As Florida insurers attain insolvency at alarming rates, the Florida Senate Appropriations Committee passes Senate Bills 2-D and 4-D in the hope of stabilizing the struggling property insurance market. Parts I and II of Forte’s Florida Legal Updates addressed contractors and insurance fraud, aging roofs, and deductibles. This paper will address Florida’s aging multi-family housing infrastructure.

Following the tragic 12-story Surfside Condominium collapse in 2021, politicians, Florida residents, and political action advocates anticipate that this reform will help improve safety for condo-dwelling Floridians and stabilize the struggling property insurance market.  Florida governor Ron DeSantis is referring to these two bills as “the most significant reforms” in insurance policy in generations. What this looks like and how will it affect condo unit owners, insurers, and condominium cooperative owners will be summed up in the following:

• Increased frequency of inspections
• Safety reserve funding
• Making safety reports available to the public

The first noteworthy provision of SB 4-D is that, prior to this bill, Florida building codes only required condominiums to have a structural safety inspection every 40 years. As it was built in 1981, the Surfside Condominium building had just reached 40-years-of-age when it collapsed in June of 2021. According to the Tampa Bay Times, nearly 600,000 of Florida’s 1.5 million condos are currently at least 40 years old.

The new bill will require condos greater than three stories high to conduct, at their own cost, a structural integrity inspection at 30 years instead of 40. If, however, the structure is located within 3 miles of the coastline, the inspection will be done at 25 years, due to the corrosive effects of seawater. The Surfside Condominiums were considered “seaside” condominiums. This reform would have required an inspection of Surfside 15 years prior to the horrific June 24 collapse in 2021.

As many of us know, Surfside did engage an expert to inspect the property, and a host of warning signs were identified and subsequently deferred primarily due to cost. Therefore, the second notable point about SB 4-D addresses how this new bill will prevent building owners and owner-led associations from ignoring these investigative findings.

SB 4-D is now requiring all condominiums with three or more stories to conduct, at their own cost, a “structural integrity reserve study” performed by a state-licensed Architect or Engineer every ten years after the 25 or 30-year inspection.  The notion is that condo associations and unit owners are given maintenance and repair budgets and forced to comply with establishing reserve funding accordingly. These reserve inspections must include the roof, load-bearing walls, floor, foundation, fireproofing and fire protection, plumbing, and any item with deferred maintenance or replacement cost that exceeds $10,000.

The new bill also regulates how these reserves are spent.  Spending reserves for any reason other than those outlined in the reserve studies, or not spending the funds for the purpose outlined in the study will be deemed a breach of the directors’ and officers’ fiduciary responsibilities, which could lead to being held personally liable.

In conclusion, the bill addresses disclosure to all interested parties.  In order to ensure these condition reports reach unit owners and the general public, both the 25 and 30-year investigations and the structural integrity reserve studies are to be submitted to the local building officials for review and enforcement. Additionally, all associations and managers must share the report with all unit owners in the cooperative via US Post, or if written permission is granted, via email. Finally, the report is to be posted on the property, and on the association’s website (if applicable), visibly accessible to all who enter or wish to learn more about the property’s condition.

Forte Structural Engineer, Luis Torres notes, “This is a team effort. A well-thought-out design and good construction are a critical start to the structure’s integrity; however, recurrent inspections and proper maintenance are crucial to keeping it safe and sound. Any great engineered design model will be superseded by the real-life behavior of a structure which is affected by many different factors during its lifespan.”

Unfortunately, Florida is unlikely to recover immediately from this tragedy. The new bills allow Floridians to fully comply by the end of 2024. Florida condo owners are sure to see increases in association fees and assessments. Insurance premiums and the cost of long-deferred maintenance are expected to continue rising, increasing financial stress on Florida condo owners, multi-family housing owners, and their managers.

This concludes our three-part legal update on “2022 Florida Property Insurance Reform.”

Written by Janel Giarratano with contributions by:
Luis Pablo Torres, P.E. Forte Consulting and Investigations, LLC