Minnesota ahead of the issue that could have contributed to the Miami condo collapse
In 2017, there was a short supply of condos and townhouses in the Minnesota. Some developers claimed they were not motivated to build because of the confusing laws on building defects, warranties, and threat of litigation. That year, a law was adopted to clarify the rule around litigation over construction and design flaws to assist developers in understanding penalties for certain mistakes. Not only did the bill clarify rules for developers, it also required developers and owner associations to take the necessary steps to monitor and fund upkeep of the buildings, including creating maintenance plans. These plans are required to be reviewed every three years and boards must inform owners of the results and estimated future costs every year.
While the cause of the Miami collapse has not been fully investigated, it appears that owners were aware of certain issues but did not have incremental maintenance fees to address the problem. Instead, owners were going to be faced with one-time massive bills that ranged from $80,000 to $360,000. The collapse showcased the challenges that owner associations are faced with—getting residents onboard to support necessary repairs.
Thankfully Minnesota is ahead of this dilemma. In 2010, an amendment to state law governing owner associations required groups to budget for “adequate” replacement reserves separate from other budgets. This will hopefully help prevent catastrophes like the one in Miami. Currently condo boards are not required to accumulate reserves, but they can be challenged by unit owners.
While Minnesota is ahead of the game compared to some states, there is still room for improvement. For example, Minnesota does not require reserve studies to assist in paying for replacements costs. Minnesota also does not require associations to hire professionals to conduct these studies. The tragedy in Miami has perhaps given renewed attention to these very important issues.