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FLORIDA LEGISLATURE ENACTS A FRACTION
SURFSIDE TASKFORCE RECOMMENDATIONS IN QUADRUPLE OVERTIME
A billion dollar settlement fund, appearance of major news network reporters, and the first year anniversary of Surfside’s Champlain Towers South Condominium’s collapse may have finally pushed the Florida Legislature and Governor to act. After failing to move a bill to the floor during the entire regular Legislative session and no action during the first three special sessions, the fourth special session appeared to be the charm.
As quadruple overtime commenced, yes in a fourth special session since mid-March, building safety nor condominiums were supposed to be on the agenda. The Governor’s proclamation calling the fourth special session did not mention, or even allude to, building safety. Nevertheless, literally at the last moment a parliamentary maneuver added building safety.
So, what does this mean for Florida communities. Who is affected? What must you do? When are the deadlines?
It is an 88 page bill; thus, you will be surprised by lots of details. By the fact the bill was introduced, voted for approval, and signed by the Governor in less than a week, there will be many questions that have no good answers, and will wait for corrections during the 2023 Legislative session.
Those who are affected are generally condominium and cooperative associations with buildings three stories or higher. § 553.899(3).
The WHAT that must be done are mandatory structural inspections and reserve studies. Finding that structural integrity is “of paramount importance” to avoid threats to public, safety, health or welfare. § 553.899(1). The Legislature defined a “milestone inspection” as:
… a structural inspection of a building, including an inspection of load-bearing walls and the primary structural members and primary structural systems as those terms are defined in s. 627.706, by a licensed architect or engineer authorized to practice in this state for the purposes of attesting to the life safety and adequacy of the structural components of the building and, to the extent reasonably possible, determining the general structural condition of the building as it affects the safety of such building, including a determination of any necessary maintenance, repair, or replacement of any structural component of the building. The purpose of such inspection is not to determine if the condition of an existing building is in compliance with the Florida Building Code or the fire safety code.
- 553.899(2)(a). Integral to the process is another definition “substantial structural deterioration” which is defined as:
… substantial structural distress that negatively affects a building’s general structural condition and integrity. The term does not include surface imperfections such as cracks, distortion, sagging, deflections, misalignment, signs of leakage, or peeling of finishes unless the licensed engineer or architect performing the phase one or phase two inspection determines that such surface imperfections are a sign of substantial structural deterioration.
The new law mandates two levels, or “phases” of milestone inspections. These are identified as:
- Phase 1. A visual inspection which must include “major structural components of a building.”
- Phase II. This is triggered if there is any sign of substantial structural deterioration, note the definition above. A Phase II may include destructive testing, and is 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 program for fully assessing and repairing distressed and damaged portions of the building.
The WHEN is the deadline for these milestone inspections which depends on two factors, age and location.
- Condominium and cooperative buildings that are three stories in height must complete the milestone inspection by of the end of the year in which the building reaches thirty years of age, and every ten years thereafter.
- If the condominium or cooperative building is located within three miles of a coastline, then the milestone inspection must occur by the end of the twenty-fifth year, and every ten years thereafter.
The age of a building calculation commences upon the issuance of a certificate of occupancy. § 553.899(3). If a condominium or cooperative association receives written notice from its local enforcement agency, then there is 180 days to complete a milestone inspection. § 553.899(6).
Recognizing that there are many buildings over thirty years old, to avoid a pile up of activity there are some transition dates. If a condominium or cooperative building certificate of occupancy was issued on or before July 1, 1992, then the initial milestone inspection deadline is extended to December 31, 2024. § 553.899(3).
There are some exceptions. The focus is the building’s use: single family, two family and three family dwellings with three or fewer habitable stories above ground. § 553.899(3). Note the distinction of habitable stories for the exception, but not otherwise. Thus, a story that is solely for parking, or as in the Keys where sometimes the lowest story is not habitable, if there are only two stories with living area, if for three families or less, may be excepted. On the other hand, a condominium or cooperative building with four or more residents with a first floor that is parking and only two habitable stories above would still be required to have milestone inspections.
MILESTONE INSPECTION REPORT AND SUMMARY
Burying a bad news milestone inspection report will be difficult, if not impossible by design. Presumably the report should be reviewed by the officers and directors and management. They should then consider corrective action, including timing and funding.
Just in case, checks and balances are incorporated into the new law. The inspecting engineer or architect’s signed and sealed milestone inspection report is to be distributed to people who would be anticipated to have an interest ensuring that necessary work is timely undertaken and would take action if work was not properly completed: building officials and owners!
