By: David P. Clapp, GRI, SFR, C2EX, Managing Broker, Director of Education, Re/Max Alliance Group

In 2022, the Florida legislature passed new laws that now require condominiums and cooperatives to perform what are called “Milestone Inspections” and a “Structural Integrity Reserve Study.” Both the Structural Inspection and Reserve Study will require the hiring of a structural engineer to complete these new requirements, which will add costs to the Association.

Additional Expenses

While the earliest that both the Structural Inspection and Reserve Study need to be completed by is December 31, 2024, the associations are now planning and budgeting for this added expense. If the inspection report shows any structural issues, it would require additional inspections and reports (Phase II), and mandatory repairs to be made. All of this could cause additional expenses and possible special assessments to owners of the condominium or cooperative.

In the past, associations have been able to defer fully funding their reserves. Under the new law for most of the items that reserves are set aside for, they will mandatorily need to be funded at 100%. For associations that have not fully funded in the past, this could cause an increase in fees and/or special assessments at a considerable increase in monthly costs and out-of-pocket expenses to an owner.

So, the question is, what effect will this all have on the value of some of the older condominium complexes? Will the costs to make repairs to some of the older complexes lead way to them being bought at a fraction of their value by developers so that they can tear them down to make way for new buildings? Will the mandatory repairs that need to be made as a result of the Milestone Inspections result in excessive monthly association fees that then makes it difficult to sell the units? Or will the value of the units have to come down to offset the excessive association fees?

Disclosure Requirements

This leads us to the question: what is the responsibility of the seller and of the Realtor® to disclose such possibilities? The new law requires the seller to disclose the summary of the Milestone Inspection Report if one is available, and to provide a copy of the Structural Integrity Reserve Study if one is available. BUT, we know that for most associations, these reports and studies will not be available until December 31, 2024, almost two years away. So, what are the responsibilities now?

Law Modifications On The Horizon

Some brokerages are now starting to develop a disclosure, which is provided to both buyers and sellers to inform them about the new law and to encourage them to investigate the effects of it on the Association, and what the future implications are for them. You should have a discussion with your broker as to what would be appropriate for you and your brokerage regarding disclosure. Florida REALTORS® is working on changes to the Condominium Rider that will reflect necessary contract language changes due to the new condominium law. Also being considered are changes to the Sellers Property Disclosure-Condominium and the possible creation of a separate disclosure. Stay tuned for more information on these potential upcoming changes.

It is expected that the Florida Legislature will consider changes and modifications to this new law in the 2023 legislative session, but it’s too soon to know what changes will result.

Florida Realtors’ Riders Being Revised – Webinar February 28th

The condominium and cooperative riders will be updated on March 20th due to changes in law. The revisions are limited and address new documents buyers of certain condominiums and cooperatives are entitled to receive from sellers. See Redlined version of the changes here.

  • Your members may be interested in understanding the law changes and revisions, please invite them to join us for a webinar scheduled for Feb. 28, 2023, at 10:30 a.m. (EST) where this material will be covered.
  • To find out more and register for the Florida Realtors®  Zoom online meeting, click here.