The Florida legislature just passed sweeping, lifesaving laws during the past special legislative session to ensure another condo never falls down with residents living inside as happened a year ago in Surfside, Florida.
The impact of the new laws will be far-reaching and a form of gentrification, according to one expert. Per the new law, older condo buildings three stories or higher now require inspections and fully funded reserves. The inspections are mandatory for buildings 30 years or older and now must be done in each Florida county, not just Miami Dade and Broward. If the assessments are prohibitive for current residents, especially seniors on fixed incomes, they will likely be foreclosed upon and displaced. When a majority of residents are forced out of an older condo building, it will then likely be sold to a developer who will knock it down and build a brand new building that only the very rich will be able to afford.
According to Broward attorney Eric Glazer, who is board certified in community association law, “This is by far the most complicated set of condo laws that have ever passed. It is a massive statute, so many changes, so many new things to learn. In fact, the new statute goes out of its way to scare directors and remind them that a breach of these new laws is a breach of fiduciary duty.
Also Glazer says, “This is surprising but Management Companies be careful because the new statute says: RESPONSIBILITY OF THE MANAGEMENT COMPANY: If a community association manager or a community association management firm has a contract with a community association that has a building on the association’s property that is subject to s. 553.899, (the Mandatory Inspections statute) the community association manager or the community association management firm must comply with that section as directed by the board. “
Also, before the new laws were passed, only Miami Dade and Broward counties had to do mandatory inspections. But now the new laws spell big changes for all of Florida. There are 27,500 condominiums in the state of Florida. More than half the state lives in a condo or HOA.
According to Glazer, “With the passage of these bills, Florida is no longer a state in which retirees can live in a condo on a social security budget. We now have in every Florida county something called milestone inspections — and there are parts one and part two .”
First, let’s talk about timeframes. Instead of the first inspection being after 40 years, it’s now 30 years and every ten years thereafter. But, if your condo is ON THE COAST or within three miles of the coast however, your first inspection is AFTER TWENTY FIVE YEARS AND EVERY TEN YEARS THEREAFTER. And this applies to every condo or co-op that is three stories or more in height by December 31 of the year in which the building reaches 30 years of age”
Here are some answers to the most important questions:
SO HOW EXTENSIVE IS THIS FIRST INSPECTION THESE BUILDING MUST GO THROUGH?
ERIC: a structural inspection of a building, including an inspection of load-bearing walls and the primary structural members and primary structural systems, by a licensed architect or engineer authorized to practice in this state for the purposes of attesting to the life safety and adequacy of the structural components of the building and, to the extent reasonably possible, determining the general structural condition of the building as it affects the safety of such building, including a determination of any necessary maintenance, repair, or replacement of any structural component of the building.
SUPPOSE YOUR BUILDING ALREADY TURNED 30 YEARS OLD—- WHEN MUST YOU COMPLETE YOUR MILESTONE INSPECTION:
ERIC: If the building’s certificate of occupancy was issued on or before July 1, 1992, the building’s initial milestone inspection must be performed before December 31, 2024. So again, once you hit 30 years old, there’s a Phase One process and then, if necessary a Phase Two process.
Here is what’s required in a Phase One Test:
PHASE ONE — (a) For phase one of the milestone inspection, a licensed architect or engineer authorized to practice in this state shall perform a visual examination of habitable and nonhabitable areas of a building, including the major structural components of a building, and provide a qualitative assessment of the structural conditions of the building. If the architect or engineer finds no signs of substantial structural deterioration to any building components under visual examination, phase two of the inspection, as provided in paragraph (b), is not required.
BUT REALISTICALLY, IF I’M THE PHASE ONE GUY, I DON’T WANT TO BE SUED FOR SAYING THIS BUILDING IS IN PERFECT SHAPE AND DOESN’T EVEN NEED A PHASE TWO INSPECTION.
ERIC: I agree completely. I think the Phase One Inspection will Always result in the First architect or engineer calling for a Phase Two study. What does he or she have to lose? So here is what a Phase Two Study does:
PHASE TWO: (b) A phase two of the milestone inspection must be performed if any substantial structural deterioration is identified during phase one. A phase two inspection may involve destructive or nondestructive testing at the inspector’s direction. The inspection may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use and to recommend a program for fully assessing and repairing distressed and damaged portions of the building. When determining testing locations, the inspector must give preference to locations that are the least disruptive and most easily repairable while still being representative of the structure.
