On June 9, 2023, Governor DeSantis signed Senate Bill 154 into law. The legislation went into effect that day. SB 154 relates to milestone inspections, structural integrity reserve studies, reserve funding and a few other items. SB 154 further revised 2022 revisions to Chapters 553, 718 and 719.
Most of the revisions relate to residential condominium and cooperative buildings that are 3 stories in height or more, but some impact on all condominium and cooperative buildings, regardless of height.
Please refer to our “2022 Legislative Update: Structural Inspections, Reserve Studies, Reserve Funding and Roofing” for an analysis of the requirements in Chapters 553, 718 and 719, the 2023 revisions to which are summarized in this article.
REVISIONS TO 2022 LEGISLATION REGARDING MILESTONE INSPECTIONS, STRUCTURAL INTEGIRY RESERVE STUDY AND RESERVE FUNDING
1. Residential Condominiums and Cooperative Buildings
SB 154 provides that the milestone inspection, structural integrity reserve study (“SIRS”) and SIRS component reserve funding requirements are applicable to residential condominium and cooperative buildings that are 3 stories in height or more. Strictly commercial condominium and cooperative buildings are not subject to those requirements.
- 2. Milestone Inspection Deadline
Distance from the coastline is no longer relevant to the deadline to perform a milestone inspection.
The milestone inspection must be performed by December 31st of the year in which the building reaches 30 years of age, based upon the date the certificate of occupancy (“CO”) was issued, and every 10 years thereafter, provided that:
If a building reached 30 years of age before July 1, 2022, the building’s initial milestone inspection must be performed before December 31, 2024.
If a building reached or reaches 30 years of age on or after July 1, 2022, and before December 31, 2024, the building’s initial milestone inspection must be performed before December 31, 2025.
If the date of issuance for the CO is not available, the date of issuance of the building’s CO shall be the date of occupancy evidenced in any record of the county or municipal building official.
The applicable county or municipality may determine that local circumstances, including environmental conditions such as proximity to salt water, require that a milestone inspection must be performed by December 31 of the year in which the building reaches 25 years of age, and every10 years thereafter. However, the county or municipality may extend the deadline if the association has signed a contract with a licensed Florida engineer or architect and the inspection cannot reasonably be completed before the deadline or other circumstance are present to justify an extension.
Notwithstanding any other applicable deadline, the association must complete “phase one” of the milestone inspection within 180 days after receiving written notice from the county or municipality pursuant to Section 553.899(5), F.S. that the milestone inspection is required.
- 3. Milestone Inspection Report Performed Prior to July 1, 2022
The county or municipality may accept a milestone inspection report prepared by a licensed Florida engineer or architect before July 1, 2022 if the inspection and report substantially comply with the requirements of the statute.
- 4. Who Can Perform Milestone Inspection Services
The milestone inspection services may be provided by a team of professionals with a licensed Florida engineer or architect acting as a registered design professional in charge of all work and reports signed and sealed by the appropriate qualified team member.
- 5. Disclosure to Owners and to County or Municipality
The association must notify all owners that the milestone inspection is required, within 14 days of receipt of written notice to that effect from the county or municipality.
Within 45 days after receiving the milestone inspection “summary report” from the licensed Florida engineer or architect, the association must provide it to all owners, either by mail or by email to those owners who have given written consent to receive official notices via email. The summary report must also be posted in a conspicuous place on the condominium or cooperative property and on the association’s website, if the association is required by law to have a website.
If a phase two milestone inspection is required, within 180 days after submitting a phase one inspection report, the licensed Florida engineer or architect performing the phase two inspection must submit a phase two progress report to the local enforcement agency with a timeline for completion of the phase two inspection.
- 6. Structural Integrity Reserve Study (“SIRS”)
The SIRS aspects of the 2022 legislation have been modified in the following manner:
“Floor” and “Foundations” have been deleted from the list of components that must be included in a SIRS. “Structure”, “Primary Structural Systems” and “Exterior Doors” have been added. However, the SIRS must address only those components that are the association’s responsibility pursuant to the declaration. Accordingly, the SIRS need not include items such as windows and doors if they are the owner’s responsibility pursuant to the declaration.
The 2022 legislation requires that an association with building(s) of 3 stories or more must have a SIRS completed every 10 years and that associations existing on or before July 1, 2022, which are controlled by owners other than the developer, must have a structural integrity reserve study completed by December 31, 2024. However, pursuant to the 2023 legislation, an association (i.e., a residential association) that is required to complete a milestone inspection on or before December 31, 2026, may complete the SIRS simultaneously with the milestone inspection. In no event may the SIRS be completed after December 31, 2026.
At a minimum, a SIRS must identify each item of the property being visually inspected, state the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of each item of the property being visually inspected, and provide a reserve funding schedule with a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense of each item of condominium property being visually inspected by the end of the estimated remaining useful life of the item. The SIRS may recommend that reserves do not need to be maintained for any item for which an estimate of useful life and an estimate of replacement cost cannot be determined, or the SIRS may recommend a deferred maintenance expense amount for such item. The SIRS may recommend that reserves for replacement costs do not need to be maintained for any item with an estimated remaining useful life of greater than 25 years, but the SIRS may recommend a deferred maintenance expense amount for such item.
The visual inspection portion of a SIRS may be performed by a licensed Florida engineer or architect or a person certified as a reserve specialist or professional reserve analyst by the Community Associations Institute or the Association of Professional Reserve Analysts.
If the milestone inspection required by Section 553.899, F.S. or an inspection completed for a similar local requirement, was performed within the past 5 years and meets the requirements of the statute, such inspection may be used in place of the visual inspection portion of the structural integrity reserve study.
Developers are no longer required to obtain a SIRS prior to turnover (the turnover inspection report is sufficient).
Requires the Florida Building Commission to adopt rules regarding inspection criteria, testing protocols, and standardized inspection and reporting forms relating to milestone inspections by December 31, 2024.
7. Reserve Funding
Any budget adopted on or after December 31, 2024 must include the funding specified in the SIRS. Owners cannot vote to waive or reduce funding of the SIRS reserves. The legislation appears to permit the pooling method of funding SIRS component reserve items.
Owners in buildings 3 stories or higher may still vote to waive or reduce reserve funding for non-SIRS component reserve items.
Owners may vote to waive or reduce reserve funding for one or 2-story buildings.
The voting requirement to waive or reduce reserve funding for non-SIRS component reserve items is a majority of the voting interests – which means a majority of the total voting interests. This voting requirement is an increase from the current requirement of a majority of the voting interests that vote, provided a quorum is established.
Provides that reserve contributions may be adjusted to account for inflation.
Requires presuit mediation pursuant to Section 720.311, F.S. if the board of directors fails to: (1) obtain a milestone inspection; (2) obtain a SIRS; and (3) fund SIRS reserves
Reserve funding only applies to items that are an association responsibility.
Items with a remaining life of more than 25 years do not have to be funded.
Additional Provisions of SB 154
Excludes insurance premiums from the 115% computation for budget increases (i.e., increases in recurring operating costs that can lead to an owner petition to have a vote on a substitute budget).
Exempts owners who are insured by Citizens Property Insurance Corporation from purchasing flood insurance as a condition for maintaining policies that do not provide coverage for the peril of wind and policies that provide coverage under a condominium unit owners form.
Requires the board of directors to perform any required maintenance identified in the turnover inspection report.
Requires additional disclosures on sales.