By: Mark Grant, Esq. and Natalie Alonso, Summer Associate* (*Not an Attorney)
1. Background.
On May 26, 2022, the Florida Legislature passed Senate Bill 4D (henceforth, “SB 4D”, or “the Bill”) in response to the tragic collapse of the Champlain Towers South condominium in Surfside, Florida.[1] The Bill creates various changes to Florida condominium laws in an attempt to increase building safety measures and mitigate risk.
The Bill is effective upon becoming law which means these changes in the law are already in effect since the Governor signed the Bill.[2] To that end, the purpose of this memorandum is to provide a summary of the numerous changes found in SB 4D and discuss its implications for condominium developers and condominium associations.
2. New Safety Measures, Requirements, and Inspections.
a. Roof Protection.
SB 4D creates a statutory exception to the roof protection requirements found in the Florida Building Code (henceforth, “the Code”). The current edition of the Code requires that no more than 25% of the total roof area or roof section may be repaired, replaced, or recovered in any 12-month period, unless the entire existing roofing system or roof section conforms to the current requirements of the Code.
The Bill, however, states that if 25% or more of the roof is damaged, then only the repaired, replaced, or recovered portion is required to be constructed in compliance with the Code.[3] In order for the exception to apply, the roof system or roof section must already comply with the 2007 Florida Building Code or any subsequent editions of the Code.[4]
b. Milestone Structural Inspections.
SB 4D requires condominium and cooperative associations to participate in new statewide structural inspection programs to increase safety measures, including Milestone Structural Inspections for each building that is three stories or more.[5]
Purpose. A Milestone Structural Inspection evaluates the life safety and adequacy of a building, including the building’s general structural condition and any necessary maintenance, repair, or replacement needed.[6] The inspection must be completed by a licensed engineer or licensed architect.[7]
Timeline. SB 4D provides the following timeline for when initial Milestone Structural Inspections will need to be completed:
Generally, initial Milestone Structural Inspections must be conducted by December 31 of the building’s 30th year of age and every ten years thereafter; or,
If the building is located within three miles of the coastline, then the initial inspection must be completed by December 31 of the building’s 25th year of age and every 10 years thereafter; or,
If a building’s certificate of occupancy was issued on or before July 1, 1992, the building’s initial Milestone Structural Inspection must be performed before December 31, 2024.[8]
The building’s age is based on the date the certificate of occupancy for the building was issued.[9] If the date of issuance for the certificate of occupancy is not available, then the date of occupancy evidenced in any record of the local building official will be used instead.[10]
Inspection Process. Once it has been confirmed that the building will need to have a Milestone Structural Inspection, a local enforcement agency will provide a written notice of the inspection to the condominium association or cooperative association.[11]
A Milestone Structural Inspection has two key phases[12] :
Phase One involves a visual examination of the habitable and uninhabitable areas of the building and requires the examiner to provide a qualitative assessment of the building’s structural condition. This examination must be completed within 180 days after receiving written notice from the local enforcement agency.[13]
Phase Two will only be performed if the examiner finds signs of substantial structural deterioration[14] during Phase One of the inspection. Phase Two could involve a destructive or nondestructive testing based on the examiner’s discretion and must be as extensive or as limited as necessary to fully assess the building. When determining testing locations, the inspector must give preference to locations that are the least disruptive and most easily repairable.
Inspection Report Submission. Upon completion of Phase One or Phase Two, the examiner must submit a sealed copy of the inspection report, along with a separate summary of the material findings and recommendations, to the condominium association and the appropriate building official of the local government.[15]
Inspection Report Distribution. The condominium or cooperative association must distribute a copy of the examiner-prepared summary of the inspection report to each condominium unit owner or cooperative unit owner, regardless of the findings or recommendations in the report, by mail or personal delivery and by electronic transmission.[16]
Associations must also post a copy of the summary in a conspicuous place on the condominium or cooperative property.[17] The full report and summary must be posted on the association’s website, if the association is required to have a website.[18]
Responsibilities. In addition, SB 4D requires associations to be fully responsible for all aspects of the Milestone Structural Inspections, including all costs associated to complete the inspection or any additional requirements.[19]
Breach of Fiduciary Duties. Officers or directors of an association that willfully and knowingly fail to have a milestone inspection performed will have breached their fiduciary duties to unit owners.[20]
Potential Penalties. SB 4D provides local building officials with the ability to asses penalties for failing to comply with the requirements and proper timeline for Phase One and Phase Two inspections.[21]
The Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (henceforth, “the Division”) may also evaluate complaints related to the procedural completion of milestone inspections.[22]
c. Structural Integrity Reserve Study.
