Real Estate & Property Law

Will Insurer of Uninhabitable Fla. Condo Building Have to Pay to Repair Defects?


In the midst of a terrible real estate market, the owners of the 117 units at the Dophin Tower condominium in Sarasota, Fla., have a bigger problem to worry about than most.

In addition to owning homes that are probably worth only a fraction of what they paid, their units have been uninhabitable for a year and a half and aren’t likely to be occupied again anytime soon, due to a failed concrete slab. Although they won a legal victory in federal court this week, when a judge ruled in their favor in a declaratory judgment action concerning insurance coverage for the design and construction defects that allegedly caused the concrete damage, the condo association for the approximately 35-year-old building is struggling to stay afloat financially as it pursues the case, according to the Sarasota Herald-Tribune.

Meanwhile, there’s no guarantee that the association will persuade Great American Insurance Co. of New York to pay its repair costs or win enough at trial to reimburse residents, even though a judge has given the case a green light to proceed. Due to a high delinquency rate on assessment payments, the association can’t get a loan to pay for repairs while it argues with Great American.

In an effort to get the association’s finances under control, the condo board is instituting what some consider draconian collection measures, including an 18 percent interest rate on delinquent balances and threatened foreclosure. A number of residents also complain that the board is unduly harsh and unfeeling in the tone it takes with owners who have been dealt a severe financial blow in the form of repair bills that could top $10 million.

“At times, the board has had an absolute air of superiority,” said former 10th-floor resident Sarita Roche. “A lot of people in the building now are destitute—some people are losing everything—and it’s uncalled for.”

An earlier Herald-Tribune article details what is wrong with the building and a planned fix, which involved jacking the 15-story building up like a car with a flat tire.

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