This is the second installment of my annual legislative review for 2024. The first segment looked at changes to the condominium laws regarding director education, mandatory website requirements, new board meeting procedures, and the addition of criminal penalties for certain aspects of condominium statute violations.
Today we will look at more changes to the condominium laws, which became effective July 1, 2024.
Structural Integrity Reserve Study (“SIRS”). There were not any significant substantive changes to this law in 2024. For condominiums operating buildings of 3 stories or more, associations must, in general, have the SIRS completed by December 31, 2024.
The new law states that within 45 days after receiving the structural integrity reserve study, the association must distribute a copy of the study to each unit owner or deliver to each unit owner a notice that the completed study is available for inspection and copying upon a written request. Distribution of a copy of the study or notice must be made by United States mail or personal delivery, or by electronic transmission to the e-mail address or facsimile number provided to fulfill the association’s notice requirements to unit owners who previously consented to receive notice by electronic transmission.
Within 45 days after receiving the structural integrity reserve study, the association must also provide the Division of Florida Condominiums, Timeshares and Mobile Homes with a statement indicating that the study was completed and that the association provided or made available such study to each unit owner. The Division is required to set up a website containing the reporting form to be filled out. That website is not, to my knowledge, set up yet.
Year End Financial Reports. In general, condominium associations must provide (or provide notice of availability of) year-end financial statements no later than 120 days from the close of the fiscal year.
The level of required report is as follows, based on revenue: Associations with total annual revenues of $150,000 or more, but less than $300,000, must prepare “compiled” financial statements. Associations with total annual revenues of at least $300,000, but less than $500,000, must prepare “reviewed” financial statements. Associations with total annual revenues of $500,000 or more must prepare “audited” financial statements. Associations with total annual revenues of less than $150,000 must prepare a report of cash receipts and expenditures.
Boards have the discretion to obtain higher level financial reports than the default minimums set by law. The law also allows unit owners to take a vote, prior to the end of the fiscal year, to “waive down” to a lower-level financial report. For a short period of time, the law limited waiver votes to 3 consecutive years, but that was repealed several years ago.
The new statute provides “an association may not prepare a financial report pursuant to this paragraph for consecutive fiscal years.” This a poorly written piece of the new law. The apparent “intent” is that statutory default level reports will be required at least every other fiscal year.
For example, if a condominium association has a $700,000.00 budget, it would default to the requirement for a year-end audit. However, a majority of the owners could vote to “waive down” to a review, a compilation, or a statement of cash receipts and expenditures. Under previous law, this “waive down” vote could be taken every year. Under this law, if this is what it means, the “waive down” vote cannot be taken in consecutive fiscal years meaning that our hypothetical association would be required to have an audit at least every other year. If this is what the new statute means, this is a big change.
In addition to being poorly written, the amendments to this part of the statute are ill-conceived. On the theory that most unit owners are not interested in reading lengthy technical financial documents, previous law provided that a condominium association could either send the statements to the owners or send them a notice letting them know that they could ask for a copy free of charge. Now, the association must do both. Setting aside why someone would ever ask to have something sent to them that they already have, this will add cost, administrative burden, and the opportunity for innocent technical mistakes.
Next week we will wrap up review of the condominium statute changes and then move to some significant changes also made to the homeowners’ association statute.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.