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Ninety Eight lives were lost when the Champlain South Tower collapsed on June 24th, 2021 in Surfside, FL. Surfside is about a 20 minute drive North of Miami Beach, FL. The town shook and fingers were pointed in every direction for fault. After many engineers and professionals looked over the building and plans it was determined that many people were at fault, but could it be the condo associations board of directors?
The board’s responsibilities include:
Managing day-to-day affairs
The board decides on the condo association’s daily operations and votes on the long-term and short-term effects of those operations. The board also has the authority to levy assessments, maintain, repair, and replace common elements or association property.
Negotiating contracts
The board signs all contracts and ensures that board resolutions are carried out.
Ensuring compliance
The board ensures that the condo is following its rules and regulations, as well as the state’s laws.
Working with management
The board works closely with the management company if there is one.
Condo board education requirements
New board members have 90 days to complete an education curriculum approved by the State. Otherwise, board members are required to sign and submit a written certification that meets specific statutory requirements.
Who is on a condo board?
The board of directors officers include: President, Vice president, Secretary, Treasurer, Member at large. The president runs the meetings, is in charge of day-to-day business, and ensures that board resolutions are carried out.
SB 4D New Law Effective Jan 1st, 2025
Prior to this collapse Florida law stated you could waive the right to collect reserve funds for necessary future repairs. After the collapse and starting on Jan 1st of 2025 law/statute SB 4D is in effect, members of a unit owner-controlled condo association may not elect to provide no reserves or less reserves than required for the following building components: (1) the roof; (2) load-bearing walls or other primary structural members; (3) floors; (4) the foundation; (5) fireproofing and fire protection systems; (6) plumbing; (7) electrical systems; (8) waterproofing and exterior painting; (9) windows; and (10) 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 one or more of the components above, as determined by a licensed engineer or architect performing the visual inspection portion of the SIRS (structural integrity reserve study).
SIRS Report
A Structural Integrity Reserve Study (SIRS) is a reserve study that assesses a building’s current condition and future maintenance needs. It’s required by Florida Statute SB 4D to ensure that Condo Owners Associations set aside funds for the long-term maintenance and replacement of critical structural elements.
SIRS reports are typically conducted by licensed engineers or architects. They include:
Identifying common areas that are the association’s responsibility for repair, replacement, or maintenance
Components including:
Roof
Structure
Fireproofing and fire protection
Plumbing
Electrical systems
Waterproofing and exterior painting
Windows and exterior doors
And others
Condo Budget Example
Above is an actual 2023 budget for a building in Brickell. See how it says useful life, remaining life and estimated replacement cost? That is all determined from the SIRS report. Because of law/statute SB 4D they now need to collect the funds for all these items. Prior to the law they didn’t need to collect the funds until the item actually needed replacing. Now they are forced to get ahead of the problem. Proactive instead of reactive.
Why would the condo board not want to collect reserves or pay for repairing the building?
The answer is because it’s expensive, an increase in the monthly fees or a special assessment would put financial stress on a lot of owners that have lived here for many many years, therefore they just shoved it to the back of the closet and attempted to forget about the maintenance that was needed. They wanted to kick the can down the road a little bit farther so that the next owner would have to deal with paying for those issues/repairs instead of them. They were trying to save their money and make it someone else’s problem.
Today in 2024 all these buildings are playing catch-up. They are going to have to collect a lot of funds from current owners in order to satisfy the new law of having money on hand for these repairs. Imagine a building hasn’t done necessary repairs on a roof or stucco for 30 years and they have no money set aside for the repairs. These buildings are massive and construction costs are at an all time high. Roofs, stucco, windows all cost millions of dollars so now they need to raise this capital through a special assessment from the current owners in order to meet the state law of having all these items repaired and replaced by 2025. You as an owner will have to pay your fair share of this cost, and it’s likely going to be extremely expensive!
Special Assessments
Special assessments are when the condo association does not have enough money on hand to fix or replace whatever is needed. So they issue a capital call to all the owners. The owners pay a prorated amount of the total money needed based on square footage of their unit. So the smaller the unit the smaller your special assessment will be. The bigger the unit the more expensive your special assessment will be. If there’s a total of 100,000 sq foot of space in a building and it’s broken down into 3 separate units, one unit at 75,000 sq ft, one unt at 20,000 sq ft and one unit at 5,000 sq ft it wouldn’t make sense for the 5,000 sq ft unit to pay as much as the bigger units. The 5,000 sq ft unit would pay their prorated share of the amount needed.
How much will your special assessment be, you ask? It totally depends on your building and how well it was run prior to the new law coming into effect. The older the building is the larger the special assessment will likely be. I’ve seen one as large as $40,000 on a $450k 600 sq ft condo on Brickell Key at the building Brickell Key One.
HOA Fee Increases
A massive increase in monthly hoa fees is going to happen as well. How can these fees get any higher you ask, because they are already super high. Well if they have to budget for future repairs that means the money they set aside is going to need to be a lot more than what they’re currently setting aside. If they go from setting aside $0 for the flooring repair and the flooring costs $2 Million for the whole building and last 10 years. You take $2 million divided by 10 years and that’s $200,000 extra per year that needs to be set aside. Now thats just for the floors multiply that by the multiple line items the SIRS report covers (Listed Above) Therefore it’s going to result in a large increase in monthly HOA Fees.
The Future
After 2025 since the new law goes into effect the likelihood of a special assessment will significantly decrease for all condo owners in Florida. This is because state law requires the condo associations to collect and have money on hand for future repairs. They have to collect money, they can no longer vote to wait until it needs repairing and do one big massive special assessment.
The future is benefiting off your expenses as you get smacked with hefty special assessments and fee increases. I would highly consider selling your condo before the condo association releases notice of any special assessments. There’s a critical point when it comes to selling condos in this current market and that is to sell before they levy the special assessment because once it’s levied you have to disclose it to the new buyers of your condo. When a buyer hears a $20,000 special assessment is coming they typically run away from the condo instead of moving forward with the purchase. Then you as the seller are stuck having to pay the special assessment in order to sell the unit because no owner wants to buy a condo with a special assessment on it.
Take Action Now!
That being said if you have fear your condo is going to levy a large special assessment or have a huge fee increase fill out the form below so we can get you a FREE, NO Pressure Valuation. This valuation will tell you how much your condo is worth and we will even take it one step further and send you a Free Net Sheet showing you how much you will walk away with after all fees are taken out of the sale proceeds.
