We all know by now the myriad of new safety laws condos that are 3 stories or more are required to follow. They include mandatory fire sprinklers or an engineered life safety system (for buildings 75 feet or higher only), a Phase One Milestone Inspection after 30 years and every ten years thereafter (25 years if the building is on the coast), a likely Phase Two Inspection which will result in required repairs to the structure and of course structural integrity reserve studies performed by an architect or engineer and the mandatory full funding of reserve accounts.
There’s actually more to know.
OFFICIAL RECORDS TO INCLUDE AND BE POSTED ON THE ASSOCIATION’S WEBSITE:
All audits, reviews, accounting statements, structural integrity reserve studies, and financial reports of the association or condominium. Structural integrity reserve studies must be maintained for at least 15 years after the study is completed.
A copy of the inspection reports for the milestone inspections and the structural integrity reserve studies and any other inspection report relating to a structural or life safety inspection of the condominium property. Such record must be maintained by the association for 15 years after receipt of the report.
NO LONGER IS THERE THE ABILITY
TO WAIVE RESERVES OR USE THEM FOR OTHER PURPOSES
It was always ridiculously easy to waive the funding of the reserve account. All it took was a lousy majority of a quorum. Those days are now over and reserve accounts must be fully funded, like it or not.
The same rule finally applies to developers. Before turnover of control of an association by a developer to unit owners other than a developer under 718.301, the developer-controlled association developer may not vote the voting interests allocated to its units to waive the reserves or reduce the funding of the reserves.
You can no longer vote to use reserves set aside for one category to be used to repair another category. Effective December 31, 2024, members of a unit-owner controlled association may not vote to use reserve funds, or any interest accruing thereon, that are reserved for items listed in paragraph (g) for any other purpose other than their intended purpose.
Structural integrity reserve study.
1. An association must have a structural integrity reserve study completed at least every 10 years after the condominium’s creation for each building on the condominium property that is three stories or higher in height which includes, at a minimum, a study of the following items as related to the structural integrity and safety of the building:
b. Load-bearing walls or other primary structural members.
e. Fireproofing and fire protection systems.
g. Electrical systems.
h. Waterproofing and exterior painting.
j. 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.
2. Before a developer turns over control of an association to unit owners other than the developer, the developer must have a structural integrity reserve study completed for each building on the condominium property that is three stories or higher in height.
3. Associations existing on or before July 1, 2022, which 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 in height.
BREACH OF FIDUCIARY DUTY – THIS IS SCARY
4. If an association fails to complete a structural integrity reserve study pursuant to this paragraph, such failure is a breach of an officer’s and director’s fiduciary relationship to the unit owners under s. 718.111(1). If you’re an officer or director, this new law should scare you to death. If you fail to do the reserve study, you have automatically breached your fiduciary duty. This could potentially result in individual liability against a director should the failure to do the reserve study result in collapse or injury.
Mandatory milestone inspections.—If an association is required to have a milestone inspection performed pursuant to s. 553.899, the association must arrange for the milestone inspection to be performed and is responsible for ensuring compliance with the requirements of s. 553.899. The association is responsible for all costs associated with the inspection. If the officers or directors of an association willfully and knowingly fail to have a milestone inspection performed pursuant to s. 553.899, such failure is a breach of the officers’ and directors’ fiduciary relationship to the unit owners under s. 718.111(1)(a). Again, If you’re an officer or director, this new law should scare you to death. If you fail to do the milestone inspection, you have automatically breached your fiduciary duty. This could potentially result in individual liability against a director should the failure to do the reserve study result in collapse or injury.
Next week, we’ll discuss other new laws that you definitely need to know.