MIAMI (Reuters) - Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.
The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.
With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 (27,000 pounds) with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.
Florida's condominium and homeowners' associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.
"I call it a death spiral," Miami Beach city commissioner Jerry Libbin said. "It's a catastrophe in the making."
Nearly half of Florida's 18 million residents live in condo or homeowners associations, communities where owners pay monthly fees for common expenses like cleaning, landscaping, pool maintenance and building insurance.
When a unit owner stops paying monthly fees, which can range from $150 in a small building to over $1,000 in a luxury tower, a condo board must collect money from other owners to make up the shortfall. Rising fees or special assessments, or levies, can drive other vulnerable owners into insolvency.
No one seems sure how many condo buildings are in trouble but the number of calls to Florida's condo ombudsman could be an indicator. They are up tenfold in recent months.
At Miami-based condo management company CADISA, co-founder Jackie Diaz-Sampol estimated that delinquency rates are running at 30 percent to 35 percent in half her buildings.
As a result, associations are cutting back pool and hallway maintenance, trimming services and firing maintenance staff.
"We've had to become very creative. Desperate times create desperate measures," Diaz-Sampol said. "We've even had owners who have volunteered to do a little painting."
Carol Housen, the board president at the Miami Beach condo where nearly half the units are in hot water, would talk about its problems only with an agreement that the address would not be published. It's tough to sell a condo with a bad reputation.
Housen points out chipped paint on the concrete walkways, which haven't been redone lately. Crown-of-thorns and bougainvillea plants are blooming but she wonders how they will survive with the landscaper visiting less frequently.
"Everything is not going to look as nice," said Housen, a property broker. "We had an exterminator once a month. Now he comes once every two months. We're not fertilizing the trees."
The story of this building is a familiar one.
The apartments were converted to condos at the height of a boom that saw prices -- inflated by speculation and fraud -- double within four years, then tumble in the last three. A one-bedroom, 560-square-foot (52-square-metre) unit that topped out near $200,000 might now get $70,000, leaving owners drowning in debt.
Still, said Housen, it could be worse. She pointed to a nearby tower where she said more than 200 of the 244 units have liens or lawsuits pending.
Housen said an upscale building not far away -- where units that once sold for over $1 million and are now priced below $500,000 -- has 16 troubled apartments of 44 in the building.
The crisis could mean serious pain for Miami Beach, a resort town with 88,000 residents and 42,000 condos. If debtors walk away from their units, buildings could become derelict.
"I haven't seen it yet, but I think we're going to see it," Housen said.
Condo advocates say banks are partly responsible for hobbling condo boards by being slow to foreclose on owners who have fallen behind.
Lenders don't become responsible for an apartment's costs until they foreclose and under current law, a bank is liable to pay only six months worth of fees in arrears, or 1 percent of the mortgage value, when it takes back a property.
Condo advocates say banks are deliberately stalling.
"There's no doubt in my mind it's done so they don't have to pay the fees," Rosa de la Camara, a lawyer with Becker & Poliakoff, a Florida firm that does condo legal work.
Proposed legislation would make banks pay up to 12 months of fees. Advocates also want the Florida legislature to allow associations to collect rent directly from tenants when owners are taking in rent but not paying condo fees, and said other states are considering similar legislation.
Libbin, the Miami Beach commissioner, left this week for the state capital Tallahassee to lobby lawmakers to pass a bill giving more financial protection to condo associations. He took with him resolutions from Florida condo boards representing some 135,000 unit owners pleading for help.
He said the state might end up taking over bankrupt condo associations. "Imagine what it will be like if you have to call the governor's office to get a plumber," he said.
Editing by Pascal Fletcher and Doina Chiacu