The Hidden Issues That Slow Down a Condo Sale in Florida

Florida Condo Sales Have a Layer That Single-Family Sales Don't -- and It Matters

You have priced the unit well. It shows beautifully. The view is real, the finishes are updated, and the building looks good from the street. Buyers are interested, and an offer comes in quickly. And then, a few weeks later, the deal quietly falls apart -- not over the unit itself, but over something the buyer's lender found in the condo association's documents. The reserve fund numbers. An undisclosed special assessment. A pending milestone inspection. Questions about the building's structural integrity that nobody had thought to raise at the listing stage.

This scenario has become more common in Florida's condo market since 2021, when the Surfside condominium collapse prompted the legislature to significantly strengthen requirements for condo associations -- particularly regarding structural inspections and reserve funding. The result is a market where the health of the association matters enormously to the transaction, and where sellers who are not prepared for lender scrutiny sometimes find themselves dealing with delays or dead deals that could have been anticipated.

What Lenders Look at Now -- and Why It Changed

In the aftermath of the Surfside collapse, Fannie Mae and Freddie Mac -- the agencies that back the majority of conventional mortgage loans -- implemented new questionnaire requirements for condo association approvals. These requirements ask associations to disclose, among other things, whether there are any known structural deficiencies, whether the building has passed any required inspections, whether there are deferred maintenance issues affecting safety, and the financial health of the reserve fund.

Lenders now scrutinize these questionnaire responses carefully. An association that cannot clearly and affirmatively answer the structural health questions -- or that discloses significant deferred maintenance, a thinly funded reserve, or a pending special assessment -- may not meet the lender's condo approval requirements. And if the association does not meet approval, the financing falls apart. This is not the seller's fault per se, but it becomes the seller's problem when a financed buyer's deal unravels over it.

Reserve Fund Health: The Number Lenders Focus On

A well-funded reserve is the financial foundation of a healthy condo association. Reserves are the money set aside over time to pay for major future repairs and replacements -- roofing, elevators, common area systems, structural elements. Associations that have historically kept reserves underfunded -- collecting lower monthly dues but not building adequate savings for future needs -- now face increased scrutiny from lenders who are required to evaluate whether the association is financially capable of maintaining the building.

Associations with reserve funding well below recommended levels -- particularly those that have taken a "waiver" approach in the past, where condo owners voted to waive full reserve funding -- may find that certain loan products are not available to buyers of their units. This limits the buyer pool to cash purchasers or buyers using loan types with less stringent condo approval requirements, which can affect both the pace of the sale and the final price.

Special Assessments: The Deal-Breaker That Did Not Have to Be

A special assessment is a charge levied by the association on unit owners to cover a specific expense that was not budgeted for in the regular dues -- a major repair, a required upgrade, or an expense that the reserve fund cannot cover. Special assessments are a normal part of condo ownership life, but they become a transaction complication when they are not disclosed properly or when the amount is large enough to affect a buyer's willingness to proceed.

Florida law requires sellers to disclose known special assessments as a material fact. But the timing and status of an assessment matter: an assessment that has been approved by the board but not yet levied, or a repair that the building needs but that the association has not yet voted on, creates ambiguity that buyers and their lenders find uncomfortable. The cleanest situation for a seller is to know the status of any pending assessments before listing and to disclose them clearly and upfront.

The Milestone Inspection Requirement

Florida's new milestone inspection law requires that condo buildings three stories or taller undergo a structural inspection at the 30-year mark and every 10 years thereafter. Buildings within three miles of the coastline face earlier inspection requirements. The milestone inspection must be conducted by a licensed structural engineer, and if deficiencies are found, repairs must be completed within a mandated timeframe.

For sellers in older coastal buildings -- and there are many such buildings in the Jacksonville Beach, Atlantic Beach, and Ponte Vedra condo markets -- the milestone inspection status is a question buyers and their lenders will ask. Buildings that have completed the inspection and received a clean bill of structural health are in the strongest position. Buildings where the inspection has been completed and repairs identified are in a more complicated position, depending on how far along the remediation process is. Buildings where the required inspection has not yet been scheduled or completed face the most lender scrutiny.

Sellers in multi-story coastal condo buildings should know the inspection status of their building before listing -- not as a conversation they are caught off-guard by, but as a fact they can address proactively and accurately.

