By Anastasia Kolodzik, PRA, RSS, CAM / Published November 2022
Everyone is talking about the new laws, and everyone is concerned. The new SB 4-D legislation that passed in May has been the “hot topic” of so many conversations; some good, some not so good. So, let’s break it all down and get a handle on this new requirement.
As SB 4-D states,
“Structural integrity reserve study” means a study of the reserve funds required for future major repairs and replacement of the common elements based on a visual inspection of the common elements. A structural integrity reserve study may be performed by any person qualified to perform such study. However, the visual inspection portion of the structural integrity reserve study must be performed by an engineer licensed under chapter 471 or an architect licensed under chapter 481. 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.
SB 4-D further notes,
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: a. Roof. b. Load-bearing walls or other primary structural members. c. Floor. d. Foundation. e. Fireproofing and fire protection systems. f. Plumbing. g. Electrical systems. h. Waterproofing and exterior painting. i. Windows. 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.
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.
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.
There are now two different reserve studies. The traditional reserve study, sometimes referred to as a “budgeting reserve study,” is the report we have been producing for the last 20 or so years and is still a valuable tool. Not only does this product assist in the budgets, but also it prepares the board and unit owners for the coming year and gives a schedule for future replacements and repairs. It can also assist in preparation for the structural integrity reserve study. Many items which have been included on the traditional reserve study will be included in the new structural integrity reserve study. However, the statute has included some items that were not included on any traditional reserve study.
The statute has clearly outlined the list of items to be included. These components must be fully funded. All the options for partially funding these items have been removed.
Additionally, these components must be addressed by building. What this means is each building will have a separate listing of structural components within the report. This will be helpful in cases of phased developments and multi-building developments with replacement in different cycles. This will also give boards a chance to evaluate fully the task ahead of them.
The process of inspection has also changed. The new statute states the visual inspection must be done by an engineer or architect. Therefore, the new law has forced a merging between engineer/ architect and reserve analyst. However, these two professions are apples and oranges in one basket. In this atmosphere, they must work hand in hand to get the job done. So, what are the steps and how do you get there? The first thing to be done is to acquire an engineering study using the list of components in the statute. Once that is done, the engineer’s report is transferred to the reserve analyst to formulate the structural integrity reserve study. This all must be done by December 31, 2024. It sounds like there is plenty of time, but there is not. Most engineering firms operate on average six months out. There are 1.8 million condominiums in Florida who will need this done to be compliant, and fewer and fewer engineers and qualified reserve analysts to perform the task. So, the sooner an association can get it scheduled, the better.
There are also repercussions. 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 §718.111(1) 1061 (h). This is included in the statute to ensure boards and managers are completing their required duty.
In conclusion, the road ahead will be paved with challenges. Keep in mind as you navigate through these times the famous words of Benjamin Franklin: “When you fail to plan, you plan to fail.”
Vice President, Expert Reserve Services Inc.
Anastasia Kolodzik is vice president and oversees the reserve study department of Expert Reserve Services, which is a Florida-based, family-owned and -operated company serving all 67 counties. Anastasia works closely with board members and association managers and recognizes this as the key ingredient to preparing a proper reserve study. She has been certified by the State of Florida to teach reserve studies continuing education to community association managers. For more information, call (386) 677-8886, email firstname.lastname@example.org, or visit www.expertreserveservices.com.