to maintain and repair the common elements, and to maintain ‘reasonable’ reserves. But the statute makes no specific requirements to conduct regular structural inspections, or spend the money to make necessary repairs.”

Norman J. Lerum, PC, Principal/Owner of Chicago law firm specializing in business and contract litigation, insurance coverage and personal injury lawsuits

Lerum understands that enacting legislation to increase responsibilities of condominium associations, while leveling the legal playing field for unit owners, will be a challenge.

Lerum and I discussed the fact that special interest groups, such as the Community Associations Institute, Realtor groups, home builders, and others heavily invested in the condo-HOA industry, have historically lobbied against “government interference,” to include mandating regular structural and safety inspections for multifamily buildings. 

He highlights recent reports like this one from The Tallahassee Democrat in Florida.

‘It takes a tragedy’: Florida’s hands-off approach to condo regulations tested after Surfside

According to the report, the Florida Legislature repealed a statute, which, for a brief time, had required condominium associations to inspect multifamily buildings, three-stories or taller, every five years.

Excerpts from article:

In 2008, the Legislature passed a bill to make condo boards with buildings over three stories tall have inspections every five years. Signed into law by then-Gov. Charlie Crist, a Republican at the time, the bill required associations to hire an architect or engineer to perform a structural integrity check but didn’t make the state responsible for enforcing that rule. The law also allowed the boards to opt out if a majority of its members voted against the inspection.

Two years later, and after several associations complained about the high cost of getting inspections done, the Legislature passed a bill repealing the five-year inspection rule. And Crist, now a Democratic congressman from St. Petersburg running for governor, signed the repeal into law.

When asked about the safety of condominium buildings in Chicago, Lerum added: “In my opinion, there are ticking time bombs. We just don’t know where they are.

Chicago high-rise condominium’s garage closed, sued by city over code violations

Lerum notes that Crain’s Chicago has picked up a developing story about structural defects of the 8-story parking garage that supports the condo tower of 111 East Chestnut on Chicago’s waterfront. 

Readers of IAC may recall several previous posts about Norman Lerum’s representation of condo owners in litigation involving 111 East Chestnut Condominium Association. Plaintiffs Michael Boucher and Brian Connolly both prevailed in appellate cases involving First Amendment and Due Process rights of condominium owners, applicable under Illinois Statute. 

The latest legal battle involves 111 East Chestnut Garage Association — the parking garage is owned separately from the residential portion of the iconic condo tower, located on the shores of Lake Michigan.

In a story eerily similar to that of Champlain Tower South, the garage at 111 East Chestnut also had a visual structural inspection in 2018. Several serious defects were noted, and the engineer recommended prompt repair of those defects. But 111 East Chestnut Garage Association shelved the report, and took no action for three years. 

Following the collapse of Champlain Towers South in Surfside, Florida, Crain’s obtained a copy of the 2018 engineering report, and published several articles about the hazardous conditions at 111 East Chestnut. 

Shortly after that, the City of Chicago ordered the closing of the garage at 11 East Chestnut, and filed a lawsuit. The suit seeks to impose civil penalties against the Garage Condo Association. The City also seeks an injunction to compel the owners to cure code violations, including shoring up support columns and making necessary structural repairs. If necessary, the suit also asks the court to appoint a Receiver to collect funds from garage owners. If that’s unsuccessful, the City plans to move forward with repairs as necessary, filing a lien against the property owners. Alternatively, in the event the garage association abandons the property, the Garage Association could be forced to relinquish the deed for the property to the City.

Here is the link to the lawsuit:


In conclusion, here are the main components necessary for meaningful reform of the condo and HOA indsutry:

  • End government’s ‘hands-off’ approach to HOA issues and internal disputes.
  • To prevent injury and possible loss of human life, mandate local and state level administrative oversight of HOAs, especially with regard to maintenance of structural safety.
  • Institute low-cost financial assistance for condo and homeowners associations to repair or replace essential infrastructure (common elements/common property)
  • Mandate transparency, specifically, require periodic reporting of the fiscal health of each HOA-governed community association, and make those reports available to the public.
  • Level the legal playing field for property owners, creating more affordable access to legal relief, and the ability to recover attorney fees if they prevail.
  • Hold condo associations, board members, and developers personally accountable for their negligence or malfeasance.
  • Don’t let the insurance industry off the hook, by allowing multiple exclusions to avoid payment of claims.
Deborah Goonan

is the creator of Independent American Communities (IAC), a Housing Consumer Education blog focusing on HOA governed Common Interest Developments.
IAC documents legal, social, and economic challenges — and explores solutions to problems — in U.S. HOA-governed common interest communities.