ANALYSIS HB 913 (ER) -- CONDO 3.0

CHAPTER IX

• Budget Meeting, Annual Budget, Reserves + Reserve Study: Line 2040 – 2466

The bill applies to the conduct of structural integrity reserve studies for habitable buildings that are three stories or higher.   The study must be renewed every ten years and must cover roof, structure, fire protection, plumbing, electrical, waterproofing, windows and any item costing over $25,000 to repair/replace if such ailure affects structural systems.  The bill provides that professionals performing the study must disclose any interest in follow-up services., and non-disclosure makes the contract voidable and could result in discipline. For the professional.   The reserve funding plan must include the remaining useful life of each item, the reserve schedule sufficient to prevent reserve depletion and updated funding plans if methods change (e.g., special assessments, loans).   This applies to condominium associations in existence as of July 1, 2022, and the study must be completed by December 31, 2025.

Budget and Budget Meetings: 

The bill provides that video conferences may be conducted of meetings of the board or unit owners where a proposed annual association budget will be considered, subject to the adoption of rules governing the requirements for such meetings by the division.  A sound transmitting device recording the conversation of members may be heard by the board or committee members attending in person, as well as any unit owners present at the meeting.

The bill deletes the term “adopts” and replaces it with the term “proposes” relating to fiscal year annual budget which requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year.   In addition,  the board shall “simultaneously propose a substitute budget that does not include any discretionary expenditures that are not required to be in the budget that needs proposed at the budget meeting.

The bill provides that unit owners must consider and may adopt a substitute budget at the meeting. The bill deletes the quorum requirement at a special meeting,  and, if the substitute budget is not adopted, the initially proposed adopted by the board may be adopted.

The bill replaces the term “reasonable” with the term “required” to determine and exclude whether assessments exceed 115 percent threshold from the prior fiscal year on repair or replacement of the condominium property, or anticipated expenses of the association which the board does not expect to be incurred on a regular or annual basis including items listed in paragraph (g) (structural integrity reserves).

In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance.

The budget for deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement on the budget has been increased to 25,000.00 (previously it was $10,000) or the inflation-adjusted amount determined by the division in paragraph (60>, whichever is greater.

The bill provides that if an association votes to terminate the condominium in accordance withs.718.117, F.S., members may vote to waive the maintenance of reserves recommended by the association's most recent structural integrity reserve study.

Reserves and Reserve Studies:

The bill adds the following: 

c.(I) Reserves for the items listed in paragraph (g) may be funded by regular assessments, special assessments, lines of credit, or loans. A special assessment, a line of credit, or loan under this sub-subparagraph requires the approval of a majority vote of the total voting interests of the association.

c.(II) A unit-owner-controlled association that must have a structural integrity reserve study may secure a line of credit or a loan to fund capital expenses required by a milestone inspection under s. 553.899 or a structural  integrity reserve study.

• The line of credit or loan must be sufficient to fund the cumulative amount of any previously waived or unfunded portions of the reserve funding amount required and the most recent structural integrity reserve study.

• Funding from the line of credit or loan must be immediately available for access by the board to fund required repair, maintenance, or replacement expenses without further approval by the members of the association.

• A special assessment, a line of credit, or a loan secured under this sub-subparagraph and related details must be included in the annual financial statement that is required under s. 718.111(13) to be delivered to unit owners and required under s. 718.503 to be provided to prospective purchasers of a unit.

c. (III) This sub-subparagraph does not apply to associations controlled by a developer as defined ins. 718.103, an association in which the nondeveloper unit owners have been in control for less than 1 year, or an association controlled by one or more bulk assignees or bulk buyers as those terms are defined in s. 718.703.

The bill amends paragraph (d) removing the authority a majority of members approval to provide that the board may pause the contribution to its reserves or reduce until the building official determines the condominium building and its structures are habitable.

The bill adds a new paragraph (e) for budgets adopted on or before December 31, 2028 if the milestone inspection has been completed within the previous 2 calendar the years, the board upon approval of the total voting interests of the association, may temporarily pause for a period of no more than two annual budgets. 

The new paragraph (e) reads as follows:  

• (e)  For a budget adopted on or before e December 31, 2028, if the association has completed a milestone inspection pursuant to s. 553.899 within the previous 2 calendar years, the board, upon the approval of a majority of the total voting interests of the association, may temporarily pause, for a period of no more than two consecutive annual budgets, reserve fund contributions or reduce the amount of reserve funding for the purpose of funding repairs recommended by the milestone inspection.

This subparagraph does not apply to an association controlled by a developer as defined in  s. 718.103, an association in which the nondeveloper unit owners have been in control for less than 1 year, or an association controlled by one or more bulk assignees or bulk buyers as those terms are defined in s. 718.703.

Association that has paused reserve contributions under this subparagraph must have a structural integrity reserve study performed before the continuation of reserve contributions in order to determine the association's reserve funding needs and to recommend a reserve funding plan.

