Q: I read the articles summarizing the new law that addresses building safety for certain condominiums. In my condominium association, the owners are responsible for their windows, not the association. However, if I understand it correctly, the new law requires the association to reserve for window replacement. How will this requirement work in a community like mine where the owners are responsible for their windows?
A: Since SB 4-D became effective May 26, 2022, it has been a trending topic in condominium associations largely because the legislation results in sweeping changes to the condominium and cooperative statutes. The law not only requires certain condominiums and cooperatives to conduct milestone inspections, it also requires a “Structural Integrity Reserve Study” that must address: roofs; load bearing walls or other primary structural members; floors; foundations; fireproofing and fire protection systems; plumbing; electrical systems; waterproofing and exterior paint; windows; any other item which exceeds $10,000.00 in deferred maintenance cost and was identified by the engineer or architect performing the inspection portion of the Structural Integrity Reserve Study. Effective December 31, 2024, an association may not vote to waive or reduce reserves for the items listed in the Structural Integrity Reserve Study. [You can read a more detailed summary of the new statute in the July 16, 2022 column, “Summary of New Law Addressing Building Safety.”]
The new law has also left many people scratching their heads and has resulted in many questions, including how the new reserve requirements will apply to condominiums like yours. There is a likelihood that we will see some efforts at “glitch legislation” to clear up some of these issues before the law is in full force as of January 1, 2025. However, here are some of the unanswered questions that we have identified:
- Windows: Of particular relevance to the question you posed, the statute requires the Structural Integrity Reserve Study to contain a line item for window replacement. According to the new law, associations may not waive or reduce reserves for these items. However, as you pointed out in your question, the declarations for many condominium communities make the maintenance, repair, and replacement of windows an owner responsibility. How does this work? Additionally, the statute does not define what a “window” is or is not. For example, are sliding glass doors or glass “curtain walls” considered “windows”?
- Timing of the Milestone Inspection: There is a conflict in the statute concerning the timing of the milestone inspection. In one section of the law, it states that milestone inspections and reports for older buildings must be completed by December 31, 2024. In another section, it states that the Association has 180 days from receipt of certified mail notice from the local building official to complete the process. Should condominium associations plan now for their milestone inspection, or should they wait until receiving notice from their local building official?
- Impact on One- and Two-Story Buildings: The statute exempts one- and two-story buildings from the requirement for a milestone inspection and structural integrity reserve study. However, the statutes do not contain a specific exemption regarding the new prohibition against waiving or reducing full funding of certain statutory reserves.
- Preparation of Structural Integrity Reserve Study: The new law permits the Structural Integrity Reserve Study to be prepared by a qualified person. However, reserve analysts are not licensed or regulated in Florida, so who is considered a “qualified” person? Additionally, the law states that the visual inspection upon which the Structural Integrity Reserve Study is based must be done by a Florida licensed architect or engineer. Since most reserve study companies do not have field engineers engaged in this process, how is this going to work?
- Pooling Reserves: The law will prevent use of reserve funds earmarked for “Structural Integrity Reserve components” from being used for other purposes. Does this mean that pooled reserves are no longer permitted? Or does it mean the association can still have a “pool” for the “non-Structural Integrity Reserve Study” items. If so, will an association be required to have two pools, a “Structural Integrity Reserve Study-pool” and a “non-Structural Integrity Reserve Study-pool”?
- Officer/Director/Management Liability: The statute imposes a cause of action for breach of fiduciary duty against directors and officers and imposes a compliance duty on managers and management companies. Since the statute already contains various fiduciary obligations, does the statute intend to impose greater liability on directors and/or managers? How will the management industry react regarding their indemnification requests during management contract negotiations?
There are other issues that will need to be clarified in future legislation, such as how to calculate the number of “stories” in a building. While we all wait to see what the legislature will do next, be sure to reach out to your association attorney with any specific questions on how the new law impacts your community.