Imagine you own a condo, are diligently paying off the mortgage, and then receive a letter from your homeowners association informing you of a six-figure levy. Now imagine you don't have the money, but under the homeowners association's rules, failure to pay the levy means you will lose your condo to foreclosure. However, once you disclose the levy to potential buyers, it will be nearly impossible to sell the condo. What do you do?

This is the poison pill facing more and more Florida homeowners. The insurance crisis has garnered most of the attention as the ravages of extreme weather become more and more frequent in the Sunshine State. But one particularly thorny side effect of the insurance crisis is leaving many Florida homeowners with an impossible choice.

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Due to increased insurance premiums, many Florida homeowners are already facing higher HOA fees at a time when insurance for their units is becoming increasingly expensive. Howard Konetz, 79, is a homeowner in Aventura, Florida, and is living this nightmare. In a recent interview with Jeffrey Weinsier, an investigative reporter for Local 10 News, Konetz said his homeowner fees have increased from $1,500 to $3,000.

Then he was hit with a $224,000 levy. Condominium owners share the common areas in their condominium complex and are therefore subject to levies that represent their share of the cost of repairing common areas. Condominium owners in Florida are hit with these astronomical levies for several reasons. Many insurers require extensive repairs or improvements to common areas as a condition of renewing the condominium complex's HOA policy.

Another reason for the high levies is the tragic collapse of the Champlain Towers in Surfside. One of the main reasons for the collapse was that important maintenance work was not carried out for years because the homeowners' association boards could not agree on costs or schedules. After several decades, the problems became so severe that they caused the building to collapse.

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As a result, Florida's legislature passed a law in 2021 requiring HOAs to increase their reserves and implement a more frequent inspection system for all Florida condominiums. These inspections by municipal authorities and insurance company representatives have resulted in a long list of items that need to be corrected, especially in Florida's older condominium complexes.

Unfortunately, many homeowners in older developments are not financially able to pay the resulting taxes. This is because many of them are older and on a fixed income. Many of the younger owners chose to buy in older developments because they were older and less expensive than the newer developments.

It's also important to note that assessments can vary based on unit size. Larger units may have additional parking, storage, or a higher ownership stake in the community's common areas. This means they're subject to even higher assessments. Local 10 News reports that some owners in Konetz's Mediterranean Village have been hit with assessments as high as $400,000.

Plans for Mediterranean Village include elevator repairs, concrete repairs, roof improvements and even $700,000 for landscaping. Konetz and his co-owners are not allowed to pass the costs on to potential buyers. Even if they could, no reasonable buyer would pay top dollar for a unit that has six-figure taxes due. At the very least, they will demand a corresponding discount on the purchase price. That could embarrass many sellers.

Konetz has listed his condo, which is still on the market after several price cuts. More and more condo listings are showing six-figure amounts and buyers are staying away. Meanwhile, Konetz isn't sure what the future holds. When Local 10's Jeffrey Weinsier asked him what he plans to do, Konetz responded with one word: “Pray.”

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This article, “The Poison Pill for Florida Condo Owners,” originally appeared on Benzinga.com

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