Condo Investments In St. Petersburg Florida- Watch Out for Condo Fees and Special Assessments

Downtown St. Petersburg currently has three significant condo projects that were completed some time ago, but sales of the individual units have slowed considerably. The largest development is Signature Place Condominium with 244 units and approximately 37 sales, followed by The Sage Condominium with 112 units and approximately 32 sales and 400 Beach Drive with 93 units and approximately 45 sales. The sales figures are approximate because it’s frankly too time consuming to research each sale and exclude duplicate or other sales anomalies.
The important thing any person interested in purchasing in the aforementioned projects should consider is the effect all the unsold units will have on each unit owner’s investment in their unit. When a developer builds a project, a budget for the building’s operating fees is developed and each unit is assessed its pro-rata share of those budgeted fees. A prudent developer will build in reserves to cover the sales period, but it is highly unlikely that any developer considered reserves to cover the significant lack of sales we’re seeing in this depressed market.
Although sales of units are certainly not keeping pace with budgeted estimates, the built in, unavoidable costs associated with buildings of the magnitude described above continue to add up every day.
Examples of these costs include property taxes, liability and casualty insurance and maintenance and repairs. Another major expense is the debt service that accrues each day, but for purposes of this discussion this major expense can be excluded.
The bottom line is that every day these buildings sit with less than full sales, the current unit owners risk assuming liability for the costs associated with those empty units and the expenses related to the building itself.   The built in fees will be borne by someone and other unforeseen fees related to maintenance and other special assessments may be assessed against current owners.
Because of this major risk–and many others–prospective purchasers of these units (or any other partially sold development) should carefully consider the liability they face prior to purchasing in such a situation. For more information, visit my website at www.mattweidnerlaw.com.