What Condominium Associations Need To Know About The Life Safety Task Force Recommendations
In light of the recent tragedy at Surfside, the Condominium Law and Policy on Life Safety Issues Advisory Task Force was formed to provide detailed recommendations to Governor Ron DeSantis and other lawmakers in an effort to prevent similar tragedies and to prioritize the health and safety of condominium association residents. The Task Force’s primary objective in proposing legislative action was to codify and regulate aspects of condominium governance relating to the preservation of safety for residents. In this endeavor, the Task Force sought to balance the economic realities of operating and maintaining a condominium with the need for uniform standards and timely inspections to ensure the safety of residents. The Task Force pointedly noted that the majority of condominiums in Florida are operated in a safe and reasonable manner. However, current condominium regulations afford broad discretion and authority to Board Members to maintain, repair, and replace necessary structural components which have a great impact on the safety and structural soundness of the building itself. While safety seems self-evident, the level of Board discretion can be a major issue because most Board Members are elected for one- or two-year terms, serve on a voluntary basis, and often do not have a thorough understanding of necessary structural repairs like a licensed professional would have. The Task Force’s main goal was to provide comprehensive and uniform standards and requirements for inspections, reporting, and funding related to building maintenance and repair. To do so, it issued recommendations for legislative intervention in twelve basic categories:
- Authority of the Board
The Board of Directors of a community association is the primary decision maker for all maintenance and repair related issues. However, Directors are elected for one- or two-year terms, usually serve on a voluntary basis, and often do not have the comprehensive knowledge to adequately address certain long-term repairs necessary to maintain the safety of the building. Additionally, the Board is often faced with the difficult task of balancing the cost-efficiency demanded by unit owners with the need to raise funds to address often hidden deterioration issues in the building. Decisions to proceed with repairs can also be hindered by the potential effects and costs associated with the repair process, such as having to secure funding for alternative housing, should the repairs require residents to vacate the building.
Currently, there are no codified standards for maintenance, repair, and replacement decisions taken by the Board. The prevailing guideline is the Business Judgment Rule, which provides that, so long as the Board was acting in its reasonable business judgment outlined by relevant Florida case law and did not commit a breach of duty, neither the Board nor the individual Directors will be held liable for such decisions. Further, there is no statutory disclosure obligation to inform residents of the condition of the building. This results in information gaps, which can lead to resistance from unit owners when they are asked to pay assessments to fund necessary repairs.
Accordingly, the Task Force recommends three amendments to the Condominium Act to address issues relating to Board authority. First, the Task Force recommends expanding the Condominium Act to require timely maintenance and repair of waterproofing elements in addition to those structural components already outlined in § 718.301(4)(p). Second, to address some Boards’ hesitance in moving forward with needed repairs, the Task Force recommends eliminating the Board’s potential liability to fund alternate housing if residents must vacate the building during the repair work. Finally, to streamline the process, the Task Force recommends that these types of repairs not be considered a material alteration which could necessitate a unit owner vote.
The Association must also have appropriate funding available to perform needed repairs. Currently, Boards are generally only allowed to levy special assessments and borrow money without unit owner approval when a state of emergency is declared for that particular locale. There is a gap in the current laws, which fail to clearly address the Board’s authority to levy assessments and borrow money in the case of necessary repairs, absent a government-declared state of emergency. In addition, many associations have governing documents that limit the ability of the Association to borrow money on the Association’s behalf. The Task Force recommends amending the Condominium Act to void such provisions which limit or prohibit the Association’s ability to levy assessments or borrow money for necessary maintenance as a matter of public policy. The Task Force also suggest that such an amendment should apply retroactively to existing condominiums.
- Disclosures and Transparency
Florida has very limited requirements for tracking and reporting building maintenance and repair. The only counties which address reporting requirements are Miami-Dade and Broward Counties, which require the majority of condominium associations to complete 40-year recertification reports with a licensed engineer. Recently, the Cities of Boca Raton and Aventura also implemented certain reporting requirements for condominiums. However, to date, there is no uniform reporting requirement across Florida. Accordingly, the Task Force recommends the following reporting requirements be put in place:
Developer Turnover Report – The Condominium Act already requires the Developer to furnish a report upon turnover regarding the mandatory components listed under Fla. Stat. § 718.201(4)(p). However, the Task Force recommends enhancing and expanding the requirements to include: (i) waterproofing in the list of mandatory components; (ii) an attestation of the developer as to the condition of the mandatory components; and (iii) a maintenance protocol for the upkeep, replacement, and repair of each of the mandatory components. These new requirements will aid the long term maintenance process by spreading planning and accountability for maintenance and conditional reporting to the developer as well. Further, these types of obligations on developers may mean stricter compliance with the Florida Building Codes and other construction requirements at every stage of the development.
Association Reporting Requirements – In addition to the more robust Developer Turnover Report, the Task Force recommends requiring associations to issue periodic, frequent, and uniform building inspection reports. As noted, Florida currently has no inspection or reporting requirement for associations, other than the 40-year recertification process in some counties. In 2008, the Florida legislature did pass a statute that required associations to issue an inspection report every five-years, but ultimately repealed that statute in 2010 due to cost-effectiveness issues. However, in light of the Champlain Towers collapse, it is more apparent than ever that the need for methods to ensure building safety far exceeds the need for cost-protective measures. Accordingly, the Task Force recommends that by December 31, 2024, all Associations prepare a building inspection report, with an updated inspection report to be undertaken every five years thereafter. The Task Force also recommends that these reports, along with other life-safety documentation, be published on the association’s website, which should be updated quarterly.
Local Government Reporting Requirements – As it stands, local governments are not required to share their building inspection reports with associations. Accordingly, any information a local government shares or publishes is merely gratuitous. The Task Force recommends codifying a requirement to ensure local governments furnish a copy of any inspection reports to the association governing the particular building.