• The bill adds a new paragraph (4) allows the board, without a vote of the members to change the accounting methods for reserves to a pooling or a straight-line method of reserve funds and specifying that reserve funding listing in paragraph (g) may only be pooled the proposed is sufficient to ensure available funds meet or exceed projected expenses.

• The bill adds a new paragraph (6) requiring the division to annually adjust for inflation the minimum threshold amount for required reserves, and, as of February 2026, the division must conspicuously post on its website the inflation-adjusted minimum amount.

• The bill amends paragraph (g)(1) to clarify that condominium property that is three “habitable”  stories or higher is subject to the structural integrity reserve study every 10 years after the condominium creation.

• The bill amends the deferred maintenance expense or replacement costs exceeding $10,000 to “$25,000 or the inflation­adjusted amount determined by the division under subparagraph (f)6., whichever is greater.”

• The bill deletes the verbiage “by any person qualified to perform such study.” in paragraph 3.a. and substitutes “ “may be performed”    , including.” .   This sentence clarifies that visual inspection are allowed.

The bill inserts a new paragraph 3.b.

• b. Any design professional as defined ins. 558.002 or any contractor licensed under chapter 489 who bids to perform a structural integrity reserve study must disclose in writing to the association his or her intent to bid on any services related to any maintenance, repair, or replacement that may be recommended by the structural integrity reserve study. Any design professional as defined ins. 558.002 or contractor licensed under chapter 489 who submits a bid to the association for performing any services recommended by the structural integrity reserve study may not have an interest, directly orindirectly, in the firm or entity providing the association's structural integrity reserve study or be a relative of any person having a direct or indirect interest in such firm, unless such relationship is disclosed to the association in writing. As used in this section, the term "relative" means a relative within the third degree of consanguinity by blood or marriage. A contract for services is voidable and terminates upon the association filing a written notice terminating the contract if the design professional or licensed contractor failed to provide the written disclosure of the interests or relationships required under this paragraph. A design professional or licensed contractor may be subject to discipline under the applicable practice act for his or her profession for failure to provide the written disclosure of the interests or relationships required under this paragraph.

The bill amends 4.a.3 to reflect a visual inspection of a structural integrity reserve study must a reserve funding plan or schedule, rather than just a reserve funding schedule.  

In addition, the following has been added:

• At a minimum, the structural integrity reserve study must include a recommendation for a reserve funding schedule based on a baseline funding plan that provides a reserve funding goal in which the reserve funding for each budget year is sufficient to maintain the reserve cash balance above zero. The study may recommend other types of reserve funding schedules, provided that each recommended schedule is sufficient to meet the association's maintenance obligation.

The bill amends 4.b  by adding the following verbiage:

• If the structural integrity reserve study recommends reserves for any item for which reserves are not required under this paragraph, the amount of the recommended reserves for such item must be separately identified in the structural integrity reserve study as an item for which reserves are not required under this paragraph.

c. The structural integrity reserve study must take into consideration the funding method or methods used by the association to fund its maintenance and reserve funding obligations through regular assessments, special assessments,lines of credit, or loans. If the structural integrity reserve study is performed before the association has approved a special assessment or secured a line of credit or a loan, the structural integrity reserve study must be updated to reflect the funding method selected by the association and its effect on the reserve funding schedule, including any anticipated change in the amount of regular assessments. The structural integrity reserve study may be updated to reflect any changes to the useful life of the reserve items after such items are repaired or replaced, and the effect such repair or replacement will have on the reserve funding schedule. The association must obtain an updated structural integrity reserve study before adopting any budget in which the reserve funding from regular assessments, special assessments, lines of credit, or loans do not align with the funding plan from the most recent version of the structural integrity reserve study.

The bill amends paragraph 5 to reflect that four-family dwellings are not subject to the provisions included in paragraph 5

The bill amends paragraph 7 to reflect that  associations existing on or before July 1, 2022, which are controlled by unit owners other than the developer, must have a structural integrity reserve study completed by December 31, 2025 for each building on the condominium property that is three stories or higher in height.

An association that is required to complete a milestone inspection in accordance with s. 553.899 on or before December 31, 2026, may complete the structural integrity reserve study simultaneously with the milestone inspection. In no event may the structural integrity reserve study be completed after December 31, 2026.

The bill inserts a new paragraph 9.

• 9. If the association completes a milestone inspection required by s. 553.899, or an inspection completed for a similar local requirement, the association may delay performance of a required structural integrity reserve study for no more than the 2 consecutive budget years immediately following the milestone inspection in order to allow the association to focus its financial resources on completing the repair and maintenance recommendations of the milestone inspection.

The bill adds a sentence to paragraph 10.   “relationship to the unit owners under s. 718.111(1). An officer or a director of an association must sign an affidavit Acknowledging receipt of the completed structural integrity reserve study.”

The bill adds a new paragraph 13.

• 13. The division shall adopt by rule the form for the structural integrity reserve study in coordination with the Florida Building Commission.

LEGISLATIVE SESSION

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