Introduced and signed into law in May 2022, Florida Senate Bill 4-D establishes statewide structural integrity reserve study and funding requirements for condominium associations and cooperatives. Because structural integrity reserve studies are new to the industry, there is currently much uncertainty around the new requirements and the potential for changes at the upcoming legislative session. Reserve Advisors is taking a multi-faceted approach to address the new legislation, ensuring we are able to support our clients moving forward.
A structural integrity reserve study is a non-invasive, visual inspection of critical infrastructure that relates to the safety of a building. The scope of work includes (at a minimum) roofs, load-bearing walls, primary structural members, floors, foundations, fireproofing and protection systems, plumbing, electrical systems, waterproofing and exterior painting, windows, and any other items that have a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such items negatively affects any of the above referenced building components. The study includes an analysis of reserve funds to offset future repair and replacement costs associated with the related infrastructure.
As the law currently stands, it is likely your existing reserve study does not fulfill the statutory requirements. While Reserve Advisors takes into consideration each of the building components that apply to the structural integrity reserve study, your existing study does not include language specific to the new legislation nor does it include a funding plan specific to the structural integrity components.
While our team takes into consideration each of the building components that apply to the structural integrity reserve study and we have a team of Florida licensed Professional Engineers, we want to ensure that the services we offer, meet the requirements set forth by state legislators. While we have not conducted a structural integrity reserve study to date, our team is working diligently to develop a solution that complies with the new legislation.
Because structural integrity reserve studies are new to the market, it may be difficult to secure a contract for one at this time. Many firms, like ours, are actively developing a solution. However, we do anticipate that demand for these studies will exceed the available supply in the marketplace, so we recommend you maintain communications with firms that either conduct or will be conducting these studies to stay informed of your options. When the service becomes available, don’t delay, as there is no guarantee that the legislation will change. In the meantime, many associations are conducting traditional reserve studies for the first time, as these are a good first step to understanding potential shortfalls and communicating the true cost of ownership to the members of the community.
While we are uncertain as to how the requirements will be monitored and/or enforced, one thing is certain….the Board has a fiduciary duty to serve in the best interest of its constituents. Not complying with the legislation is a breach of these fiduciary obligations. Furthermore, delaying the process leads many associations to underfunded reserves, deferred maintenance, and increasing difficulty getting back on track.
Funding recommendations outlined in a study are the direct result of near-term project needs and the existing reserve balance. While the law specifically states that the association must attain the annual funding level set forth in the structural integrity reserve study, there may be cases where it is difficult if not impossible to do so without the use of additional assessments. We encourage you to meet with your provider to review their recommendations and any alternate options that may be available, which may or may not alleviate the ability to attain appropriate funding levels. In the event your association is still unable to meet its funding obligations, we encourage you to consult with legal counsel to better understand the risk associated with being non-compliant.
Florida Senate Bill 4-D establishes requirements for registering with the Bureau of Compliance. Associations existing on or before 7/1/2022 are required to register with the Bureau of Compliance by 12/31/2022. The association needs to inform the local Bureau of 1) the number of buildings within the condominium associations that are three-or-more stories tall, 2) the total number of units in all such buildings, 3) the addresses of all such buildings, and 4) the counties in which all such buildings are located. Contact the Bureau today.