SO THE PERSON PERFORMING THE PHASE TWO STUDY REALLY DETERMINES HOW MANY MILLIONS OF DOLLARS YOUR CONDO NEEDS IN REPAIRS.
ERIC; That’s exactly right. Beware of the Phase Two guy.
SO DOES THE LOCAL BUILDING OFFICIAL GET A COPY OF THESE REPORTS?
ERIC: Upon completion of a phase one or phase two milestone inspection, the architect or engineer who performed the inspection must submit a sealed copy of the inspection report with a separate summary of, at minimum, the material findings and recommendations in the inspection report to the condominium association or cooperative association, and to the building official of the local government which has jurisdiction. Completely independent of the “Milestone Inspections” that every building must go through at the 30 year mark, every association must also have a mandatory “Structural Integrity Reserve Study” and start putting away money for a rainy day.
MANDATORY STRUCTURAL INTEGRITY RESERVE STUDY
718.103 Definitions.—As used in this chapter, the term:
(25) “Structural integrity reserve study” means a study of the reserve funds required for future major repairs and replacement of the common areas based on a visual inspection of the common areas. A structural integrity reserve study may be performed by any person qualified to perform such study. However, the visual inspection portion of the structural integrity reserve study must be performed by an engineer licensed under chapter or an architect licensed under chapter At a minimum, a structural integrity reserve study must identify the common areas being visually inspected, state the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of the common areas being visually inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense of each common area being visually inspected by the end of the estimated remaining useful life of each common area.
OFFICIAL RECORDS TO INCLUDE AND BE POSTED ON THE WEBSITE:
- All audits, reviews, accounting statements, structural integrity reserve studies, and financial reports of the association or condominium. Structural integrity reserve studies must be maintained for at least 15 years after the study is completed.
- A copy of the inspection reports report as described in ss. 553.899 and 718.301(4)(p) and any other inspection report relating to a structural or life safety inspection of condominium property. Such record must be maintained by the association for 15 years after receipt of the report.
- The inspection reports described in ss. 553.899 and 718.301(4)(p) and any other inspection report relating to a structural or life safety inspection of condominium property. The association’s most recent structural integrity reserve study, if applicable.
- The inspection reports described in ss. 553.899 and 718.301(4)(p) and any other inspection report relating to a structural or life safety inspection of condominium property.
- The association’s most recent structural integrity reserve study, if applicable.
NO LONGER IS THERE THE ABILITY TO WAIVE RESERVES OR USE THEM FOR OTHER PURPOSES
Before turnover of control of an association by a developer to unit owners other than a developer under 718.301, the developer-controlled association developer may not vote the voting interests allocated to its units to waive the reserves or reduce the funding of the reserves.
Effective December 31, 2024, members of a unit-owner controlled association may not vote to use reserve funds, or any interest accruing thereon, that are reserved for items listed in paragraph (g) for any other purpose other than their intended purpose
(g) Structural integrity reserve study.
- An association must have a structural integrity reserve study completed at least every 10 years after the condominium’s creation for each building on the condominium property that is three stories or higher in height which includes, at a minimum, a study of the following items as related to the structural integrity and safety of the building:
- Load-bearing walls or other primary structural members.
- Fireproofing and fire protection systems.
- Electrical systems.
- Waterproofing and exterior painting.
- Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed in subparagraphs a.-i., as determined by the licensed engineer or architect performing the visual inspection portion of the structural integrity reserve study.
- Before a developer turns over control of an association to unit owners other than the developer, the developer must have a structural integrity reserve study completed for each building on the condominium property that is three stories or higher in height.
- Associations existing on or before July 1, 2022, which are controlled by unit owners other than the developer, must have a structural integrity reserve study completed by December 31, 2024, for each building on the condominium property that is three stories or higher in height.
BREACH OF FIDUCIARY DUTY
- If an association fails to complete a structural integrity reserve study pursuant to this paragraph, such failure is a breach of an officer’s and director’s fiduciary relationship to the unit owners under s. 718.111(1).
