Introduction

The tragic collapse of Champlain Towers South in Surfside, Florida, on June 24, 2021, shocked the nation and highlighted critical issues in building safety. This disaster, resulting in 98 lives lost and the destruction of 135 apartments, prompted significant legislative changes in Florida's condo safety regulations. In response, Florida enacted Senate Bill 4-D (SB 4-D) in 2022 and amended it with Senate Bill 154 (SB 154) in 2023, introducing strict safety measures for condominium and cooperative buildings. This blog explores these new laws, how they affect condo owners, buyers, and associations, and provides insights on staying compliant and safeguarding your investment.

The Surfside Collapse: A Catalyst for Change

The Impact of Champlain Towers South Collapse

The collapse of Champlain Towers South was a tragic event that exposed severe structural issues in aging condominium buildings. The building was 40 years old at the time of the collapse, leading to the death of 98 people and a $1.02 billion settlement with victims' families. In May 2022, the property was sold at auction for $120 million to a Dubai-based developer. This disaster underscored the urgent need for enhanced building safety regulations, prompting lawmakers to act.

Florida's Legislative Response

Following the collapse, Florida's legislature moved swiftly to address building safety. A task force was established in 2021, but initial safety proposals did not pass during the general session. In 2022, a special legislative session led to the passage of SB 4-D, signed into law on May 26, 2022. This law was later refined by SB 154 in 2023, signed on June 9, 2023, to address feedback from industry professionals and community leaders.

Key Provisions of Florida’s New Condo Safety Laws

Milestone Inspections Explained

Milestone inspections are now mandatory for all condominiums and cooperative buildings that are three stories or taller and have four or more units. These inspections assess the structural integrity of essential components, such as load-bearing walls and primary structural systems, ensuring buildings remain safe for residents.

Two Phases of Inspections

Phase I: This is a visual inspection of all habitable and non-habitable areas of the building, conducted by a licensed architect or engineer. The inspector reviews the structure's major components, looking for any visible signs of deterioration.

Phase II: If Phase I reveals substantial structural deterioration, a more in-depth examination is required. This phase involves destructive or non-destructive testing to assess the severity of the damage and determine necessary repairs.

Deadlines

  • Buildings Constructed Before July 1, 1992: Must complete the first milestone inspection by December 31, 2024, with subsequent inspections every 10 years.
  • Buildings Constructed After July 1, 1992: Must complete the first inspection by the 30th year after the certificate of occupancy was issued (or 25 years if located within three miles of the coastline), followed by inspections every 10 years.

Structural Integrity Reserve Study (SIRS)

The Structural Integrity Reserve Study (SIRS) requires associations to conduct a detailed evaluation of their reserve funds to ensure adequate funding for future major repairs. The study must assess several critical components, including:

  • Roofing systems
  • Load-bearing walls and primary structural members
  • Fireproofing and fire protection systems
  • Plumbing and electrical systems
  • Waterproofing and exterior painting
  • Windows and exterior doors

Reserve Funding Requirements

Starting December 31, 2024, associations can no longer vote to waive or underfund reserves designated for structural repairs. Funds allocated for these purposes must be used exclusively for their intended repairs or replacements. Additionally, associations must update their SIRS at least once every 10 years to stay compliant with the law.

New Responsibilities for Condo Associations

Associations now bear significant responsibilities under these laws. They must report the number of buildings over three stories and their units to the Florida Division of Condominiums. Associations are also required to share milestone inspection reports and SIRS summaries with current and prospective unit owners. If Phase II inspections reveal necessary repairs, associations must begin repairs within 365 days or face municipal safety assessments. Officers and directors who knowingly fail to comply with these mandates risk personal liability.

Impact on Condo Owners and Buyers

Higher Maintenance Fees and Special Assessments

The costs associated with milestone inspections and SIRS can be substantial, often ranging between $50,000 and $100,000. To meet these financial demands, associations may need to increase HOA fees or impose special assessments. Condo owners should prepare for higher expenses related to maintenance and reserve funding.

Disclosure Requirements for Sellers

Sellers must now provide buyers with the most recent milestone inspection summary and SIRS report. If these reports are unavailable, the seller must disclose this in writing. This requirement increases transparency for buyers and can impact the marketability of units in non-compliant buildings.

Financing Challenges for Condo Buyers

Condo buyers may face stricter lending conditions due to enhanced lender restrictions. Fannie Mae and Freddie Mac have implemented stricter guidelines for buildings with deferred maintenance or critical repair needs. Condominiums on Fannie Mae's ineligible list may be denied conventional financing, limiting buyer options and potentially reducing property values.

Frequently Asked Questions (FAQs)

What is a Milestone Inspection?

A milestone inspection is a legally required evaluation of a building's structural components, aimed at ensuring the safety of load-bearing walls and other critical elements. These inspections help identify and address structural issues before they escalate.

What happens if an association does not comply with the new laws?

Failure to conduct milestone inspections or adequately fund reserves can result in severe consequences, including personal liability for association officers and mandatory safety assessments by municipal authorities.

How do these laws affect condo buyers?

Buyers must be aware of potential increased HOA fees and special assessments due to the required inspections and reserve funding. Additionally, financing options may be limited for units in buildings flagged by lenders.

What documents should I request during the condo inspection period?

Buyers should obtain:

  • Milestone inspection reports
  • SIRS reports
  • HOA meeting minutes for the last 12 months
  • Reserve fund disclosures
  • Special assessment details
  • Most recent approved budget

Management companies are notoriously difficult to get these documents from, so if you are purchasing a condo make sure you get these documents during your inspection period. If you don't have them during your inspection period, ask to extend it until those documents are received. This way, you are protected and able to cancel the contract if things pop up that were unexpected like future assessments that have not yet passed that the current owner may not be aware of.

Getting these documents ahead of time will also prevent you from spending more money on appraisals, condo questionnaires, applications, or other purchase related fees for a deal that ends up cancelling and can save you hundreds or thousands of dollars depending on the condo.

Navigating the New Condo Landscape in Florida

Tips for Condo Owners and Associations

Condo associations should act proactively by scheduling inspections and reserve studies well ahead of deadlines. Proper budgeting for maintenance and reserves is crucial. Regular communication with residents regarding inspections, funding, and upcoming repairs fosters trust and transparency.

Advice for Condo Buyers

Prospective buyers should carefully review recent milestone inspection reports and SIRS documents. Evaluating the association's financial health and understanding upcoming assessments is essential. Partnering with a real estate agent experienced in navigating Florida's condo laws can help mitigate risks.

Working with Real Estate Professionals

The Mandel Team are experienced real estate agents that provide valuable guidance on compliance, disclosure requirements, and financial risks. Whether buying or selling, we can assist in making informed decisions and negotiating terms based on the building's compliance status.

Conclusion

Florida's updated condo safety laws, driven by the Surfside tragedy, prioritize safety and accountability across the state's real estate market. By implementing stricter inspection requirements and funding rules, these laws aim to protect residents and preserve property values. Staying informed and proactive is essential for condo owners, buyers, and associations alike.

Looking to buy or sell a condo in Florida? Contact us today or explore available condo listings to make informed decisions.


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Posted by Andy Mandel on
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