Guidance for Condo Associations in Wake of Champlain Towers Collapse

By Raymond M. Roberts, Esq. & Marilyn Le Lodico, Esq. with assistance by Gabrielle K. Shaulis
Rothman Gordon
Pittsburgh, Pennsylvania

The tragic collapse of the Champlain Towers South condominium resulted in many unanswered questions and widespread concern across the country. While investigators continue to search for a cause, it has become clear that the Champlain Towers South Condominium Association struggled to fund necessary repairs to the building. It is believed that a myriad of uncompleted repairs contributed to the building collapse. The association’s financial inability to make needed repairs has been attributed by some observers to an inadequately prepared reserve fund.

Residents of condominium communities pay monthly, quarterly or annual assessments of fees or dues that are used to pay for maintaining or repairing the building or costs of the association, such as insurance. In most cases, condo associations will set aside a portion of the fees or dues collected in a reserve fund, which is essentially a savings account to ensure that it has funds to pay for major expenditures, such as replacement of the HVAC systems or roof repairs. If an association does not have a reserve fund, or has an inadequately funded reserve fund, major, unplanned expenses for significant or emergency repairs would typically result in a special assessment charged to owners.