Condo reforms coming: Inspections at 25 or 30 years, no waiving financial reserves

·7 min read
Gerald Herbert/AP

Florida lawmakers on Tuesday reached a deal on the most significant overhaul of Florida’s condominium laws in two decades, seeking to prevent a repeat of last year’s catastrophic collapse of Champlain Towers South in Surfside that left 98 dead.

The package of reforms, which includes statewide inspections for aging condominium buildings and requirements for condo associations to hold money in reserves to pay for repairs, was passed by the full Senate Tuesday night and is poised to be approved by the House on Wednesday.

Tweaks to the state condo law would also make developers of new buildings fund reserves before handing the keys over to condo boards, and open up board members who ignore inspection requirements to lawsuits.

The proposal emerged Tuesday afternoon as state lawmakers were in Tallahassee addressing Florida’s ailing property insurance market during a special session called by Gov. Ron DeSantis. Reforms to the state’s condo laws were not part of the agenda, but Republican leaders unveiled legislation after negotiating details behind the scenes.

“I think that there was a lot of criticism, understandably so, about us not getting the bill done during the regular session,” House Speaker Chris Sprowls, R-Palm Harbor, told reporters shortly after the bill was made public. “But I do think that the bill that we have today is significantly better than the bill we could have agreed on a couple of months ago.”

READ MORE: Surfside condo was ‘screaming’ as alarming crack formed just weeks before collapse

Five hours after the 101-page measure was filed in the House, the Senate added the condo reform proposal as an amendment to a roofing bill related to property insurance. It was approved by the Senate on a 38-0 vote. The roofing bill with the condo reforms will be considered by the House on Wednesday.

“This is not a perfect bill. It is not the perfect solution. There’s some tough love measures. But the state has a compelling interest to improve and save people’s lives that live in cooperatives and condominiums. And this will do that,” said Sen. Jason Pizzo, D-Miami, whose family lives in a condo.

No agreement reached during regular session

In March, legislators wrapped up the regular legislative session without a deal on condo reform. The Senate wanted to impose a statewide reinspection requirement for aging buildings but not a requirement to hold money in reserve to pay for repairs, fearing that people on fixed incomes wouldn’t be able to foot the bill.

The House sponsor, Rep. Danny Perez, R-Miami, declared the change unacceptable, warning that it would not help avoid tragedies like Champlain Towers South last June. He and the Senate sponsor, Sen. Jennifer Bradley, declared the effort dead for the session.

“After I witnessed the tragedy of Surfside, the number one priority for me this past session was to pass meaningful condominium reform,” Perez said Tuesday. “I have always been willing to discuss what that looks like, but I was never willing to pass legislation that did not solve the real issue, which is to ensure there is association funding to fix the problems discovered during inspections.”

READ MORE: Five things to know about the condo legislation

The deal would address that concern. It would require condominium associations to conduct reserve studies every decade to make sure they have the resources to finance needed structural repairs. Starting in 2025, they would be barred from waiving a requirement that they put money in reserves to make structural repairs, although they could continue to waive collecting reserve funds for other improvements.

There are hundreds of condo buildings in South Florida and more across the state that would need to ramp up funding quickly if the bill passes, said Roberto Blanch, a Miami-based condo attorney for Siegfried Rivera.

“That is very likely going to impart upon [condo associations] a heavy financial burden,” Blanch said. “It’s kind of like quitting smoking cold turkey. There’s not going to be any gradual step-down for these folks. … That could, in some buildings, become a very tough pill to swallow.”

There’s some time to prepare

Pizzo noted the reserve requirement will not kick in until Dec. 31, 2024.

“We don’t want any industry, any individual, any family or any entity to think that we’re displacing them and that we’re just sort of disregarding them,” Pizzo said. “There are many ways to convey value. It is not just cash out of pocket. You don’t have to get very creative or very fancy, and nobody should be worried about being displaced.”

Perez said the reserves provision was a priority.

“The reasons why I was so strung up on that is the majority of associations currently waive their reserves, which they are able to do,” he said. “But we had to hold the association’s feet to the fire, and the only way to do that was taking away their ability to waive reserves.”

Moving forward, Bradley, R-Fleming Island, said she would like to consider additional changes to the state’s condo laws, including board member education “so they understand their fiduciary relationship and they understand their role in governance.”

The bill requires structural studies and funding not only for building roofs, floors, and foundations, but also specifies inspections of crucial components such as load-bearing walls and waterproofing thought by experts to have contributed to the Champlain Towers South partial collapse.

David Haber, a condo attorney based in Miami, said that, prior to the collapse in Surfside, condo reserve studies typically included things like pool furniture, air-conditioning equipment and electrical components, “but load-bearing walls wasn’t part of it and neither was waterproofing.”

“That is, in my opinion, a direct response to what [lawmakers] saw in Surfside,” Haber said.

Champlain Towers South had just over $777,000 in reserves to pay for what was estimated by inspectors as a $16 million repair bill. Tensions between members of the condo board led to years of deferred repairs, which engineers have told the Miami Herald likely contributed to the partial collapse.

Haber, who has long advocated for reforms to state condo law, said that requiring developers to fund reserves and opening condo board members up to legal liability are also significant changes that will reverberate throughout Florida.

“Up until now, boards have slow played the 40-year inspections if you will, and slow played repairs,” Haber said. “[Lawmakers are] making this clear that, you better do these mandatory milestone inspections, or else.”

Statewide inspection requirements

The bill would also require that condos be re-certified after 30 years if they are three stories or higher, or are 25 years old and within three miles of the coast. Every 10 years after that, they would have to be re-certified again.

The statewide inspection requirement is necessary to ensure that “buildings are structurally sound so as to not pose a threat to the public health, safety or welfare,” the bill says.

In Florida, there are an estimated 2 million people living in more than 912,000 condominium units that are 30 years old or older. Of the 1.5 million condo units in Florida, another 131,773 are 20 to 30 years old, and more than 105,000 condo units are more than 50 years old.

But under current law, only Miami-Dade and Broward counties and some individual cities require regular inspections of condos to ascertain their structural integrity. The proposed legislation would change that.

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.

“While we can never replace the 98 lives we lost in the collapse of the Champlain Towers South, we can honor their memory with strong reforms that will better protect condo owners and residents moving forward,” Senate President Wilton Simpson said in a statement.

DeSantis’ office said the legislative proposal is a “welcomed step to ensure that such a tragedy, like the community of Surfside experienced last year, will never happen again.”

“As the governor has mentioned, there are ongoing federal and local investigations into the finite details of the Champlain Towers South disaster. When those investigations are complete, we will review their findings and carefully consider any recommendations for further reforms based on those findings,” DeSantis’ press secretary Christina Pushaw said in a statement. “The safety of Floridians is an important priority for the governor.”

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