New Florida Law Impacts Condominium Associations

 

Jay Fraiser, Partner with Moorhead Law Group of Pensacola and Santa Rosa Beach, Florida, is writing about Senate Bill 4-D (“SB 4-D”) that was signed into law on May 26, 2022.  The new law will impact how Florida condominium associations identify and address safety and preventative measures related to the condominium property. Fraiser presents a recap of the important aspects of SB 4-D below. For questions and more information about the impact of this law, contact Fraiser at 850-202-8522 or CAGroup@moorheadlaw.com

 

Recap of SB 4-D

SB 4-D puts in place the following safety and preventative measures which must be carefully considered by Florida condominium associations. The new law requires additional and stringent inspections by licensed professionals and forbids the waiver of reserves for many condominium property components. In recognition of the expense and contracting necessary to implement these changes, the Legislature has provided a two-year period of compliance for many of the requirements.  Following is a summary of several important items addressed in SB 4-D.

Milestone Structural Inspections 

Condominium associations with building(s) of 3 stories or more will now be required to perform what has been termed a Milestone Structural Inspection (“MSI”) where a Milestone Inspection Report (“MSR”) must be produced by a licensed architect or engineer.  The MSI will analyze a building’s life safety and structural component integrity. The costs of the MSI and the resulting MSR are anticipated to be significant and condominium associations should prepare to fund the MSI. It will be considered a breach of a director’s and/or officer’s fiduciary obligations to willfully and knowingly fail to have an MSI performed by the required dates.

• Buildings 3 stories or higher must perform an MSI by December 31 of the year in which the building is 30 years old (must be performed every 10 years thereafter)
• Buildings within 3 miles of the Florida coastline that are 3 stories or higher must be inspected by December 31 of the year the building is 25 years old (must be performed every 10 years thereafter)
• Buildings with a certificate of occupancy issued on or before July 1, 1992 (30 years or older) must conduct an MSI before December 31, 2024.

Structural Integrity Reserve Study and Reserve Funding Requirements

In addition to the MSI, condominium associations must perform what has been termed to be a Structural Integrity Reserve Study (“SIRS”).  The SIRS must consist of a visual inspection of various condominium property components by a licensed architect or engineer.   These components include the condominium’s roof, load-bearing walls, floor, foundation, fireproofing and fire protection systems, plumbing, and any item with a deferred maintenance or replacement cost that exceeds $10,000. The SIRS is required every 10 years after the condominium’s creation for each building that is 3 stories or higher. If the SIRS identifies any recommended repairs, the association’s board will have 1 year to begin the recommended repair items. Again, it will be considered a breach of a director’s or officer’s fiduciary obligations to willfully and knowingly fail to perform the SIRS by the required dates.

• The initial SIRS must be completed by December 31, 2024, for each building that is 3 stories or higher (must be performed every 10 years thereafter).
• As of December 31, 2024, a condominium association may no longer refuse to fund (may not waive) or underfund the reserves for items required to be included in a SIRS. Members cannot opt-out of the mandatory funding of reserves for any components included in the SIRS.
• As of December 31, 2024, for items included in the SIRS, a condominium association may no longer use those itemized reserve funds (or any interest accruing thereon) for other purposes, and a condominium association may only use those itemized reserve funds for their designated purposes.

Reserve Funding

As of December 31, 2024, condominium associations are prohibited from: (i) using reserves for a purpose other than as intended or reserved, (ii) waiving the reserves, or (iii) reducing the funding of reserves for certain structural components of the property. Each condominium association existing on or before July 1, 2022, must provide information to the Division of Florida Condominiums, Timeshares, and Mobile Homes on or before January 1, 2023, regarding the number of buildings that are 3 stories or higher, the total number of units in all buildings, addresses of all buildings, and counties that the buildings are located in.

All inspection reports and studies contemplated in SB-4 must be kept as official records of the condominium association and must be available to members. The Florida Department of Business and Professional Regulation and local municipalities are now required to track condominium buildings and the inspection reporting.

There are discussions regarding future amendments to SB-4, but condominium associations must not depend on any such amendments.  These new requirements must be planned for in order to comply with the existing deadlines.  Some immediate measures may be taken, such as amending the annual budget to gradually increase assessments.

SB-4 as passed is the most significant amendment to the Florida Condominium Act in many years.  The requirements contained in SB-4 will be difficult to navigate and expensive to fulfill.  Condominium associations should formulate a compliance plan now by contacting their legal counsel and licensed architects and/or engineers to identify current threats to building integrity, and financial planning for future improvements.