THE 2022 LEGISLATIVE SESSION IS FINALLY OVER
HERE IS WHAT YOU NEED TO KNOW
Steven R. Braten, Shareholder
Paula C. Marra, Senior Associate
Michael H. Casanover, Senior Associate
In the aftermath of the Champlain Towers disaster, the 2022 State Legislative Session was fraught with much stress and anxiety as the State House of Representatives and Senate tried their best to agree on a community association safety legislation to address statewide building and other safety-related concerns. Images of the South Tower’s collapse in the early morning hours of June 24, 2021 echoed through the halls of our State Capitol during the sixty-day 2022 legislative session, creating an urgency to pass a community association safety bill not seen since Hurricane Andrew. Despite this urgency, however, on Friday, March 11, 2022, the legislative session came to close without the approval of any legislation creating new safety laws for community associations or any other laws impacting community associations for that matter.
Regrettably, both chambers of the Legislature could not reach agreement on how to strike a balance between the need for new state-wide safety protocols for older multi-family dwellings within proximity to the Florida’s coastlines while avoiding bankrupting many condominium and cooperative associations that have waived the funding of reserves for many years or only partially funded reserves. Additionally, other laws that were being supported by various special interest groups that were incorporated into some of the bills intended to primarily address safety-related concerns probably played a part in none of the bills introduced during the legislative session receiving enough support to be passed into law. Nevertheless, it is worth examining what the House and Senate attempted to pass into law so community associations can prepare for what is no doubt to come – perhaps sooner than later if the Governor, or the Speaker of the House and President of the Senate call for a special session.
SUMMARY OF THE SAFETY BILLS THAT DID NOT PASS
SB7042/HB7096 – “Community Association Building Safety” – In its original form, this bill intended to include within the definition of condominium and cooperative official records, including official records required to be accessible on statutorily mandated websites, reserve studies and inspection reports “relating to a structural or life safety inspection of association property.” This bill also would have mandated reserve studies for residential buildings at least three stories in height every three years, as well as created new categories of reserves required to be funded unless waived. The memberships’ right to use reserve funds for other than authorized reserve expenditures would have to be replenished within 12 months after the expenditure. Further, the memberships’ right to waive or reduce reserve funding would have been restricted if of a condominium association. New disclosures on budgets would have been required if a condominium or cooperative association was not fully funding reserves, including, “THE BOARD OF ADMINISTRATION HAS FAILED TO SATISFY THE ASSOCIATION’S RESERVE FUNDING OBLIGATION UNDER SECTION 718.112(f).” Such a statement arguable could have created a breach of fiduciary duty claim against directors, creating a chilling effect on those who would be willing to serve on condominium and cooperative boards. Most importantly, if this bill had passed, it would have required condominium and cooperative residential buildings at least three stories in height to have a “milestone inspection” by December 31st of the year the building reaches 30 years of age and then every 10 years thereafter. Those three story buildings within 3 miles of the coastline would have had to conduct a milestone inspection upon reaching 20 years of age, and then every 7 years thereafter.
SB 1702 – “Building Safety” – This Senate bill was also focused on safety, though taking a different approach. Had it passed, this bill would have amended Chapter 558 – Florida’s Construction Defects laws – which would have also created and defined a new term, “milestone inspection.” Like Senate Bill 7046, this Senate Bill would have contained the same height, age and location triggers for the initial “milestone inspection” and subsequent inspections. This bill, however, went into greater detail specifying that the purpose of a milestone inspection is not to determine compliance with the Florida Building Code or the fire safety code. The proposed amendments to Section 718.112(f) regarding budgets and disclosures contained in budgets when the membership elected to waive or partially fund reserves were less inflammatory, while providing meaning information to the members and prospective buyers. This bill also would have revised the certification and education requirements for directors of association boards, require board members to both certify by affidavit to the secretary of the association that the newly elected director had read the governing documents of the association, that he or she would work to uphold such documents and take a board certification course, whereas the current law does not require the certificate to be by affidavit and by taking a board certification course, a new director does not have to sign such a certification, whether under oath or otherwise.
While the Legislature was unable to agree on how to institute new statewide safety protocols and reserve funding requirements, it’s a “safe bet” to expect future attempts by the Legislature to do so. Moreover, while state-wide legislation was unsuccessful this past session, we can anticipate local government to at least enact certification laws similar to Miami-Dade and Broward Counties. If your condominium or cooperative association is not fully funding reserves, your communities should develop short-term and long-term plans to fully fund reserves. While the wheels of government often move slow, the private sector typically swiftly reacts to disaster events. Already, Fannie Mae and Freddie Mac have changed their mortgage questionnaires to include questions about condominium and cooperative “structural integrity.” Also, buyers are becoming more sophisticated in the wake of the collapse at Surfside, Miami, demanding to see from sellers copies of the most recent financial statements and current budgets to evaluate the funding status of an association’s reserves. The message is clear – start fully funding reserves, or risk buyers looking elsewhere. Deciding how to “catch-up” reserve funding may present a number of accounting and legal compliance issues for your board. Before embarking on a new course to fully fund reserves, please consult your accounting and legal professionals.