Senate Bill 4-D: A Response to the Surfside Tragedy

Written By: Douglas J. Clarke, Esq.

doug@sotolawgroup.com

On May 26, 2022, Florida Governor DeSantis signed Senate Bill 4-D into law. The underlying purpose behind this Bill is to promote condominium building safety in the wake of the tragic collapse of the Champlain Towers South residential condominium in Surfside, Florida.  In a showing of bi-partisan and industry-wide cooperation, Senate Bill 4-D puts in place the following safety and preventative measures that Florida Condominium Associations and Cooperatives must take careful note of:

Milestone Structural Inspections

A “Milestone Structural Inspection” is essentially a structural inspection of a building performed to determine and analyze a particular buildings’ life safety and structural component integrity (or rather, its adequacy). The following are just some of the most important things you should know about these Milestone Structural Inspections:

·         If your building is three (3) stories or higher, your Association is

required to perform a Milestone Structural Inspection by December 31 of the year in which the building turns thirty (30) years old. This Milestone Structural Inspection is not a onetime thing – it must be conducted every ten (10) years thereafter.

·         If your building is located within three (3) miles of the Florida coastline, each building within the community that is three (3) or more stories high, must be inspected by December 31 of the year in which the building turns twenty-five (25) years old. Like above, a Milestone Structural Inspection must then be subsequently performed every ten (10) years thereafter.

·         If an Association is older than thirty (30) years old (e.g., the building’s certificate of occupancy was issued on or before July 1, 1992), the Association must conduct a Milestone Structural Inspection of the buildings within its community before Dec. 31, 2024.

·         The Association is responsible for all costs relating with performing a Milestone Structural Inspection.

·         The inspection must be performed by a licensed engineer or licensed architect.

·         Senate Bill 4-D makes the Milestone Structural Inspection Report itself an “official record” of the Association, which must be maintained by the Association for fifteen (15) years. A Tenant of a Unit has a right to inspect an Association’s Milestone Structural Inspection Report, whereas a prospective buyer of a Unit has a right to inspect an Association’s Summary of said Report.

·         Critically, it is a breach of an Officer or Director’s fiduciary duties if an Officer or Director willfully and knowingly fails to have a Milestone Structural Inspection performed, when necessary.

Structural Integrity Reserve Study and Reserve Funding Requirements

Just as important as a “Milestone Structural Inspection” Senate Bill 4-D also introduces the requirement of a “Structural Integrity Reserve Study.” This study identifies an Association’s reserve funds, which have been earmarked for future major repairs and replacements of the building(s) Common Areas. The Structural Integrity Reserve Study must consist of a visual inspection of the Common Areas by a licensed engineer or licensed architect and must include the roof, load bearing walls, floor, foundation, fireproofing and fire protection systems, plumbing, and any item with a deferred maintenance or replacement cost that exceeds $10,000.

            The following are just some of the important things you should know about a “Structural Integrity Reserve Study”:

·                     An Association must have an initial Structural Integrity Reserve Study completed by December 31, 2024, and a Structural Integrity Reserve Study completed every ten (10) years thereafter;

·                     As of December 31, 2024, an Association may no longer refuse to fund (may not waive) or underfund the reserves for items required to be included in a Structural Integrity Reserve Study;

·                     As of December 31, 2024, for items required to be included in a Structural Integrity Reserve Study, an Association may no longer use those itemized reserve funds (or any interest accruing thereon) for other purposes, and an Association may only use those itemized reserve funds for their designated purposes;

·                     Like the Milestone Structural Inspection Report mentioned above, a Structural Integrity Reserve Study is an “official record” of the Association and must be maintained by the Association for fifteen (15) years. Moreover, a prospective purchaser of a Unit has the right to inspect an Association’s most recent Structural Integrity Reserve Study. If an Association has not completed a Structural Integrity Reserve Study, the prospective purchaser of a Unit is entitled to a statement stating that the Association has not completed the Study.

·                     Similarly, it is a breach of an Officer or Director’s fiduciary duty if the Association fails to complete a Structural Integrity Reserve Study, as necessary.

Conclusion

Understanding the great expense and efforts required to implement these significant changes, Senate Bill 4-D provides a two (2) year window of compliance for many of the requirements mentioned above. However, please be aware that each Association existing on or before July 1, 2022, must provide certain information about its buildings to the Division of Florida Condominiums, Timeshares, and Mobile Homes on or before January 1, 2023. Also, be aware that this Bill may establish different regulations and requirements for Associations that are still controlled by a Developer. Lastly, effective December 31, 2024, condominium and cooperative associations are prohibited from using reserves outside of their purposes, waiving the reserves, or reducing the funding of reserves for certain structural components of the property.

Despite the two-year window associations will have to ultimately comply with some of the requirements imposed by Senate Bill 4-D, their board of directors and members should not act now and not delay strategizing how and when these changes will be implemented.

One helpful measure that should be considered now is to amend the association’s annual budget to account for the oncoming expense of the milestone inspections. If the association can begin building its funds now through gradually increased assessments, the association can help avoid or reduce their collection issues or unit-owner/board conflict that undoubtedly follows a sudden and hefty assessment. It is also an opportune time to review your association’s collection policies to ensure a streamlined and effective collection process is in place.

To assist in these significant tasks, Condominium associations should also begin consulting with legal counsel and other professionals now (including accountants, architects, engineers, other specialists, etc.) as they begin implementing these new requirements into practice.