After the tragic collapse of the Champlain Towers South Condominium in Surfside, Florida, the Florida legislature passed SB 4D; a bill intended to protect unit owners from similar tragedies by requiring condominium associations to order periodic milestone inspections as well as inspections to assess the structural integrity of their buildings. Notably, SB 4D requires condominium associations to complete a Structural Integrity Reserve Study (“SIRS”) for condominium buildings three or more stories high to determine the physical condition of Major Structural Components (i.e. the foundation, roof, floors, windows, plumbing, waterproofing, fire protection systems, or electrical systems). Associations will then use the findings of the report to estimate what the repair or replacement costs for Major Structural Components will be so they can accurately prepare budgets in the future.
Although Florida Statute 718 already obligated condominium associations to include reserve accounts in their annual budget for major expenses, prior to the enactment of SB 4D, unit owners could vote to merely partially fund the reserve account or even do away with it entirely. Often, unit owners want to keep their condominium assessments as low as possible, and so many condominiums opted to eliminate their reserve budgets altogether. What SB 4D has done is eliminate the unit owners’ ability to waive reserve accounts and requires them to fund the repair or replacement of Major Structural Components after December 31, 2024. For condominiums that previously waived funding reserve accounts, their assessments will now unquestionably be going up and money will need to be set aside for the replacement of Major Structural Components.
FAR/BAR Contracts have already implemented the new requirements in their condo rider. Sellers are now required to hand over any SIRS report to the Buyer prior to the sale of the condominium unit at Seller’s expense. If a SIRS report is not available, Sellers must advise the Buyer that the association has not completed one.
For newer condominiums that have been adequately funding their maintenance and reserve accounts, not much will change with the passage SB 4D. However, for older condominiums that have been putting off major repairs and neglecting the funding of their reserve accounts, there will be major increases in assessments that could make condominium living unaffordable for owners on fixed or lower incomes. Those owners may be forced to sell their unit, which could be a difficult task considering potential buyers may be reluctant to pay high assessments caused by years of underfunding that had nothing to do with them. What may happen is some condominium buildings will essentially reach their expiration date when too many unit owners are unable to afford the costs of repairs, and as result, these condominium buildings will terminate and no longer exist.