“Surfside” Condo Bills SB 4-D and SB 154 are Law of the Land

Florida Senate Bill 154, approved by the Florida Legislature on 5/3/23 and signed by the Governor of Florida on 6/9/23, tweaks Florida Senate Bill 4-D that became law on 3/26/22 in response to the collapse of the Surfside hi-rise in Miami.

Senate Bill 4-D requires new mandatory milestone structural inspections, structural integrity reserve studies and the removal of waiver of certain reserves for condominium buildings by 12/31/24. Recently approved Senate Bill 154 made changes to Senate Bill 4-D this year. We will again review SB-4-D and show the changes to it enacted this year by SB-154 in underlined below.

MILESTONE STRUCTURAL INSPECTION:

For condominium or cooperative buildings three (3) stories or more in height, by December 31st of the year in which the building reaches thirty (30) years old [twenty five

(25) years old for buildings that the local enforcement agency determines that local circumstances. including environmental conditions such as proximity to salt water should be 25 years located within three (3) miles from the coastline], and every ten (10) years thereafter, a Milestone Structural Inspection must be performed by a licensed architect or engineer. Excepted from having to do these inspections are 3 story buildings or less that only house single-family, two family, or three-family residences.

If the building’s certificate of occupancy was issued on or before July 1, 1992, the buildings initial Milestone Structural Inspection must be performed before 12/31/24. If thirty (30) years is reached between 1/1/2022 and 13/21/24 the inspection must be performed before 12/31/25

A local enforcement agency (City or County) must provide written notice of the required Milestone Inspection to the Association and the Association then has 180 days to complete Phase One of the Milestone Inspection. Once the local enforcement agency has provided notice to the Association the Association must notify the owners within 14 days after receipt of the written notice and provide a date that the milestone inspection must be completed. The 180 day clock starts after the owners have received the notice from the Association. The local enforcement agency may extend the date the by which the initial Milestone Inspection must be completed by a showing of good cause by the Condo or Co-op Association that the inspection cannot be timely completed if the Association has entered into a contract with an architect or engineer to perform the inspection and the inspection cannot reasonably be completed before the deadline or other circumstances to justify an extension.

Phase One of the Milestone Inspection requires the architect or engineer to perform a visual inspection of the building, including the major structural components, and provide a qualitative assessment of the structural conditions of the building. If the architect or engineer finds no sign of substantial structural deterioration to any building components, then Phase Two of the inspection is not required and the professional doing the inspection then submits its inspection report to the local enforcement agency.

However, if substantial structural deterioration is found (substantial structural distress that negatively affects a building’s general structural condition and integrity and does not includes surface imperfections), then Phase Two of the Milestone Inspection must be performed. This 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 distresses and damaged portions of the building. If a phase two inspection is required, within 180 days after submitting a phase one inspection report, the architect or engineer performing the phase 2 inspection must submit to the local enforcement agency a phase two progress report with a timeline for completion of the phase two inspection.

Upon completion of the Phase One or Phase Two inspections, the inspection professional must submit a sealed copy of the inspection report, with a summary, findings, and recommendations for repairs, to the Association and the local building official with jurisdiction. The Association is also required to distribute the summary to each unit owner and post a copy of the summary in a conspicuous place on the property within 45 days after receiving the applicable inspection report.

Such repairs must be commenced within 365 days after receiving the Phase Two inspection report and the Association must provide the local enforcement agency with proof that repairs have been scheduled or commenced and if Association fails to provide such the local enforcement agency must review and determine if the building is unsafe for human occupancy.

The Association is responsible for all costs associated with the inspection. If the officers or directors of an association wilfully and knowingly fail to have a Milestone Inspection performed, as required, such failure is deemed a breach of the officers’ and directors’ fiduciary duties to the owners.

STRUCTURAL RESERVE STUDY:

For condominium and cooperative buildings three (3) stories or more high, for associations existing on or before July 1, 2022 and before a developer can turnover an association to its members, a Structural Integrity Reserve Study must be completed before December 31, 2024. However, if an extension has been granted by the local enforcement agency for completion of the Milestone Structural Inspection, then the Structural Integrity Reserve Study can be completed with the Milestone Structural Inspection and then no later than 12/31/2026. (So, if an extension is granted by the local enforcement agency for the Milestone Inspection to be completed after 12/31/24, then so can the initial Structural Integrity Reserve Study to either sometime in 2025 or 2026 depending upon the length of the extension granted.)

The Structural Integrity Reserve Study shall include a study, at a minimum, of the roof, structure, including load-bearing walls primary structural members and primary structural systems, floor, foundation, fire protection systems, plumbing, electrical systems, waterproofing, exterior painting, windows and exterior doors and any other items that have a deferred maintenance expense or replacement cost exceed $10,000 the failure of which to replace or maintain would have a negative effect on these listed items (items for which reserve funding cannot be waived).

The Study must be performed by a qualified person and the visual inspection portion must be performed by a licensed architect or engineer or a person certified as a reserve specialist or professional reserve analyst by the Community Associations Institute or the Association of Professional Reserve Analysts. The Study must identify each item of the condominium property being visually inspected common areas inspected, the estimated remaining useful life, and the estimated replacement cost or deferred maintenance expense of each item of the area inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense by the end of the estimated useful life of the area inspected.

If an association fails to complete a Structural Integrity, as required, such failure will be considered a breach of an officers’ or directors’ fiduciary duty to unit owners.

Effective 12/31/24, the members of a unit owner controlled association may not determine to provide no reserves or less reserves than required by the Structural Integrity Reserve Study for reserve items that cannot be waived as discussed above)

In addition, an association may not vote to use reserve funds identified in the Structural Integrity Reserve Study, or any interest accruing thereon, for any other purposes other than for the reserves’ intended purposes as identified in the Study for those reserve items that cannot be waived as discussed above. All other reserve items the owners could vote to waive funding by a majority vote of the owners. The Structural Integrity Reserve Study may recommend that reserves do not need to be maintained for any item for which an estimate of useful life and an estimate of replacement cost cannot be determined, or the study may recommend a deferred maintenance expense amount for such item. The Structural Integrity Reserve Study may recommend that reserves for replacement costs do not need to be maintained for any item with an estimated remaining useful life of greater than 25 years, but the study may recommend a deferred maintenance expense amount for such time.

Sellers of Units must provide copies of the Milestone Inspections and Structural Integrity Reserve Studies if completed or status of same if not completed with particular wording and in conspicuous type for all contracts entered into after 12/31/2024. After providing same, the Buyers will have 3 Days to void the sales contract if desired.