Florida Condo Buyers: New Structural Reports You Need to Know by Dec 31!

Florida Condo Associations Face New Reporting Requirements by December 31, 2024

As the December 31, 2024, deadline approaches, many Florida condo associations are required to complete two key inspection reports that could significantly impact condo buyers, sellers, and current owners. These reports are designed to provide essential information about the long-term costs of ownership and potential structural issues.

What Buyers and Sellers Need to Know

Condo associations must submit a Milestone Inspection Report and a Structural Integrity Reserve Study to ensure transparency about the structural condition of their buildings. These reports are critical for buyers to assess the true cost of ownership and help sellers comply with new laws before closing a sale.

For condo owners, these reports will reveal potential future costs related to structural repairs. Many associations across Florida, particularly those managing buildings that are three stories or higher and over ten years old, must have these reports completed by the year-end deadline. Once received, the reports must be delivered to each condo owner within 45 days and posted on the association’s website, if applicable.

Addressing Transparency Issues

Historically, access to accurate financial and structural information has been challenging for condo buyers. This new reporting requirement aims to address that lack of transparency, making it easier for potential buyers to understand the true condition of a building and its financial obligations. The reports will provide valuable insight into future costs, helping buyers avoid surprises related to major structural repairs.

What the Reports Cover

• Milestone Inspection: This visual inspection, conducted by a qualified engineer, assesses the structural elements of buildings 30 years or older. If the inspection uncovers significant issues, a more detailed analysis is conducted. The goal is to identify any potential hazards before they escalate.
• Structural Integrity Reserve Study: This study assesses the remaining lifespan of key building components like the roof, plumbing, electrical systems, and load-bearing walls. It outlines how much the association needs to collect in reserves to cover future repair or replacement costs over the next 10 years.

The Importance for Buyers and Sellers

Buyers can use the information from these reports to negotiate prices if significant future repairs are identified. Sellers, on the other hand, are now legally required to provide these reports to prospective buyers before closing a sale, ensuring full transparency. If the reserve study indicates high future costs, buyers might find it harder to secure a loan or may need to adjust their offer accordingly.

Why This Law Was Passed

The reporting requirements were implemented following the tragic collapse of Champlain Towers South in Surfside in June 2021, which claimed the lives of 98 people. The incident highlighted that many older condo buildings were not adequately maintaining their structural integrity or collecting sufficient reserves to fund necessary repairs. As a result, the state legislature enacted stricter safety and financial regulations for condo associations.

What Happens If the Deadline Isn’t Met?

While the reports are required by the December 31 deadline, there is currently no direct penalty for associations that fail to complete the Structural Integrity Reserve Study on time. However, the lack of a report can still have significant consequences. If a buyer’s lender requests the study and the association cannot provide it, or if an insurance carrier requires it for coverage, transactions could be delayed or fall through.

The Future of Condo Buying in Florida

These new requirements are designed to make condo buying in Florida more transparent and secure, helping buyers make better-informed decisions. However, some experts believe that additional measures should be taken, such as allowing potential buyers to access these documents before signing a contract, not just after.

Overall, the new inspection requirements mark a shift toward greater accountability and transparency in Florida’s condo market, ensuring that both buyers and sellers have a clearer picture of the financial and structural health of condo buildings before moving forward with a sale.

What’s Next?

While there’s talk of potential extensions to the reporting deadline, especially to ease the financial burden on fixed-income owners, the law currently stands firm. Buyers and sellers alike should prepare by understanding these requirements and ensuring all necessary documents are in place to facilitate smooth real estate transactions.

With these new reports, buyers will be more informed than ever before, and sellers can expect smoother, more transparent transactions.

Source: Florida Realtors® & South Florida Sun-Sentinel