How to Prepare Your Condo for Sale

The most important thing a condo seller can do before listing is gather the association documents that lenders and buyers will request anyway, and review them for anything that might raise a flag. This includes the most recent financial statements, the reserve study (which projects future reserve needs), the meeting minutes from the past year or two (where special assessments and structural issues would have been discussed), and any correspondence from the association about pending inspections, repairs, or regulatory compliance.

If there are issues in these documents -- a low reserve, a pending assessment, an unresolved repair -- understanding them clearly before listing allows you and your agent to decide how to price and position the unit accordingly, and to disclose accurately without surprises. The unit that is priced appropriately for a known issue will often sell more smoothly than the unit priced as if the issue does not exist.

The Warrantable vs. Non-Warrantable Condo Issue

A condo is considered "warrantable" by Fannie Mae and Freddie Mac -- and therefore eligible for conventional financing -- when the association meets a series of criteria: adequate insurance, adequate reserves, a minimum percentage of units that are owner-occupied rather than rented out, no litigation against the association, and now the post-Surfside structural health questions. A "non-warrantable" condo is one that does not meet these criteria for any of various reasons.

Non-warrantable condos can still be sold, but the buyer pool narrows significantly -- cash buyers, portfolio lenders, or hard-money lenders are the main options. Each of these buyer types has different expectations and pricing dynamics. Sellers of non-warrantable units often need to adjust their pricing expectations accordingly, because the limited financing options reduce the competition for their unit.

Understanding whether your condo is currently warrantable -- and if not, why not -- is one of the most important pieces of information a seller can have at the start of the process. An experienced agent who has worked with condo transactions in this market can help you get that answer before you list, not after you have lost a deal over it.

What Buyers of Florida Condos Should Know

Buyers have their own set of condo-specific due diligence that is more extensive than what is required for a single-family home purchase. Beyond the standard property inspection, condo buyers should review the association's financial documents carefully, ask specifically about any pending special assessments or known major repairs, understand the HOA fee trajectory, and confirm the association's insurance coverage -- particularly wind and flood insurance on the common areas and structure.

The condo rider on the Florida purchase contract provides a due diligence period specifically for reviewing association documents, and buyers should treat this time seriously rather than as a formality. Walking away from a condo purchase because of what you find in the association documents is a legitimate use of your inspection and review period, and it is far better than discovering structural or financial issues after closing.

Frequently Asked Questions

How does a seller find out if their building has completed the required milestone inspection?

The condo association is the primary source for this information. Contacting the association management company or board directly and asking specifically about the milestone inspection status -- whether it has been scheduled, completed, and what the results were -- is the most direct approach. This information should also appear in recent meeting minutes if it has been a topic of board discussion, which is another reason reviewing the minutes before listing is valuable preparation.

Can a special assessment kill a condo deal?

It depends on the size and timing. A small, clearly disclosed assessment that is already being paid in installments rarely kills a deal. A large, recently approved assessment that the seller did not disclose -- or a looming assessment that has not yet been formally approved -- can create significant problems for buyers and lenders. The key is full, upfront disclosure and appropriate pricing. Buyers who know about an assessment from the beginning can factor it into their offer and financing plan. Buyers who discover it partway through the transaction feel misled, and deals fall apart on that feeling as much as on the dollars involved.

What is the difference between Fannie Mae spot approval and project approval for condos?

Fannie Mae offers two pathways for condo financing approval: full project approval, where the entire development is reviewed and approved as a whole, and spot approval, which is done on a transaction-by-transaction basis. Spot approvals are not available for all condo types -- they are excluded for certain condo categories including condotels, timeshares, and projects where more than a certain percentage of units are investor-owned. Understanding which approval pathway applies to a specific building and whether the building currently qualifies is part of what your agent and lender sort out early in the process.

Are condo sales near the Jacksonville Beach and Ponte Vedra coast affected more than inland condos?

Coastal condos in Florida face additional scrutiny primarily because many are in older buildings and because the milestone inspection requirements have tighter timelines for buildings within three miles of the coast. The combination of salt air exposure, the age of much of the coastal condo inventory, and the new inspection requirements creates a more complex transactional environment for coastal condos than for newer inland or master-planned community condos. That said, a well-maintained coastal building with a healthy reserve and a clean inspection history is a straightforward sale -- the complexity is concentrated in buildings where those conditions are not fully met.

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What To Do Right Now

If you are selling a condo in Northeast Florida -- or buying one -- the time to surface potential issues is before the contract, not after. The right preparation makes these transactions move smoothly.

Call or text Joey Larsen at 904-863-6679, or visit RetireMeToFlorida.com to get started.