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The age of a CommunityAssociation opting not to fund reserves is coming to an end, and some homeowners could be facing a steep rise in assessments. Becker Shareholder Howard Perl surveys the landscape and offers a few suggestions of how to prepare.
After the Surfside tragedy, everyone wanted to know how such a tragedy could happen and what steps could be taken to avoid similar incidents in the future. What caused the collapse? Could it have been avoided? Why were repairs not made? Why did local governments allow repairs to drag on? Why were repairs not made in a timely fashion? Unfortunately, none of these questions can be answered quickly, and proper answers will require years of study and analysis.
The above questions, and attempts to enact legislative reform to address some of these questions, were a hot topic for the Florida legislature this year. Several counties and the Florida Bar convened task forces in the aftermath of the Surfside tragedy. Primary among the suggested legislative changes for multifamily buildings were periodic engineering inspections, reserve studies, and reserve funding mandates. While all agreed generally in regard to these reforms, at the end of the day, the Senate and House could not agree on the reserve funding issue and, as a result, nothing passed. Currently Florida law can allow for owners to opt to fund less than required reserves, or no reserves. Most legislative proposals included mandatory reserve funding of one type or another. The sticking point was how quickly to implement such mandatory reserves, without the option of owners being able to waive such requirements. Whether to implement immediately, effective in 2022, or over the next three or five years, to allow a gradual implementation, is ultimately what led to nothing being passed. Rather than compromise, which seems to be a forgotten word in Tallahassee these days, legislators could not, or refused, to come to an agreement for the benefit of all condominium and cooperative residents in Florida.
These issues are certain to be re-examined next year. As such, your association should begin recognizing what is most likely coming down the pike and preparing the association and its residents now. Most likely the days are gone when owners will have an opportunity to fully waive reserves. I anticipate mandatory reserve funding of some type will be implemented. Whatever version is implemented, the result will be an increase in annual maintenance assessments. Depending on what is implemented and your association’s current reserve funding situation, some owners may be looking at a significant increase in your 2024 assessments (as the laws I am discussing would be passed in 2023, and most likely effective for the 2024 association budget).
The association should be anticipating and working on these items now. For example, some sort of reserve study requirement is most likely coming. Budget for one now. Get proposals now. Have the study done now. Once mandated by statute, demand will go up, availability will go down, and of course prices will go up. We are seeing exactly that scenario now in regard to structural engineers and 40/50-year recertifications.
In regard to reserve funding, take a good look at your reserve schedules. Get updated estimates of repair costs. Factor in inflation when projecting 10 and 20 year replacement items such as painting, roofing, etc. Any effort to increase your 2023 reserve balances will help lessen any blow of 2024 mandated reserves. Explain these issues to your residents now. Many associations are understandably involved with 40/50-year recertification requirements and other life-safety related issues. Obviously these issues need to be addressed immediately and on an expedited basis. But associations and their members should keep their eye on long-term remedial requirements as well. More oversight; more required inspections; more required repairs; and more required reserves. All of these are good things for 40–50-year-old buildings in a saltwater environment in Florida.
The outcome of the 2022 legislative session once again underscores the inherent problem when all community association ideas are placed in only one omnibus bill. Until our legislators acknowledge this problem and start using stand-alone bills for important proposals, there is always the risk that needed reforms will not pass.
Contact your legislators, tell them you welcome these types of reforms, but they need to be addressed as needed, not all under one take it or leave it omnibus bill. Work with your association leaders on the above discussed items. Don’t be surprised by increased annual assessments, special assessments, and other upcoming expenses. They are coming. Prepare now.
Howard Perl is a Shareholder in Becker’s Community Association practice and has been involved in all aspects of community association law, including transactional, collections, mediation, arbitration, construction defects and litigation. He is also Florida Bar Board Certified in Condominium & Planned Development Law.
Florida passed the statewide Condominium Safety Bill in Wake of the Surfside Building Collapse back in June of 2021. This is a major, positive change moving forward in the safety of the condominiums.
What does this bill entail?
The structural integrity reserve study at a minimum, must include:
Looking ahead:
The State of Florida Property Management Association (sfpma.com) and the many members are offering their services. On our members directory Condo & HOA’s all over the state can find the top rated companies to handle their buildings inspections, engineering, fire safety inspections, roofers, painting and waterproofing, plumbers and electricians for all of your Building Maintenance repairs.
On top of these are the Law Firms, that help with making sure your buildings are legaly ready for the changes.
We understand with all of these changes each condo and hoa will need help with funding the reserves into the future, so we did not forget this: Our industry members include the top financial companies, ie: Banks and Loan companies ready to help wth your investments. Act now start saving and growing your reserves, at times you will also need to get your accounting and bookkeeping with the added help from our collections members to make sure you cn get the funding to perform the many needed repairs.
