“Legal Recap 2022” – FCAP Managers Report

“Legal Recap 2022” – FCAP Managers Report

The 2022 legislative session may end up being one of the most impactful in terms of legislative changes to the Condominium Act since the statute was first enacted in 1963. This is a result of Senate Bill 4-D (SB 4-D), codified as Chapter 2022-269, Laws of Florida, which became effective on May 26, 2022.

The bill itself is 88 pages long. This article will focus on the following changes: (1) the milestone inspection; (2) the structural integrity reserve study; (3) the mandatory reserve component; and (4) mandatory reporting to the Division of Condominiums, Timeshares, and Mobile Homes. This article is not intended to be a complete overview of the entire statute, and all condominium and cooperative associations should consult with their legal advisors regarding the requirements of the new law.

It should be noted that there are a number of technical glitches with the statute, and there will likely be efforts to address these issues in a future legislative session. However, associations should not expect significant changes to the legislation. There may or may not be some effort to ease up on the reserve funding requirements due to market sensitivity and affordability issues, but that is far from certain.

Milestone Inspection:

  • All condominium and cooperative buildings of three stories or more in height are required to have a “milestone inspection.” (There is an exception for single-family, two-family, or three-family dwellings with three or fewer habit-able stories above ground).
  • For any building where the certificate of occupancy (CO) was issued on or before July 1, 1992, the initial milestone inspection must be performed by December 31, 2024.
  • For any building where the CO was issued after July 1,1992, the initial milestone inspection must be completed by December 31 of the year in which the build-ing reaches 30 years of age, based on the date of the CO, and every 10 years thereafter. However, if the building is within three miles of the coastline, the milestone inspection must be completed at 25 years from the CO and every 10 years thereafter.
  • The new law also states that the “local enforcement agency,” upon determining that a building must complete the milestone inspection, must send out a written notice to the association by certified mail, and within 180 days of receipt of the notice, the association must complete “phase one” of the milestone inspection. This seems to conflict with the specific deadlines mentioned in the statute based on the age of the building, and it remains to be seen how the local enforcement agencies will interpret this section or whether they will use this language to require some buildings to provide the milestone inspection at an earlier date.
  • The milestone inspection must be performed by an engineer or architect licensed to practice in Florida.
  • There are two phases of the milestone inspection:
    • Phase One: The engineer or architect must conduct a visual examination of habitable and non-habitable areas of a building, including the major structural components of a building, and provide a qualitative assessment of the structural conditions of the building. If the engineer or architect finds no sign of substantial structural deterioration to any building components under visual examination, phase two inspection is not required.
    • Phase Two: A phase two inspection must be performed if any substantial structural deterioration is identified in the phase one inspection. A phase two inspection may involve destructive or nondestructive testing at the “inspector’s” direction.
  • The association must do the following:
    • Distribute a copy of the summary of the inspection report to each unit owner, regardless of findings, by U.S. mail, personal delivery, or email (to those owners who have consented to email notice).
    • Post a copy of the summary of the inspection report on the condominium/cooperative property.
    • Publish the full report and summary on the association’s website, if the association is required to have a website.
    • Maintain inspection reports relating to a structural or life safety inspection of condominium/cooperative property as official records for 15 years after receipt.

Structural Integrity Reserve Study (SIRS):

  • An association must have a SIRS completed every 10 years after the condominium’s/cooperative’s creation for each building that is three stories or more in height. For associations existing on or before July 1, 2022, and which are owner controlled, they must complete the SIRS by December 31, 2024, for each building that is three stories or more in height.
  • The SIRS may be performed by “any person qualified to perform such study.” However, the visual inspection portion of the SIRS must be performed by a licensed engineer or architect.
  • The SIRS must include at a minimum a study of the following items as related to the structural integrity and safety of the building: (1) Roof; (2) Load-bearing walls or other primary structural members; (3) Floor; (4) Foundation; (5) Fireproofing and fire protection systems; (6) Plumbing; (7) Electrical systems; (8) Waterproofing and exterior painting; (9) Windows [Note: the statute does distinguish situations where the windows are the maintenance, repair, and replacement responsibility of the unit owner under the declaration]; and (10) 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 negatively affects the items listed above, as determined by the engineer or architect performing the visual inspection portion of the structural integrity reserve study.
  • The SIRS must be maintained for at least 15 years after the study is completed.

Mandatory Reserves for Structural Integrity Reserve Study (SIRS) Items

  • Effective December 31, 2024, members of a unit owner-controlled association may not determine to provide no reserves or less reserves than fully funded for items required to be included in the SIRS. The law does not specifically exempt one- and two-story buildings but does not affirmatively include them either.
  • 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 required to be included in the SIRS for any other purpose other than their intended purpose.

Reporting to the Division of Condominiums, Timeshares, and Mobile Homes (“Division”)

  • On or before January 1, 2023, condominium/cooperative associations existing on or before July 1, 2022, must provide the following information to the Division:
    • The number of buildings on the condominium/cooperative property that are three stories or higher in height.
    • The total number of units in all such buildings.
    • The addresses of all such buildings.
    • The counties in which all such buildings are located.
  • The Division must complete a list of the number of buildings on condominium/cooperative property that are three stories or higher in height, which is searchable by county, and must post the list on the Division’s website.

Recent Case Law
Hayslip v. U.S. Home Corporation, 336 So. 3d 207 (Fla. 2022): A deed covenant requiring the arbitration of any dispute arising from a construction defect runs with the land and is binding upon a subsequent purchaser of the real estate who was not a party to the deed.

Isola Bella Homeowners Ass’n, Inc. v. Clement, 328 So. 3d 1132 (Fla. 4th DCA 2021): When a case is voluntarily dismissed following a court-approved settlement agreement, depending upon the outcome of the settlement, there can still be a prevailing party for purposes of attorney’s fees.

De Soliel South Beach Residential Condominium Association, Inc. v. De Soliel South Beach Association, Inc., 322 So.3d 1189 (Fla. 3rd DCA 2021): Amendments to the condominium statute do not apply retroactively without express statutory intent. Voting rights of delinquent owners cannot be suspended where the declaration of condominium did not authorize the suspension of voting rights for delinquent owners, was recorded prior to the 2010 amendment to FS 718.303 permitting an association to suspend voting rights of delinquent owners, and did not incorporate future amendments to the Condominium Act.

Pash v. Mahogany Way Association, Inc., 310 So 3rd 430 (Fla. 4th DCA 2021): The appellate court reversed the trial court’s entry of summary judgment in a lien foreclosure case in favor of the association based upon what the appellate court perceived as a failure of proof. The appellate court noted that the affidavits and material submitted with the motion for summary judgment did not indicate that the association had properly adopted the budget on which the assessment was predicated.

New Horizons Condominium Master Association, Inc. v. Harding, 336 So. 3d 796 (Fla. 3d DCA 2022): Reaffirms the importance of the “business judgment” rule for association boards and also reversed an adverse summary judgment for failure to plead it as an affirmative defense, finding that the association need not plead it.

Riverside Ave. Property, LLC v. 1661 Riverside Condominium Association, Inc., 325 So.3d 997 (Fla. 1st DCA 2021): The owner’s cause of action for declaratory judgment did not accrue until there was a need for declaration upon a present set of facts creating an adverse and antagonistic interest about the declaration of community covenants. Thus, the statute of limitations did not begin running until then. The trial court’s ruling that the owner’s cause of action accrued on the date the owner bought its property interest, and was thus time-barred, was error.

To read the original FCAP Managers Report article, please click here.