Eisinger Law diligently monitors statutory changes promulgated by the Florida Legislature, especially those which directly impact community associations. During the recent 2022 Special Session, the Florida Legislature enacted key legislation that significantly impacts community association operations throughout the state, affecting millions of condominium and co-op owners.
It is critical that condo and co-op associations, management and the board of directors which govern them, review these changes and take the necessary steps to achieve compliance.
1. Mandatory Structural Inspections for Condominium and Cooperative Buildings.
The Legislature has imposed a statewide structural inspection program for aging condominium and cooperative buildings, requiring milestone inspections for each building that is three (3) stories or more in height by December 31 of the year in which the building reaches thirty (30) years of age, based on the date the certificate of occupancy for the building was issued, and every ten (10) years thereafter. If a building is located within three (3) miles of a coastline, the milestone inspections must be performed at twenty (25) years of age, and ever ten (10) years thereafter.
These milestone inspections consist of a structural inspection of a building, including an inspection of load-bearing walls and primary structural members and systems by a licensed architect or engineer authorized to practice in state of Florida 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. A critical part of the milestone inspection is an engineer or architect’s determination of any necessary maintenance, repair or replacement of any structural component of the building.
The milestone inspection process is divided into two (2) phases. Phase 1 requires that a licensed engineer or architect submit the milestone inspection report to the local building department (or other municipal enforcement agency). This report consists of a visual examination of habitable and non-habitable areas of a building, including the major structural components of the building, and provides an assessment of the structural conditions of the building.
Phase 1 must be completed within 180 days after an association receives notice from its local building department (or other municipal enforcement agency). It is important to keep in mind, however, that associations should not wait until they receive notice from their local building department to get this process started. Any association approaching its 30-year anniversary (or 25 years, as applicable) should plan ahead and prepare for the milestone inspection process.
Phase 2 of the milestone inspection must be performed if substantial structural deterioration is identified during Phase 1. Phase 2 may involve destructive or non-destructive testing necessary to fully assess the areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use. As part of this Phase 2, the architect or engineer recommends a program for fully assessing and repairing distressed and damaged portions of a building.
Upon completion of the Phase 1 or Phase 2 milestone inspection, the architect or engineer submits a signed and sealed copy of the inspection report, together with a summary of the material findings and recommendations, to the association and to the building official of the local government which has jurisdiction. The association must then distribute a copy of the inspector-prepared summary of the inspection report to each unit owner by U.S. Mail or personal delivery and by electronic transmissions to those unit owners who previously consented to receive notice by electronic transmission. Additionally, the association must post a copy of the inspector-prepared summary in a conspicuous place on the condominium or cooperative property and publish both the full report and inspector-prepared summary on the association’s website (if applicable).
All buildings that received a certificate of occupancy on or before July 1, 1992 have until December 31, 2024 to complete their initial milestone inspection. Please note that the statute is unclear as to whether those associations that have already completed recertification in either Miami-Dade or Broward County would be required to take any additional steps by this date. Associations must arrange for the milestone inspection to be performed and are held responsible for ensuring compliance with these new statutory requirements. Associations are responsible for all costs associated with the performance of the milestone inspections. Noncompliance with these requirements may result in a determination that a building is unsafe for human occupancy.
The new statute delegates to local enforcement agencies the ability to prescribe timelines and penalties with respect to compliance with the milestone inspection requirements. Additionally, individual counties may adopt ordinances requiring associations to schedule or commence repairs for substantial structural deterioration within a specified time after receipt of the Phase 2 inspection report, provided that repairs in any event must commence within 365 days after receipt of the report.
2. Structural Integrity Reserve Study and Reserve Requirements.
In addition to the already existing statutory reserve requirements, the Legislature has imposed the requirement of a structural integrity reserve study. A structural integrity reserve study is a study of reserve funds required for future major repairs and replacement of common areas based on a visual inspection of the common areas. The visual inspection portion of the structural integrity reserve study must be performed by a licensed engineer or architect. The structural integrity reserve study must identify the common areas being visually inspected, as well as the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of the common areas being inspected, and must 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 the common area.
