At a time of rising prices for gas, groceries and health care, millions of Florida condominium owners are facing an even tougher financial challenge.

They soon will be required to pay for expensive repairs to their aging condominium buildings, and many don’t have enough money saved to cover the cost. Years of skimping on condominium homeowner association fees, inadequate HOA reserves and a recent state law forcing HOA’s to make needed repairs are creating a scenario playing out throughout Tampa Bay and the rest of Florida.

It is a quandary that will require condo association boards of directors and unit owners to make hard choices. The associations are hiring engineers, planning for needed repairs to common elements such as roofs and courtyards, and exploring creative ways to raise the money to pay for it all.

This perfect storm was a long time coming.

For decades, many condominium boards did not save enough money for future repairs, keeping HOA fees low and fellow unit owners happy. They deferred financial pain, and the state did not require condo boards to build reserves to pay for major building repairs.

That all changed following the 2021 catastrophic collapse of the 12-story condominium Champlain Towers South in Surfside, Fla., which killed 98 people. A 2023 state law requires older condo buildings to undergo inspections to determine needed structural improvements and to save enough money each year to ensure they will have adequate reserves to pay for repairs when they are needed.

Condominium buildings that are 30 years old or older and three stories or more of residences must perform milestone inspections. All residential condo buildings three or more stories must conduct Structural Integrity Reserve Studies that inspect the parts of the building the association is required to maintain, determine when they must be replaced, and set a mandatory schedule for building reserves to pay for the repairs. The result: Condo associations no longer can defer repairs and keep HOA fees artificially low.

That all makes sense, but the consequences of the change in state law are financially daunting for many condo owners. More than two million Floridians live in condo buildings that are more than 30 years old. Many of them already are facing unprecedented annual HOA fee increases or enormous assessments to pay for the upcoming required repairs to roofs, electrical systems, foundations and other structural elements.

For properties where unit owners can’t come up with the needed upgrade funds all at once, condo HOA’s are considering another strategy for easing the financial strain: Bank loans that can help pay for the improvements and be repaid with increased HOA fees and dues over time.

This is similar to how many owners of stand-alone homes pay for roofs or renovations. They obtain loans to pay for improvements needed now and pay the money back over time, usually using the value of their home as collateral.

For condominium buildings, it’s a little different. The condo HOA, not individual unit owners, obtains the loan on behalf of the entire property. The loan is secured by an assignment of the association’s legal right to collect fees/dues and assess unit owners and paid back through such fees or assessments over a period of years. There are no mortgages or home-equity loans on individual units.

To be sure, obtaining loans to pay for these essential condominium repairs won’t be an option for everyone. Most lenders prefer to deal with condominiums that are professionally run by property management companies rather than directly by the condo association, though there are exceptions. They will also want a minimum number of units (20+), and the higher the proportion of owner-occupied units, the better. Typically, lenders also will not make HOA loans to cover 100% of the cost of repairs, and the total loan amount should probably not exceed 20% of the value of the individual units.

With these parameters, bank loans can be viable options for condominium HOA’s struggling to find the money to pay for repairs that can no longer be postponed. A collaborative banking partner who understands the unique legal structure of condominium HOA’s and is experienced in working with boards of directors and property management companies is essential. Such a partnership can be an effective approach to complying with state law and ensuring that Florida’s condominium buildings are safe and secure for the long term.