Your Condo Is Struggling: Should It Be Redeveloped?

Sept. 4, 2025 — Unfortunately, condo properties can get in danger of going bankrupt. It happened back in the housing crisis of 2008-9 because many homeowners, who had lost their jobs or most of their income, defaulted on their HOA dues. The same danger exists for many condo properties in 2025, but for different reasons.

3 Problems Taking Condos to the Precipice.

Three big problems are causing many HOAs to realize they might be able to continue as viable organizations. These combined problems are causing some financial liabilities that are higher than the value of the property. In which case, it might be better for everyone to sell out to a developer or other buyer.

The first factor is rising insurance rates because of climate related risks, particularly in coastal areas and much of Florida. For many properties, insurance rates have doubled in the last five years.

Reason number two stems from Florida’s new building inspection requirements. Florida’s new law, SB 154, requires HOA buildings of 3 stories or more to conduct vigorous inspections, in an effort to prevent tragic building collapses like the one in Surfside, FL that killed 98 people. These inspections are turning up big problems at many properties, which will require homeowners to pay hundreds of thousands, if not millions, of dollars for repairs (FL is considering limiting SB 154 to buildings of 6 stories or more).

Florida has also imposed new financial reserve requirements on HOAs, which is reason number 3. These new rules have fixed categories and stringent rules about funding reserves, which will force almost every HOA in Florida to dramatically increase the amounts they have in their reserves.

The result of this constellation of causes: many HOA owners cannot afford to pay their dues and assessments, forcing them to sell and driving down the value of their units. It is not helpful that the Florida housing market is soft, turning into a buyers’ market. As more and more owners sell, the problem cascades with fewer and fewer owners left to pay the bill. (Note: while Florida is the leading state for these problems, the underlying problems apply to condos and HOAs in almost every state.)

“They can’t sell their multimillion-dollar condos because of these assessments. Buyers don’t want to take on units with assessments and sellers can’t meet their bottom line if they pay the assessments.”

Dawn Munera, a real estate broker for Pembroke Pines-based Essential Realty Solutions, as quoted in the Sun Sentinel

So Can an HOA Redevelop?

If a condo property finds itself in a situation when it costs more to fund reserves and make building repairs than the property is worth, and face hefty insurance increases, what can it do?

Biscayne 21 is a Miami condo tower at the center of a court case on just this situation. The outcome of that case could change how termination deals are handled. The developer Two Roads paid about $150 million to buy all but ten of the 191 units in Biscayne 21. Now in control of the HOA, Two Roads rewrote the condo organizational rules to allow the property to be dissolved and converted to luxury condos. Naturally, some of the remaining homeowners sued, leading to the court case. Pending its journey through the Florida courts, the project is in limbo.

A similar situation is happening Tampa at the Grande Oasis. Owner holdouts there sued the condo board and the West Shore investor that purchased a majority of units.

A Desperate Situation – with No Idea on How It Will Play Out

In many condos and HOAs with big repair projects and/or reserve requirements the situation is bleak, and getting worse. The higher the assessments get, the more owners who will be forced to sell. If owners of units go into arrears or default, the remaining owners have to pick up the slack. This is what happened in 2008 and 2009. Some developments will have no choice but to go bankrupt or sell out to a developer, and take what they can get. That is the best solution, as owners will get at least something for their units. But, like in the Grand Oasis and Biscayne 21 situations, any holdouts can try to block the sale. The result is a big mess mired in enmity and lawsuits.

For further reading:

Can Struggling Condos Be Redeveloped

Soaring Florida Housing Inventories: It’s a Buyers’ Market

Comments? Have you seen any condos or co-ops that are facing problems like this? What would you do in your HOA got into a similar situation.