Updated 6/29/2023
Florida Senate Bills 4-D and 154 Signed Into Law
Senate Bill 4-D and the subsequent Senate Bill 154, both passed into law in the past year, have forever changed our condo market in Florida. Florida has more than 1.5 million condos that are home to more than 2 million residents, most of whom will be affected by these new laws. While the requirements in these bills will be a financial burden for many associations, owners of Florida condos will be much safer as a result. Many buildings will have special assessments in order to pay for deferred maintenance and required repairs. However, these investments in our older condo buildings will strengthen our overall market and provide condo owners with peace of mind.
Summary of the New Laws
The new laws establish substantial new structural safety and reserve requirements for Florida condominiums and cooperative associations. We are encouraging anyone who owns a condo or is thinking about purchasing a condo to read both bills for a full understanding of the new requirements. See links to bill summaries below. Here are the highlights:
Both a Milestone Inspection and a Structural Integrity Reserve Study (SIRS) must be completed by all buildings 3 stories or higher before December 31st, 2024. This can be extended if the inspections are contracted to be completed by the deadline.
Milestone Inspections: On or before a building turns 30 years old (or 25 years if the building is within 3 miles of the coast) the building must be visually inspected by a licensed engineer or architect, and then re-inspected every 10 years thereafter. Phase One structural inspections are required and if substantial deterioration is discovered, then Phase Two inspections will also be required. Any work required by the reports must commence within 365 days of receiving the report.
Structural Integrity Reserve Study (SIRS): If an association existed before July 1, 2022 then a SIRS must be performed by the end of 2024 and then every 10 years thereafter. The report will include estimated remaining life and estimated cost of replacement of major structure elements and systems including roofing, load-bearing walls, floor foundations, fire protection, plumbing, electrical systems, windows, foundation, waterproofing, and any component over $10,000 whose failure to replace or maintain negatively affects other items. The report will also 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. Associations must maintain the required reserves as provided in the SIRS report.
Tips For Buyers and Sellers of Condos
Agents at By The Sea Realty are condo specialists and we sell a lot of condos. We get questions every day from buyers and sellers regarding building special assessments, building reserves and financing. Let’s touch on some of the the questions that you and your real estate agent should be asking an association when buying or selling a condo.
Condo Building Questions
- Has the building had its most recent required inspections and when were they completed?
- What repairs are required and have those repairs been completed? If not, when are the repairs/renovations scheduled to commence and what is the estimated completion date?
- Are there any special assessments pending and what is the dollar amount? Who is responsible for the special assessment? Can it be negotiated between the seller and the buyer or does it need to be paid in full at closing? Can owners pay the assessments in installments?
- Has the required reserve study been completed and does the association have the required reserves in their account?
- How much is the monthly condo fee and does it include reserves? If so, what portion is dedicated to funding the reserves and when will it be fully funded?
- Is there any litigation in the building?
- Can we have copies of the Milestone Inspection and SIRS reports?
In addition to addressing obvious safety concerns, these questions are also important to the financial stability of the of the building. The answers to these questions will also determine whether condo purchases can be financed in the building. Unfortunately for buyers, some associations may require an accepted offer before giving out this information. However, we do expect more cooperation from associations moving forward and many associations and owners are already being more transparent.
Florida Law: After executing a purchase agreement and receiving all condo documents (listed below), buyers have 3 days to review all of the condo documents. The documents that buyers are entitled to include the Condo Declaration, Articles of Incorporation, Bylaws and Rules of the Association, Frequently Asked Questions and the most recent Year End Financial Information. In addition, buyers are entitled to receive copies of any Milestone Inspection reports and SIRS reports. During this 3 day period, it is important that you and your agent are in contact with the association to get answers to your questions before moving forward with a purchase.
Understand the Repairs
With the passing of of these new laws you can expect that many of the condo buildings in Florida will be undergoing some major updating and repairs in the coming years. Here are some things that you may want to consider before purchasing in a building that is about to undergo major updating or repairs.
- What hours during the day will work be going on in the building? Will all of the elevators be accessible?
- What is the noise factor going to be? Concrete and roof work can be quite loud. If you work from home or have pets this may not be an ideal situation.
- Will you have limited access to the amenities including the pool and sundeck?
- Some repairs may require the owner to move out of the unit for a period of time. Where will you go?
- Do you plan on renting your unit? If so you can expect to get less monthly rent until the work gets finished. In some cases it may be difficult to even find a willing renter while work is being completed.
Work with Local Professionals
Are you a buyer who needs to finance your purchase? Make sure you work with a local mortgage consultant who understands our Florida condo market. Some condos may not even be eligible for financing. A lender who knows what questions to ask and what underwriters will require will save you a lot of time and heartache. Your real estate agent should be able to refer you to lender who understands condos.
Finally, whether you are buying or selling a condo, you need a real estate agent who specializes in the South Florida condo market.
Contact a By The Sea Realty condo specialist today!
