In the transactional
world of resale of residential condominium units the
statutory three business-day condominium-review period will
be taking on new elements for consideration. These
additional considerations will be very important in
analyzing the potential costs of ownership of a condominium
unit. Every buyer of a residential condominium unit resale
is currently entitled to receive the Declaration of
Condominium, Articles of Incorporation, Bylaws and Rules of
the Association, a copy of the most recent year-end
financial information and the frequently asked question and
answers documents for the association and a copy of the
Florida Condominium Governance form. From the date of
receipt of the aforementioned documents the buyer has three
days, excluding Saturdays, Sundays and legal holidays,
during which to terminate the contract (Rescission Period).
One of the fundamental reasons for the Rescission Period is
for a prospective buyer to ascertain what the costs of
ownership are and likely will be moving forward. With
additional information soon to be available the analysis of
the current and future costs go beyond the currently
required documents.
As a consequence of the tragedy of the Champlain Towers
collapse on June 24, 2021, the Florida Legislature has
required more robust regular inspections of residential
condominium properties. The Structural Integrity Reserve
Study (SIRS) included in Florida Statutes 718.112(2)(g)
requires a residential condominium of three or more stories
to have an inspection of the structural elements of the
condominium property to identify major repairs and
replacements that may be needed. § 718.112(2)(g) Fla. Stat.
The SIRS report is to be completed every 10 years and for
associations existing on or before July 1, 2022, the initial
report is to be completed by Dec. 31, 2024. The following
components, if maintained by the association, are to be
addressed by a visual inspection to be done by an
appropriately qualified professional: roof, structural,
load-bearing walls and other primary structural members;
fire proofing and fire protection systems; plumbing;
electrical systems; waterproofing and exterior painting;
windows and exterior doors; any other item that has deferred
maintenance or replacement cost that exceeds $10,000 and the
failure to replace affects the previously mentioned
components. The Milestone Inspection Report Study (MIRS) is
a structural inspection of a building, including an
inspection of load-bearing elements and the primary
structural members and primary structural systems by an
Florida-licensed architect or engineer authorized to
practice in Florida for the purposes of attesting to the
life safety and adequacy of the structural components of the
building and, to the extent reasonably possible, determining
the general structural condition of the building as it
affects the safety of such building, including a
determination of any necessary maintenance, repair or
replacement of any structural component of the building. §
553.899(2)(a) Fla. Stat. An association of a building that
is three or more stories in height must have a MIRS
performed by December 31 of the year in which the building
reaches 30 years of age, based on the date the certificate
of occupancy for the building was issued, and every 10 years
thereafter. If a building reached 30 years of age before
July 1, 2022, the building’s initial MIRS must be performed
before Dec. 31, 2024. If a building reaches 30 years of age
on or after July 1, 2022, and before Dec. 31, 2024, the
building’s initial MIRS must be performed before Dec. 31,
2025. If the date of issuance for the certificate of
occupancy is not available, the date of issuance of the
building’s certificate of occupancy shall be the date of
occupancy evidenced in any record of the local building
official. The local enforcement agency may determine that
local circumstances, including environmental conditions such
as proximity to salt water, require that a MIRS must be
performed by December 31 of the year in which the building
reaches 25 years of age, based on the date the certificate
of occupancy for the building was issued, and every 10 years
thereafter.
In addition to annual operating expenses, a budget must
consider reserves for capital expenditures and deferred
maintenance for roof replacement, building painting and
pavement resurfacing along with any other item which has a
deferred maintenance expense or replacement cost that
exceeds $10,000. The amount to be reserved must be computed
using a formula based on estimated remaining useful life and
estimated replacement cost or deferred maintenance expense
of the reserve item. For condominium budgets adopted on or
before Dec. 31, 2024 an association controlled by the owners
of units may by a vote of the majority of the owners decide
not to fund reserves at all or partially fund. For a budget
adopted on or after Dec. 31, 2024 for an association that
must obtain a SIRS report the association may not determine
to provide no reserves or less reserves than required to
address the items identified in the report. Moreover, the
MIRS might identify certain deficiencies that need immediate
attention and expenditures.
For residential real estate contracts entered into after
Dec. 31, 2024 conspicuous language will be required as
follows:
“THIS
AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE
OF THE BUYER’S INTENTION TO CANCEL WITHIN 3 DAYS, EXCLUDING
SATURDAYS, SUNDAYS, AND LEGAL HOLIDAYS, AFTER THE DATE OF
EXECUTION OF THIS AGREEMENT BY THE BUYER AND RECEIPT BY
BUYER OF A CURRENT COPY OF THE INSPECTOR-PREPARED SUMMARY OF
THE MILESTONE INSPECTION REPORT AS DESCRIBED IN SECTION
553.899, FLORIDA STATUTES, IF APPLICABLE; A COPY OF THE
TURNOVER INSPECTION REPORT DESCRIBED IN SECTION
718.301(4)(p) AND (q), FLORIDA STATUTES, IF APPLICABLE; AND
A COPY OF THE ASSOCIATION’S MOST RECENT STRUCTURAL INTEGRITY
RESERVE STUDY DESCRIBED IN SECTIONS 718.103(26) AND
718.112(2)(g), FLORIDA STATUTES, IF APPLICABLE. ANY
PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO
EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD
OF NOT MORE THAN 3 DAYS, EXCLUDING SATURDAYS, SUNDAYS, AND
LEGAL HOLIDAYS, AFTER THE BUYER RECEIVES A CURRENT COPY OF
THE INSPECTOR-PREPARED SUMMARY OF THE MILESTONE INSPECTION
REPORT AS DESCRIBED IN SECTION 553.899, FLORIDA STATUTES; A
COPY OF THE TURNOVER INSPECTION REPORT DESCRIBED IN SECTION
718.301(4)(p) AND (q), FLORIDA STATUTES; OR A COPY OF THE
ASSOCIATION’S MOST RECENT STRUCTURAL INTEGRITY RESERVE STUDY
DESCRIBED IN SECTIONS 718.103(26) AND 718.112(2)(g), FLORIDA
STATUTES, IF REQUESTED IN WRITING. BUYER’S RIGHT TO VOID
THIS AGREEMENT SHALL TERMINATE AT CLOSING.” §
718.503(1)(d)(2) Fla. Stat.
Prior to the language being adopted in standard real estate
contracts as mentioned above it will be incumbent on the
buyer to request the SIRS and MIRS reports, if completed and
available. In addition to the SIRS and MIRS it is suggested
to request the current budget and minutes of association
meetings for the one-year period prior to the effective date
of the contract. With review of the budget, minutes, the
SIRS and MIRS and other statutorily required documents a
buyer can better ascertain the current and near future costs
of ownership of the condominium unit.