(h) Mandatory milestone inspections.—If an association is required to have a milestone inspection performed pursuant to s. 553.899, the association must arrange for the milestone inspection to be performed and is responsible for ensuring compliance with the requirements of s. 553.899. The association is responsible for all costs associated with the inspection. If the officers or directors of an association willfully and knowingly fail to have a milestone inspection performed pursuant to s. 553.899, such failure is a breach of the officers’ and directors’ fiduciary relationship to the unit owners under s. 718.111(1)(a).
DISTRIBUTION OF THE REPORT
Upon completion of a phase one or phase two milestone inspection and receipt of the inspector-prepared summary of the inspection report from the architect or engineer who performed the inspection, the association must distribute a copy of the inspector-prepared summary of the inspection report to each unit owner, regardless of the findings or recommendations in the report, by United States mail or personal delivery and by electronic transmission to unit owners who previously consented to receive notice by electronic transmission; must post a copy of the inspector-prepared summary in a conspicuous place on the condominium property; and must publish the full report and inspector-prepared summary on the association’s website, if the association is required to have a website.
THE DEVELOPER’S TURNOVER REPORT
Notwithstanding when the certificate of occupancy was issued or the height of the building, a milestone inspection report in compliance with s. 553.899 included in the official records, under seal of an architect or engineer authorized to practice in this state, and attesting to required maintenance, condition, useful life, and replacement costs of the following applicable condominium property common elements comprising a turnover inspection report:
- Structure, including load-bearing walls and primary structural members and primary structural systems as those terms are defined in s. 627.706.
- Fireproofing and fire protection systems.
- Heating and cooling systems.
- Electrical systems.
- Swimming pool or spa and equipment.
- Pavement and parking areas.
- Drainage systems.
- Irrigation systems.
- A copy of the association’s most recent structural integrity reserve study.
POWERS OF THE DIVISION
- The division may enforce and ensure compliance with this chapter and rules relating to the development, construction, sale, lease, ownership, operation, and management of residential condominium units and complaints related to the procedural completion of milestone inspections under s. 553.899.
- However, after turnover has occurred, the division has jurisdiction to investigate complaints related only to financial issues, elections, and the maintenance of and unit owner access to association records under s. 718.111(12), and the procedural completion of structural integrity reserve studies under s. 718.112(2)(g).
ALL CONDOMINIUM ASSOCIATIONS MUST:
On or before January 1, 2023, condominium associations existing on or before July 1, 2022, must provide the following information to the division in writing, by e-mail, United States Postal Service, commercial delivery service, or hand delivery, at a physical address or e-mail address provided by the division and on a form posted on the division’s website:
- The number of buildings on the condominium property that are three stories or higher in height.
- The total number of units in all such buildings.
- The addresses of all such buildings.
- The counties in which all such buildings are located.
(b) The division must compile a list of the number of buildings on condominium property that are three stories or higher in height, which is searchable by county, and must post the list on the division’s website. This list must include all of the following information:
- The name of each association with buildings on the condominium property that are three stories or higher in height.
- The number of such buildings on each association’s property.
- The addresses of all such buildings.
- The counties in which all such buildings are located.
(c) An association must provide an update in writing to the division if there are any changes to the information in the list under paragraph (b) within 6 months after the change.
DEVELOPER DISCLOSURE BEFORE SALE:
The Developer must provide the new buyer with: A copy of the inspector-prepared summary of the milestone inspection report as described in ss. 553.899 and 718.301(4)(p).
A copy of the association’s most recent structural integrity reserve study or a statement that the association has not completed a structural integrity reserve study.
NON DEVELOPER DISCLOSURE PRIOR TO SALE:
Each unit owner who is not a developer as defined by this chapter must comply with the provisions of this subsection before prior to the sale of his or her unit. Each prospective purchaser who has entered into a contract for the purchase of a condominium unit is entitled, at the seller’s expense, to a current copy of all of the following:
- The declaration of condominium.,
- Articles of incorporation of the association
- Bylaws and rules of the association.,
- Financial information required by s. 718.111.,
- A copy of the inspector-prepared summary of the milestone inspection report as described in ss. 553.899 and if applicable.
- The association’s most recent structural integrity reserve study or a statement that the association has not completed a structural integrity reserve study.
- The document entitled “Frequently Asked Questions and Answers” required by s. 718.504.