Three Questions Community Association Decision-Makers Should Consider about Florida’s Condominium Safety Laws

By Rebecca Prieto / Published August 2023

In May 2022 Florida passed SB 4-D, a safety regulation for condominium and cooperative association buildings. Subsequently, on June 9, 2023, Florida passed SB 154 to provide additional clarity to SB 4-D. These condominium safety laws center around inspection requirements, mandatory reserves, and more transparency for unit owners and prospective unit owners on information regarding the condition of the buildings. For associations that have been waiving or partially funding their reserves, the laws may result in large budgetary increases and create a financial burden on unit owners.

Florida’s condominium safety laws at a glance

SB 4-D and SB 154 primarily focus on the following requirements.

Mandatory building inspections

Building inspections are required for community buildings in all 67 counties in Florida that are three or more stories in height. This includes mandatory “milestone inspections” of structural integrity by an architect or engineer when a building turns 30 years old and every 10 years thereafter. Local officials can require inspections after a building turns 25 years old, depending on local circumstances, such as environmental conditions or proximity to salt water.

Structural integrity reserve study (SIRS)

Associations are required to complete a structural integrity reserve study every 10 years for each building in an association that is three stories or higher.

Adequately funded reserves

For a budget adopted on or after December 31, 2024, no unit owner-controlled condominium or cooperative can vote to waive or partially fund the reserves. All community associations, regardless of size or location, must adequately fund reserves pursuant to the reserve study required.

Transparent inspection report results

Another requirement is mandatory transparency to unit owners. The inspection report results must be provided to local building officials and the association and requires an inspector-prepared summary to be provided to unit owners.

Community association decision-makers should consider these three questions as Florida’s condominium safety laws go into effect.

1. What should property managers or associations do now regarding the condominium safety laws?
   At Popular Association Banking, we have been advising our clients to engage a structural engineer and a reserve study analyst as soon as they can. Such studies will help estimate the additional costs and the reserve amounts needed to meet the condominium safety laws. The demand for such projects is also likely to increase in the coming months.
   With a better-defined estimate amount, associations can focus on developing a budget planning strategy to fund reserves without having to pass larger assessments to their members. Such planning will also help identify financial gaps and financial solutions to help address those.
2. What funding options are there to consider short-term?
   Given the impact of these changes, it is important to communicate with your association banker early and often. In those conversations, consider external factors that are outside of your control—inflation, and rising costs of labor and supplies, as well as an anticipated spike in demand for the very services your association is considering.
3. What about the long-term financial strategy?
   Make certain your association budget properly allocates funds for reserves, repairs, insurance, and other required expenses. And then develop contingency plans for the unexpected.

Consider a contingency line of credit as a lending option

For example, consider a contingency line of credit to help with potential expenses, including insurance deductibles to facilitate the immediate funding of any needed repairs. We are seeing a lot of such projects going over budget, requiring additional labor and insurance; having a contingency line of credit in place can help alleviate a financial burden without the association having to take out a new loan.

We are also seeing repair projects exceeding established budgets, including contingency funds. A contingency line of credit can help diminish a potential slow-down in the construction progress and eliminate the need for an immediate short-term special assessment, thereby providing another alternative to complete the project.

Reexamine your financial priorities

Revisiting your budget plans and working closely with your banker to address your association’s priorities and challenges will remain critical over the next few months. Your association banker’s knowledge of
available options and guiding you through them will offer peace of mind for property managers, board members, and the unit owners going forward.

This article is an updated version of an article that previously appeared in the South Florida Business Journal.

The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or professional advice. You should seek the advice of a professional advisor and/or legal counsel to address your specific needs regarding the issues related to your situation. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content.

Rebecca Prieto, Senior Commercial Banker

Popular Association Banking

     Rebecca Prieto is a senior commercial banker with Popular Association Banking, a division of Popular Bank and a nationwide leader in providing financial products and services to community associations. You can reach Rebecca at rprieto@popular.com or visit popularassociationbanking.com. Popular Bank is the mainland subsidiary of Popular Inc. (Nasdaq: BPOP), which ranks among the top 50 U.S. banks by assets. Popular Inc. brings nearly 130 years of success in banking, driven by integrity and values. At Popular Bank we leverage our financial expertise to enable customers to focus on what matters most. We have branches in New York, New Jersey, and Florida, and provide 24/7 digital banking solutions and access to 55,000 ATMs through the Allpoint network. Popular Bank and its affiliates are not affiliated with ATM National LLC. Allpoint is a registered trademark of ATM National LLC.