To justify action, a report must include the manner and type of inspection, identifying any substantial structural deterioration as well as the extent and recommended repairs, state if there are unsafe or dangerous conditions, recommend any remedial or preventive repair for damage but not substantial structural deterioration, and identify items requiring further inspection. To help make the crux of the report easier to digest, the inspecting engineer or architect must also provide a “summary” stating the inspection report’s material findings and recommendations to the association and the local governmental building official. § 553.899(8).
The report must be delivered to the local enforcement agency. What is the “local enforcement agency” referred to in this new law. It is defined as:
… an agency of local government, a local school board, a community college board of trustees, or a university board of trustees in the State University System with jurisdiction to make inspections of buildings and to enforce the codes which establish standards for design, construction, erection, alteration, repair, modification, or demolition of public or private buildings, structures, or facilities.
- 553.71(5). In common terms, this will be a county or municipal building department, usually not law enforcement!
Again, in an indirect effort to pressure timely repairs, the association must also distribute the inspection report to each owner, post at the condominium or cooperative, and if the association is required to post records on a website, then also posting on the website. § 553.899(9). Local authorities may enact further deadlines and penalties for failing to meet deadlines. § 553.899(10). Generally, repairs must be within one year within the report being filed. § 553.899(11).
Money is the blood of action. As The Florida Bar’s Condominium Life Safety Task Force reported, the lack of funds undermined many associations’ ability to undertake repairs. The waiver or reduction of reserve funding was a primary cause of this fault.
Thus, as an initial step, or toe forward, the new law requires condominium and cooperative associations three stories or higher to obtain a “structural integrity reserve study.” This study is defined as:
… a study of the reserve funds required for future major repairs and replacement of the common areas based on a visual inspection of the common areas.
The visual inspection portion of the structural integrity reserve study must be performed by a Florida licensed engineer or architect.
What is the deadline for this structural integrity reserve study? December 31, 2024.
What must the study report include? At a minimum, a structural integrity reserve study must:
- Identify the common areas being visually inspected;
- State the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of the common areas being visually inspected; and,
- Provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense of each common area being visually inspected by the end of the estimated remaining useful life of each common area.
718.103(25). The components to be inspected include:
- Load-bearing walls or other primary structural members.
- Fireproofing and fire protection systems.
- Electrical systems.
- Waterproofing and exterior painting.
- Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed in subparagraphs a.-i., as determined by the licensed engineer or architect performing the visual inspection portion of the structural integrity reserve study.
On, and after December 31, 2024, condominium and cooperative associations three stories or higher may not vote to provide for no reserves (no waiver!) or less than required reserves or to vote to use reserves for another purpose as it related to reserves identified in the structural integrity reserve study. § 718.112(2)(f)2. Reports must be updated every ten years. § 718.112(2)(2).
The failure to obtain a structural integrity reserve study or to complete a mandatory milestone inspection by December 31, 2024, is stated as constituting a breach of officers and directors’ fiduciary relationship to the owners. That likely was included in the law as the potential of litigation against volunteer officers and directors will be another indirect pressure to comply.
In a further effort to indirectly pressure associations to timely act, reports are to be kept as association Official Records for at least fifteen years after receipt of the report. A prospective buyer of a condominium unit is entitled to obtain copies of other condominium documents and financial information, the inspector prepared a summary of the milestone inspection report and the most recent structural integrity reserve study. §718.503; §718.504. Interestingly, a renter of a unit has a right to inspect and copy the inspection reports. §718.111(12)(c). §719.104(2)(a)(15).
The Division of Condominiums is the delegated enforcement authority concerning the “procedural completion” of milestone inspections and structural reserve studies. § 718.501; §719.501. The beginning of 2023, condominium and cooperative associations three stories or higher must provide a report to the Division of Condominium on a form to be created by the Division identifying threshold information for milestone inspection reports and thereafter update the information. §718.503(3)(a). §719.503(3)(a).
This is likely the most significant condominium association related legislation in quite some time. The speed of its passage is not necessarily positive as incongruities in text are being identified.
Condominium and cooperative associations should be prepared to quickly implement these provisions, especially for associations that are required to undertake reports and to retain engineers or architects.
A number of older associations will be facing significant repair issues. Will it be financially justified to undertake extensive repairs? Some may reconsider whether to terminate the condominium and sell! Realizing the actual expense of Florida unit ownership may be an unanticipated consequence of this situation!!
Also, this new law does not alleviate the responsibility of associations to address issues that may prevent loans from being available from Fannie Mae and Freddie Mac. In an earlier edition we reported on how the private financing sector has filled the void where the Legislature had not stepped in, seeking to require associations to complete financing questionnaires that may result in no loans being made for units in a building.
Please note that statutory citations to Chapter 718 are only for condominium associations.