- Association Compliance and Unit Owner Remedies
Another area highlighted by the Task Force was the ability of owners to seek redress for an association’s failure to comply with recommended reporting requirements. While owners are entitled to bring claims for negligence or breach of fiduciary duty, the Task Force found that there is a need for a more cost-effective method to pursue redress for an Association’s failure to perform the required inspections or maintenance. The Task Force suggested that these private causes of action should not be subject to arbitration or mediation, but should provide the Association with written notice and a reasonable opportunity to cure any non-compliance.
While this avenue for redress for individual owners does have merit, HLPA also believes it is important to remember the practical realities of managing an association. If the Association can be sued by each individual unit owner in a private cause of action not subject to alternative dispute resolution, it may have an impact on the Association’s ability to carry out and fund necessary repairs and maintenance in the first place.
Reserves are an integral component of building safety, as they allow for aggregated funding of components that are often extremely expensive to finance at one time. However, as there is no codified requirement for the Association to obtain a reserve study, and the current laws allow for reductions and waivers of reserve funding with a relatively low voting threshold, necessary reserves can often get overlooked and underfunded. Particularly when Board Members are only elected for one-to-two-year terms, it can be difficult to obtain support for funding repairs that will not be conducted until years (or even decades) in the future.
Accordingly, the Task Force recommends the following as to Reserve Funding:
- Associations should be required to obtain a reserve study, the content of which should be uniform and consistent. The reserve study requirement may be combined with the Association’s reporting requirements, described above.
- Associations should be required to maintain reserve funding for each of the mandatory components described in Fla. Stat § 718.301(4)(p), plus waterproofing, and this requirement should not be subject to being waived.
- Associations should not be permitted to pool reserves for mandatory components. Each mandatory component should have its own reserve funding, in an amount which is at least 50% of its replacement cost. The Association should obtain reserve funding in this amount by at least December 31, 2026. If the Association is unable to do so, it must secure an alternative funding mechanism. Further, none of the funding for the mandatory components may be diverted into non-life-safety expenditures.
- Developer Responsibilities
As noted above, Developer accountability is an important component of the Task Force’s recommendations to revamp life-safety in condominium buildings. Accordingly, the Task Force report outlines specific issues that the Developer should be accountable for, including defects in the original construction along with ensuring the financial and operational capabilities of the Association at turnover. To accomplish this, the Task Force recommends voiding non-statutory warranties, disclaimers, and limits on liability for contactors and developers as against public policy. This will allow community associations more opportunities to hold designers, contractors, and developers accountable for issues with the building.
- Condominium Termination Requirements
A significant issue that many associations face is obtaining repair funding when the cost of repairs outweighs or is disproportionate to the value of the property. While the Condominium Act currently provides a method to terminate the condominium in such cases, termination requires an incredibly high level of owner approval. Failures to approve termination often result in economic waste that is not beneficial for associations, unit owners, or the surrounding community. The Task Force recommends that the statute providing for termination due to economic waste be amended to require a determination by an independent appraisal. Further, the Task Force proposes that the required authorization vote should not exceed 80% of the total voting interests for the condominiums.
- Responsibilities of the Department of Business and Professional Regulation (“DBPR”)
One of the consistent themes of the Task Force’s recommendations deals with “lessening the information gap” between those who hold information and those who are affected by such information. As part of this initiative, the Task Force recommends that at least 30% of the funding for the Florida Condominium Trust Fund be dedicated to education and training of directors, officers, and unit owners regarding the life-safety components of condominium buildings.
- Unit Owner Financing
Throughout its recommendations, the Task Force emphasized the importance of funding to ensure adequate and timely maintenance and repair of structural and life-safety issues. However, costly assessments can place a heavy financial burden on unit owners and may detract from the appeal of living in a condominium building in the first place. Particularly, large special assessments can be difficult for unit owners to manage, especially those with fixed incomes or limited financial resources. Accordingly, the Task Force recommends creating more accessible financing options for unit owners who qualify for affordable housing with amortized loans and alternative funding options.
- Responsibilities of Community Association Managers
To further reduce the information gap, the Task Force also recommends further educating Community Association Managers. First, to ensure accountability and reliable information, the Task Force proposes to eliminate limitations on liability of community association management companies and other consulting professionals, and declaring them void as a matter of public policy. Next, the Task Force suggests implementing continuing education programs for Community Association Managers regarding deferred maintenance and repair/replacement work so that managers can offer specific and reliable recommendations to their Boards and residents.
- Local Government Responsibilities
The Task Force notes that local government accountability is also an important aspect of life-safety in condominium buildings. Current Florida case law dictates that despite enforcing building codes, the local government building department does not have a duty to ensure proper construction of buildings. The Task Force suggests that local governments be held accountable and/or liable for defects and issues that arise from a condominium’s reliance upon inspection reports performed by or on behalf of local governments.
- Insurance Requirements
Finally, the Task Force submits that associations should be required to obtain insurance coverage for the replacement cost of the component or property the policy is meant to ensure. Although the current statutes require condominiums to purchase “adequate insurance coverage,” the Task Force recommends updating that language to specifically require full coverage for replacement costs.
 Fla. Stat. § 718.301(4)(p) requires the developer to file a report under the seal of an architect outlining the replacement cost of certain mandatory components including the roof, structural components, fire safety components, elevators, heating and cooling components, plumbing, electrical components, pool & spa, seawalls, parking, drainage systems, paint of the building, and irrigation systems. The Task Force recommends adding waterproofing maintenance to this list as well.
 HLPA has previously written an in-depth blog article discussing the merits and hindrances of the newly enacted Aventura Ordinance, which can be viewed with this link.