One of the most common mistakes condo buyers make in Miami is falling in love with a unit and doing almost no due diligence on the building itself. The floors, the view, the kitchen — those things matter. But in a market shaped by post-Surfside legislation, rising insurance costs, and aging infrastructure, the building's financial health can be the difference between a sound investment and an expensive mistake.
Here's what to look at, what to ask for, and what the answers actually mean.
Start with the condo documents — before you go under contract
In Florida, sellers are required to provide condo association documents to buyers, and buyers have three business days to review them after receipt. That review period is your window to walk away without penalty if something doesn't look right.
The documents you need to request and read are the declaration of condominium, the bylaws, the most recent budget, the most recent financial statements, the reserve study, and the meeting minutes from the past 12 to 24 months. This sounds like a lot. It is. But skipping it is how buyers end up with a $40,000 special assessment six months after closing.
The reserve fund: the most important number
The reserve fund is the building's savings account for major repairs and replacements — roof, elevators, pool, plumbing, parking structure, and so on. A well-funded reserve means the building has been setting aside money consistently and won't need to hit owners with a large lump-sum assessment when something breaks.
A poorly funded reserve — or worse, a building that has voted to waive reserve contributions over the years — means the money isn't there when it's needed, and you'll be asked to write a check.
Post-Surfside, Florida law now requires buildings over three stories and 30 years old to conduct a structural integrity reserve study and fund reserves at the levels that study recommends. Many older buildings are still catching up, and the catch-up cost is being passed directly to unit owners.
When reviewing the financials, look at what percentage of reserves are funded relative to what the reserve study recommends. A building at 70% or above is generally in reasonable shape. Below 50% is a warning sign. A building with no reserve study at all, or one that has repeatedly waived reserve funding, is a serious red flag.
Special assessments: past and pending
A special assessment is a one-time charge to unit owners to cover a cost the reserves didn't. Ask specifically whether there are any pending or anticipated special assessments before you close. Sellers are required to disclose known assessments, but "anticipated" is a gray area — the board may not have voted yet, even if they know a major repair is coming.
Reading the meeting minutes from the past two years is the best way to surface this. Look for discussions about roof condition, elevator issues, plumbing repairs, structural concerns, or anything involving the milestone inspection process. If the board has been talking about a problem for 18 months without resolving it, that problem is likely to become your assessment.
Ask your agent to include a representation in the contract that there are no undisclosed pending special assessments. It won't protect you from everything, but it creates accountability.
The milestone inspection and structural integrity
Since Surfside, buildings over 30 years old — or over 25 years old if within three miles of the coast — are required to undergo a milestone inspection by a licensed engineer or architect. Phase one is a visual inspection. If concerns are flagged, a phase two inspection involving more intrusive examination is required.
Ask whether the building has completed its milestone inspection and, if so, what the results were. A building that has completed its inspection with no significant findings is in a strong position. A building that has findings requiring remediation — or that hasn't completed the inspection yet — carries more risk.
The structural integrity reserve study, also now required, goes further — it identifies the remaining useful life and replacement cost of each major structural component. This feeds directly into what the building must fund in reserves. Ask for this document and read the summary section carefully.
Insurance: can the building get it, and at what cost?
Building insurance has become one of the most acute pain points in Florida condo real estate. Some buildings in older or higher-risk areas are struggling to obtain adequate coverage, or are seeing premiums spike dramatically. When the building's insurance cost goes up, it flows directly to unit owners through higher HOA fees.
Ask for the current master insurance policy and the most recent insurance renewal documents. Look at whether coverage is through a standard admitted carrier or through the surplus lines market, which indicates the building had difficulty finding standard coverage. Ask what the HOA fee increase has been over the past three years — a steady upward trend driven by insurance is a signal worth understanding.
Also check whether the building is adequately insured for full replacement cost. An underinsured building in a major storm event could leave owners contributing out of pocket even after an insurance payout.
HOA fee trends and the operating budget
The monthly HOA fee covers the building's operating expenses: management, landscaping, utilities for common areas, insurance, and reserve contributions. Look at the operating budget and compare income to expenses. A building that is consistently running a deficit — spending more than it collects — either needs to raise fees or cut services.
Look at the HOA fee history over the past five years. Steady, modest increases in line with inflation are normal and healthy. Large sudden increases — particularly those driven by insurance or deferred maintenance catching up — are worth understanding before you commit.
Also check the delinquency rate: what percentage of unit owners are behind on their HOA payments? High delinquency reduces the association's cash flow and can affect the building's ability to qualify for Fannie Mae or Freddie Mac financing, which directly impacts your ability to sell later.
Fannie Mae and Freddie Mac eligibility
Speaking of which: many buyers in Miami use conventional financing backed by Fannie Mae or Freddie Mac. Both agencies have updated their condo lending guidelines post-Surfside and now require more thorough review of building financials, insurance, and structural status before approving loans. A building that doesn't meet their requirements is effectively cash-only, which dramatically reduces your buyer pool when it comes time to sell. Before closing, your lender will run a condo project review. If the building fails that review, you either need a different lender willing to portfolio the loan or you need to walk.
Your agent should be able to tell you whether a building has a history of financing issues. It's worth asking upfront.
What good looks like
A building in strong financial health has a reserve fund at or near the level recommended by its reserve study, clean milestone inspection results, no significant pending special assessments, stable or moderately increasing HOA fees, adequate insurance through an admitted carrier, a balanced operating budget, low unit owner delinquency, and Fannie Mae or Freddie Mac eligibility.
No building is perfect, and some trade-offs are acceptable depending on the price and your risk tolerance. But going in with eyes open — knowing exactly what you're buying into — is what separates buyers who build wealth through real estate from those who get caught flat-footed.
This is one of the areas where having a knowledgeable agent matters most. I walk my buyers through this process on every condo transaction. If you're evaluating a specific building or want to understand what the documents are telling you, reach out.
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