In addition to Milestone Structural Inspections, SB 4D requires associations to complete a Structural Integrity Reserve Study every 10 years for buildings that are three stories or higher.[23] The initial Structural Integrity Reserve Study must be completed by December 31, 2024.[24]
Purpose. A Structural Integrity Reserve Study is a study of the reserve funds required for future major repairs and replacement of common areas based on a visual inspection of common areas.[25]
At minimum, the study must identify the common areas being visually inspected, state the estimated remaining useful life and estimated replacement cost of the common areas, and provide a recommended annual reserve amount that achieves the estimated cost.[26]
The amounts determined in a Structural Integrity Reserve Study will be used to assess reserve accounts association’s annual budget.[27] If the amount to be reserved is not in the association’s most recent or initial Structural Integrity Reserve Study, then the amount for the budget must be computed using a formula based upon the estimated remaining useful life and replacement cost, or deferred maintenance expense, of the reserve item.[28]
By December 31, 2024, an association may no longer refuse to fund or provide less reserves for items required to be included in a Structural Integrity Reserve Study.[29] In addition, effective December 31, 2024, members of a unit-owner controlled association may not vote to use reserve funds for any other purposes other than their intended purpose.[30]
Timeline. Condominium associations and cooperative associations are required to complete a Structural Integrity Reserve Study every 10 years for each building to be maintained by an association that is three stories or higher.[31]
Associations existing on or before July 1, 2022, that are controlled by unit owners other than the developer, must have a Structural Integrity Reserve Study completed by December 31, 2024, for each building on the condominium property that is three stories or higher.[32]
Study Process. A Structural Integrity Reserve Study can be performed by any person qualified to perform the study, however, the visual inspection must be completed by a licensed architect or engineer.
As part of the Structural Integrity Reserve Study, an association must have the following components assessed and state the estimated remaining useful life and the estimated replacement cost of each item:
Roof;
Load-bearing walls or other primary structural members;
Floor;
Foundation;
Fireproofing and fire protection systems;
Plumbing;
Electrical systems;
Waterproofing and exterior painting;
Windows; and,
Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.00 and the failure to replace or maintain such item that negatively affects the items listed above.[33]
Record Maintenance. Structural Integrity Research Studies must be maintained for at least 15 years after the study is completed.[34]
Potential Penalties. The Division may evaluate complaints related to the procedural completion of Structural Integrity Reserve Studies.[35]
Breach of Fiduciary Duties. Officers or directors of an association that fail to complete a Structural Integrity Reserve Study will have breached their fiduciary duties to unit owners.[36]
3. Additional Changes for Associations.
a. Contractual Relationships with Other Buildings.
SB 4D imposes additional requirements for contractual relationships between associations and other buildings. The Bill provides that if a community association manager or a community association management firm has a contract with another association that has a building subject to Millstone Structural Inspections, then the community association manager or the community association management firm must comply with the requirements of a Milestone Structural Inspection as directed by the board.[37]
b. Official Records
Milestone Inspection Reports and Structural Integrity Reserve Studies are considered under SB 4D to be official records of the association and must be maintained accordingly.[38]
c. Filing Requirements.
Cooperative associations and condominium associations that existed on or before July 1, 2022, must now provide the following information to the Division:
The number of buildings on the property that are three stories or higher;
The total number of units in all such buildings;
The addresses of all such buildings; and,
The counties in which all such buildings are located.[39]
The aforementioned information must be provided in writing on or before January 1, 2023.[40] The information can be provided either through e-mail, U.S. Postal Service, commercial delivery service, or hand delivery at any physical address or e-mail address by the Division.[41] The Division will also accept the information through a form posted on their website.[42]
The Division will utilize this information to compile a list on their website. The list will include the following information:
The name of each association with buildings on the condominium or cooperative property that are three stories or higher in height;
The number of such buildings on each association’s property;
The addresses of all such buildings; and,
The counties in which all such buildings are located.[43]
Members of condominium and cooperative associations should also note that any changes to the information listed above must be updated in writing to the Division within 6 months after the change.[44]
4. Additional Changes for Developers.
a. Turnover Requirements of an Association to Unit Owners.
