UPDATE: Florida Legislature Passes Condo Inspection Law in Wake of Surfside Tragedy
SUN MAY 29, 2022
BY OPPENHEIM LAW ON FLORIDA
REAL ESTATE
The Florida Legislature unanimously approved a condominium
safety bill, S.B. 4D, this past week, which now awaits the Governor’s
signing. Pursuant to that bill, buildings three stories or higher and thirty
years old will have to undergo strict safety inspections and every ten years
thereafter. Buildings within three miles of the coast must be inspected before
they are twenty-five years old, and then inspected every ten years.
The inspection reports must detail the building’s structural
deterioration, whether the deterioration is safe or not, and whether it
requires repair. Copies of these reports must be distributed to all condo unit
owners, and the condo boards must conduct reserve studies every ten years to
determine how much each owner must pay to cover future repairs. Condo boards
will not be able to waive reserve requirements or use the reserves for other
purposes.
As discussed in an earlier blog, the 2022
Florida State Legislature did not initially pass a proposed law which would
have created one of the strictest condo inspection within the United
States. The legislation was an attempt to prevent tragedies such as
the horrific Surfside, FL collapse last June, which raised issues of
condo ownership, collective responsibility for condo maintenance and upkeep,
and inadequate reserves. Unfortunately, the requirement of financial reserves was perhaps the biggest
issue. Condo unit owners routinely do not vote in favor of annual
proposals for their buildings to carry substantial cash reserves. As a result,
unless the association imposes a special assessment on its members for large
repairs, the repairs are not done.
What now?
Should the Governor sign this bill, there will be more oversight
into the structural integrity of condos. However, whether the condo owners will
be able to provide monetary reserves, especially in older buildings that may in
fact necessitate higher reserves, remains to be seen. If there are substantive
repairs needed for the safety of condo’s structure and there are condo owners
who are not able to pay the assessments, there may be an issue as to whether
those owners would potentially face foreclosure by the association. The
condo documents may need modification to address this issue.
Further, should increased reserves be necessary, potential
purchasers of the condo may be reluctant to purchase within a specific condo,
leaving many units unsold. As a result, there may be more people looking to
rent the units.
departments will have to rev up their code enforcement policies
and begin the unpleasant process of condemnation of entire buildings.
Finally, insurers will certainly increase their premiums on
liability policies on older buildings that do not have adequate reserves as
their financial exposure will invariably increase.
What does this all mean?
In order to prevent tragedies like Surfside, mandatory
inspections of condos are needed. Requiring reserves is also necessary in order
to prevent and repair the structural integrity of the condos. New developments
and existing condos will be required to build in a reserve allocation into
their annual budgets. However, the question as to whether condo owners,
especially those in older condos, will be able to bear their pro rata share
remains to be seen.
Roy Oppenheim - Esq.
From The Trenches