Associations must have a structural integrity reserve study completed at least every ten (10) years after the condominium or cooperative’s creation for each building on the property that is three stories or higher. In addition, unit-owner controlled associations existing on or before July 1, 2022 must have a structural integrity reserve study completed by December 31, 2024 for each building on the condominium or cooperative property that is three stories or higher in height.
The amount to be reserved in an association’s annual budget must now be determined by the association’s most recent structural integrity reserve study, which must be completed by December 31, 2024. If the amount to be reserved for an item is not in the association’s initial or most recent structural integrity reserve study, or the association has not completed a structural integrity reserve study, the amount must be computed using a formula based on estimated remaining useful life and estimated replacement cost or deferred maintenance expense of the reserve item.
The members of a unit-owner controlled association may determine, by a majority vote at a duly called meeting, to provide no reserves or less reserves than otherwise required under the preceding paragraph (i.e., waive or partially waive). However, effective December 31, 2024, the members of such a unit-owner controlled association may not waive or partially waive reserves for items listed on the structural integrity reserve study, which include the following components: (a) roof; (b) load-bearing walls or other primary structural members; (c) floor; (d) foundation; (e) fireproofing and fire protection systems; (f) plumbing; (g) electrical systems; (h) waterproofing and exterior painting; (i) windows; and (j) 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 any other structural integrity component, as determined by a licensed architect or engineer performing the visual inspection portion of the structural integrity reserve study. In addition, effective December 31, 2024, the members of a unit-owner controlled association may not vote to use reserve funds (or any interest accrued thereon) that are reserved for any of the foregoing items for any other purpose (i.e., other than their intended purpose).
3. Official Records
The Association must maintain a copy of each structural integrity reserve study for at least fifteen (15) years after the study is completed. Additionally, each milestone inspection report and any other report relating to a structural or life safety inspection of condominium or cooperative property must be maintained by the association for fifteen (15) years after receipt of the report. Note that these reports are available for inspection and copying to both unit owners (or their authorized representative) and renters at all reasonable times. Lastly, any milestone inspection report, structural integrity reserve study and/or other inspection report relating to a structural or life safety inspection of condominium property must be posted on the association’s website (if applicable).
4. Officer and Director Fiduciary Duties.
If an association fails to timely complete a structural integrity reserve study, such failure is deemed to be a breach of the officers’ and directors’ fiduciary relationship to the unit owners. Additionally, if the officers or directors of an association willfully and knowingly fail to timely have a milestone inspection performed, such failure is deemed a breach of the officers’ and directors’ fiduciary relationship to the unit owners.
5. New Seller Disclosure Obligations
In connection with the sale of a unit, the unit owner must now provide to each prospective purchaser a copy of the inspection-prepared summary of the association’s milestone inspection as well as the association’s most recent structural integrity reserve study (or a statement that the association has not completed a structural integrity reserve study).
6. New Developer Obligations.
In addition to all other documents and disclosures that developers must provide to prospective buyers or lessees, developers must now also provide such prospective buyers or lessees with a copy of the inspector-prepared summary of the milestone inspection report as well as 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).
Developers also are now required to have a structural integrity reserve study completed for each building on the condominium property that is three stories or higher in height prior to turnover. Additionally, in connection with turnover, developers are required to issue a milestone inspection report as part of the turnover report, regardless of when the building’s certificate of occupancy was issued or the height of the building, which attests to the required maintenance, condition, useful life, and replacement costs of applicable condominium property. The turnover report must also address waterproofing conditions as well as structural conditions, including load-bearing walls and primary structural members and systems. The turnover report must also include a copy of the association’s most recent structural integrity reserve study.
It should also be noted that before turnover, a developer-controlled association is no longer permitted to waive or reduce the funding of reserves.
7. New Division Reporting Requirements.
On or before January 1, 2023, associations (except for those coming into existence after July 1, 2022) must report to the Division of Florida Condominiums, Timeshares and Mobile Homes (the “Division”) the following information: (1) the number of buildings on the condominium property that are three stories or higher in height; (2) the total number of units in all such buildings; (3) the addresses of all such buildings; and (4) the counties in which all such buildings are located. This information will be used by the Division to compile a searchable list that will be posted on the Division’s website.
Should you have any questions or concerns with respect to any of the statutory changes discussed above, please do not hesitate to reach out to one of our attorneys and we will be happy to assist you.
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