Condo Special Assessments and Bankruptcy in Florida: Milestone Inspections, Reserve Mandates, and the Association's Lien

Florida condo owners facing the new assessments

After the Champlain Towers South collapse in Surfside in 2021, the Florida Legislature rewrote the rules for older condominium buildings. The goal was safety. The cost landed on unit owners. Across the state, and especially along the coast, associations that had deferred repairs and waived reserves for decades are now levying special assessments in the tens of thousands of dollars per unit, sometimes more, on owners who are often retirees on fixed incomes. When an owner cannot pay, the questions become legal ones: what bankruptcy can do about the assessment, what it cannot do about the lien, and whether the unit can be kept at all.

Why the assessments are so large

Two statutes drive most of them.

Milestone inspections. Section 553.899 of the Florida Statutes requires a milestone structural inspection for condominium and cooperative buildings three habitable stories or more in height, by December 31 of the year the building reaches 30 years of age, and every 10 years after that. The local building official may require the first inspection at 25 years based on local conditions such as proximity to salt water. When the inspection finds structural deterioration, repairs follow, and the association must pay for them.

Structural integrity reserve studies. Section 718.112(2)(g) requires a residential condominium association to obtain a structural integrity reserve study at least every 10 years for each building three habitable stories or higher. The study covers the roof, the structure and load-bearing walls, fireproofing and fire protection, plumbing, electrical systems, waterproofing and exterior painting, and windows and exterior doors, among other items. For budgets adopted on or after December 31, 2024, unit owners of an association that must obtain the study generally may not vote to waive or reduce reserves for those items.

The result is a double charge: a special assessment to fix what the inspection found, and higher regular assessments to fund reserves going forward. Some associations borrow instead and pass the loan payments through the budget, which spreads the cost but does not reduce it.

The association's lien

Under section 718.116, the association has a lien on each unit to secure unpaid assessments, interest, late charges, and the costs and attorney's fees of collection. The association can foreclose that lien.

Bankruptcy does not remove it. A discharge eliminates your personal liability on a debt, but a valid lien on property generally passes through the case and remains attached to the unit. That is the central fact for any condo owner considering bankruptcy: the discharge stops the association from suing you personally for pre-filing assessments, but it does not stop the association from enforcing its lien against the condo.

Homestead does not usually help here. Florida's homestead exemption is strong against most creditors, but it does not generally defeat a condominium association's lien for assessments. The association's rights arise from the recorded declaration that bound the unit before you bought it, and Florida law has generally allowed those liens to be enforced against homestead property. An owner who expects the homestead exemption to stop an association foreclosure is likely to be disappointed.

Is a special assessment dischargeable?

It depends on when the obligation arose.

Pre-petition assessments. Assessments that came due before you filed are pre-petition debts. In Chapter 7 your personal liability for them is discharged, subject to the surviving lien. In Chapter 13 they are paid through the plan.

Post-petition assessments. 11 U.S.C. § 523(a)(16) excepts from discharge condominium and homeowners' association fees and assessments that come due after the filing date, for as long as you or the trustee hold a legal, equitable, or possessory ownership interest in the unit. If you keep the condo, you must keep paying. If you surrender it, the charges continue until title actually leaves your name.

Special assessments adopted before filing but payable in installments afterward. This is the hard case. A board may approve a large assessment and allow owners to pay it over several years. Whether the unpaid installments are a pre-petition claim that can be discharged, or post-petition fees caught by § 523(a)(16), has not been resolved uniformly, and the answer can depend on the governing documents and the wording of the board's resolution. Bring the resolution and the payment schedule to your consultation.

Chapter 13: keeping the unit

For an owner who wants to stay, Chapter 13 is usually the tool. A plan can cure the association arrears, together with any mortgage arrears, over three to five years while you pay current assessments and the regular mortgage payment directly. The automatic stay stops an association foreclosure the day the case is filed, and once the plan is confirmed the association is bound by it, as long as you stay current.

Chapter 13 works only if the numbers do. Your income must cover the ongoing mortgage, the higher regular assessments that reserve funding now requires, any new special assessment installments, and the plan payment. If the building faces another round of repairs, a plan built on today's budget may fail next year. Look at the association's most recent budget, its reserve study, and its inspection report before deciding.

Surrendering the unit

Sometimes the honest answer is that the condo cannot be kept. The assessment exceeds the equity, the mortgage is underwater, and the building's future costs are unknown. In that case Chapter 7 with a surrender of the unit can discharge the mortgage deficiency and the pre-petition assessments.

The trap is the same one that catches timeshare owners. Section 523(a)(16) keeps post-petition assessments coming as long as the unit is in your name. Checking "surrender" on the Statement of Intention does not transfer title. To stop the charges:

1. Ask the lender to foreclose promptly or to accept a deed in lieu.
2. Ask whether the association will accept a deed in lieu of its own foreclosure.
3. Move out and stop using the unit, and document the date.
4. Keep every bill and letter. Charges for periods after title transfers should stop.

Frequently asked questions

The association already recorded a claim of lien. Is it too late to file? No. A recorded lien is not a judgment of foreclosure, and even a pending foreclosure is stopped by the automatic stay. The lien will be treated as a secured claim in the case.

Can I sell the unit instead? Sometimes, and it may be better. But a buyer inherits the lien, and the closing will require payment of the arrears. With a large pending assessment, buyers are scarce and prices reflect it.

Will a Chapter 7 trustee sell my condo? Only if there is non-exempt equity after the mortgage, the association's lien, and the costs of sale. With large assessments outstanding, that is uncommon, but it should be checked before filing.

Before deciding between keeping and surrendering the unit, the free Florida means test calculator takes about three minutes and shows whether Chapter 7 is realistic before you pay for a consultation.