A bill has been sent to Florida’s governor that would require statewide recertification of condominiums over three stories tall, in response to the Surfside building collapse that killed 98 people
TALLAHASSEE, Fla. — Florida would require statewide recertification of condominiums over three stories tall under a bill sent Wednesday to Republican Gov. Ron DeSantis by lawmakers, their legislation a response to the Surfside building collapse that killed 98 people.
The House unanimously passed the bill during a special session originally called to address skyrocketing property insurance rates. The condominium safety bill was added to the agenda Tuesday after an agreement was reached between the House and Senate.
Recertification would be required after 30 years, or 25 years if the building is within 3 miles (5 kilometers) of the coast, and every 10 years thereafter. The Champlain Towers South was 40 years old and was going through the 40-year-recertification process required by Miami-Dade County when it collapsed last June.
At the time, Miami-Dade and Broward counties were the only two of the state’s 67 that had condominium recertification programs.
“We have actually made positive change knowing that condominiums will be safer moving forward,” said Republican Rep. Daniel Perez.
The bill would require that condominium associations have sufficient reserves to pay for major repairs and conduct a study of the reserves every decade. It would also require condominium associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report.
Similar legislation failed during the regular session that ended in March.
The condominium measure was attached to a bill that would forbid insurers from automatically denying coverage because of a roof’s age if the roof is less than 15 years old. Homeowners with roofs 15 years or older would be allowed to get an inspection before insurers deny them coverage.
While some Democratic lawmakers complained that the special session on insurance didn’t go far enough to help relieve homeowners, they did praise the addition of the condominium safety legislation.
“This bill makes this trip worth it, at least for me,” said Democratic Rep. Michael Grieco, whose district borders Surfside. “I know folks who lost people in that building.”
The House sent the bill to Republican Gov. Ron DeSantis on Wednesday.
The House unanimously passed the legislation during a special session on skyrocketing property insurance rates.
Recertification would be required after 30 years — or 25 years if the building is within three miles of the coast — and every 10 years thereafter.
Nearly a year after the catastrophic collapse of Champlain Towers South in Surfside, Florida lawmakers on Wednesday gave final approval to legislation that will require condominium association boards to set aside money in reserves to cover future repairs starting in 2025. Current law allows them to waive the requirement.
“They are allowed to do that, and most of them are doing that today. They’re doing that because they are kicking the can down the road and not wanting the cost,” said state Rep. Danny Perez, R-Miami. “So moving forward, the structural integrity of a condominium will be reserved, they will be maintained, and they will be kept up to par so that future condominiums never have to worry about another Surfside taking place.”
The measure, which was approved by the House on a 110-0 vote and now heads to Gov. Ron DeSantis, would also require condo boards to conduct reserve studies every decade to make sure they have the resources to finance needed structural repairs. The proposal would also open up condo board members — many of them volunteers — to lawsuits if they ignore inspection requirements.
At play in Florida will be how to mandate reserves and maintenance to prevent tragedy and prepare associations who will need to make decisions that will likely cost homeowners more money.
“The compliance timeline is a few years away to afford an opportunity to smoothly transition,” the Senate sponsor of the bill, Sen. Jennifer Bradley, R-Fleming Island, said. “Additionally, the Legislature will remain engaged as condos and associations work to implement these changes.”
Bradley said she knows the changes to the state’s condo law will be a disruption to the status quo for many condos, but she says, “the safety of Floridians must come first.”
“The creation of a first-of-its-kind statewide system of milestone inspections for our aging condos and providing transparency and disclosure to local officials, unit owners, and renters are significant measures that will save lives,” Bradley said.
There would be two phases to inspections. If a visual inspection by a licensed architect or engineer authorized to practice in Florida reveals no signs of substantial structural deterioration, no further action is necessary until the next required inspection. If structural deterioration is detected, a second phase of testing is required to determine whether the building is structurally sound.
The changes to the state’s condo laws emerged on Tuesday afternoon during a special session that Gov. Ron DeSantis called to address Florida’s failing property insurance market. The deal came after months of negotiations between lawmakers.
On Wednesday, Perez said the reserves provision was “the most important” part of the bill. House Speaker Chris Sprowls, R-Palm Harbor, thanked him for standing his ground, telling him that “people in the state of Florida are safer because of your efforts.”
Whether you are an experienced board member or thinking about becoming one, having a foundation for effective community association board leadership is important.
By becoming a community association board member, you step up to take on positions of service and responsibility. You’re now expected to anticipate issues, solve problems, meet the expectations of residents, and protect property values.
Here are five important skills to possess as a board member:
Since the tragic Surfside condo collapse, residents are asking for more transparency from their elected board members. Board members can use Concierge Plus as a platform for keeping residents in the loop with regards to anything related to their community.
Below are few Concierge Plus features that can help you become a transparent board member:
Community association board members should serve with the best interests of their communities in mind. The law imposes a level of care and loyalty, owed by board members to their associations. It is vital that you receive proper education and training in order to understand your obligations and fulfill your fiduciary duty to the association.
Book a meeting with our experts today, and see for yourself how thousands of board members across North America have become more informed and effective using our platform.