SB 4D requires that a developer must have a Structural Integrity Reserve Study completed for each building on the condominium property that is three stories or higher before turning over control of an association to unit owners.[45]
In addition, before turnover of control of an association by a developer to unit owners other than a developer, the developer-controlled association may not vote to waive the reserves or reduce funding the reserves.[46] A developer’s turnover inspection report must also comply with the Milestone Inspection Report which now must include the condition of the buildings.[47]
b. Disclosure to Prospective Buyers.
SB 4D requires developer and non-developer unit owners to give prospective buyers of a unit a copy of an examiner’s summary of the Milestone Inspection Report and a copy of the association’s most recent Structural Integrity Reserve Study.[48] If the association has not completed a Structural Integrity Reserve Study, then a statement disclosing such information is required.[49]
5. Changes for Unit Owners and Renters.
a. Inspection Disclosures.
SB 4D grants unit owners and buyers the right to inspect and copy, as official records, the Milestone Inspection Report and all other inspection reports relating to the structural or life safety of a building.[50]
Renters are also given the right to inspect any Milestone Inspection Reports.[51]
6. Conclusion.
The Florida Legislature and Governor DeSantis have taken legislative action in an attempt to increase building safety measures, mitigate risk, and promote transparency. The aforementioned changes are effective upon becoming law which means these changes in the law are already in effect since the Governor signed the Bill. Thus, it is imperative that both developers and boards of associations are familiar with the changes and update their procedures accordingly.
[1] Fla. SB 4D (2022). SB 4D available at: https://www.flsenate.gov/Session/Bill/2022D/4D/BillText/er/PDF .
[2] Fla. SB 4D, § 23 (2022).
[3] Fla. SB 4D, § 1 (2022) (proposed Fla. Stat. § 553.844(5)).
[4] Id.
[5] Fla. SB 4D, § 3 (2022) (proposed Fla. Stat. § 553.889).
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id. at 9, ll. 251-55.
[12] Id. at 10, ll. 264-90.
[13] Note that completion of Phase One of a Milestone Structural Inspection occurs when the licensed engineer or architect who performed the Phase One inspection has submitted the report by e-mail, U.S. Postal Service, or commercial delivery service to the appropriate local enforcement agency. Fla. SB 4D, § 3, at 9-10, ll. 256-63 (2022) (proposed Fla. Stat. § 553.889(6)).
[14] Substantial structural deterioration is specifically defined as “[a] substantial structural distress that negatively affects a building’s general structural condition and integrity.” Fla. SB 4D § 3, at 8, ll. 214-22 (2022) (proposed Fla. Stat. § 553.889(2)(b)).
[15] Id. at 11, ll. 292-98.
[16] Id. at 11-12, ll. 317-27.
[17] Id.
[18] Id.
[19] Id. at 9, ll. 235-40.
[20] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[21] Fla. SB 4D § 3, at 12, ll. 328-29.
[22] Fla. SB 4D § 17 (2022) (proposed Fla. Stat. § 719.501(1)).
[23] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[24] Id.
[25] Fla. SB 4D § 4 (2022) (proposed Fla. Stat. § 718.103).
[26] Id.
[27] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[28] Id.
[29] Id.
[30] Id.
[31] Id.
[32] Id.
[33] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[34] Fla. SB 4D § 14 (2022) (proposed Fla. Stat. §719.104(2)).
[35] Fla. SB 4D § 17 (2022) (proposed Fla. Stat. § 719.501(1)).
[36] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[37] Fla. SB 4D § 2 (2022) (proposed Fla. Stat. § 468.4334(1)(b)).
[38] Fla. SB 4D § 14 (2022) (proposed Fla. Stat. §719.104(2)).
[39] Fla. SB 4D §§ 10, 17 (2022) (proposed Fla. Stat. §§ 718.501, 719.501).
[40] Id.
[41] Id.
[42] Id.
[43] Id.
[44] Id.
[45] Fla. SB 4D §§ 6, 15 (2022) (proposed Fla. Stat. §§ 718.112, 719.106).
[46] Fla. SB 4D § 15 (2022) (proposed Fla. Stat. § 719.106).
[47] Fla. SB 4D §§ 9, 16 (2022) (proposed Fla. Stat. §§ 718.301, 719.301).
[48] Fla. SB 4D § 18 (2022) (proposed Fla. Stat. § 719.503).
[49] Id.
[50] Fla. SB 4D § 14 (2022) (proposed Fla. Stat. § 719.104(2)).
[51] Id.
