ANOTHER VIEWPOINT Condo blacklists will reshape the future of housing

Florida’s real estate market is facing a reckoning — and it’s not a hurricane this time. It’s the condo blacklist. Fannie Mae and Freddie Mac’s unpublished “blacklists” of condos and co-ops deemed ineligible for conventional financing are now publicly exposed, and the consequences are reverberating across the Sunshine State. Nearly 3,000 properties nationwide are affected — and a staggering number are right here in South Florida, with Miami-Dade, Broward and Palm Beach counties at ground zero.

Let’s be clear: These lists are not arbitrary. They are a direct response to growing concerns about deferred maintenance, underfunded reserves, and structural safety in the wake of the Surfside tragedy. However, the unintended fallout is this: Entire communities have become unmarketable overnight, property values are plummeting, and average Floridians are stuck, unable to sell, refinance or move.

So, what comes next?

We are entering a bifurcated housing market in Florida. On one side, newly constructed or financially robust condominium associations that meet Fannie and Freddie’s criteria. On the other, aging buildings with looming repairs and financial shortfalls, red-flagged into ineligibility. Buyers will avoid the latter in droves. Sellers will be forced to slash prices. Associations will face pressure to raise dues or levy special assessments to fund mandated repairs and reserves, causing further owner dissatisfaction and potential legal challenges.

We’re at this point because, in the wake of the Surfside tragedy, state legislators passed Senate Bill 4-D in 2022, which mandated milestone inspections and reserve funding by 2025. However, implementation has been slow, confusing and poorly communicated. Boards and owners alike are struggling to understand what’s required. The condo blacklist is a wake-up call. Lawmakers must revisit the current framework and offer practical paths for compliance — especially for communities with low- to moderate-income residents. Otherwise, we risk turning hundreds of buildings into obsolete financial sinkholes.

Until now, federal agencies’ lists were confidential. That veil has been lifted, and it will stay off. Expect a push for greater transparency in association finances, reserve studies and inspection reports. Buyers will demand it, and regulators will require it. We also predict a greater role for third-party certifiers, specifically engineers, reserve specialists and other professionals who can provide “clean bills of health” for communities trying to get off the blacklist.

Going forward, buyers will scrutinize associations with the same vigor they apply to mortgage rates and school districts. Lenders, too, will raise their standards — whether or not the property is blacklisted. The burden of proof will shift onto associations to prove their fiscal and structural integrity.

The condo blacklist isn’t just a list, it’s a turning point. If Florida’s 1.5 million condo owners and their boards don’t seize the moment, we’re looking at a future of distressed sales, abandoned buildings and a loss of confidence in one of the state’s largest housing sectors.

We must embrace this as an opportunity to build smarter, stronger and more transparent communities. Florida can once again lead the nation — not just in sunshine and tourism, but in safe, sustainable housing. The future of Florida housing depends on what we do next. Let’s all get to work and develop solutions.

Peter S. Sachs is a founding partner of Sachs Sax Caplan P.L. in Boca Raton. He is board certified in Condominium and Planned Development Law by the Florida Bar. Visit ssclawfirm.com.