Article Courtesy of  The Coastal Breeze

By  William G. Morris, Esq.

Published October 20, 2024

Florida’s legislature and courts have historically looked to protect buyers of Florida real estate.At Common Law, buyers of real estate had little protection. Caveat emptor, which means that the buyer beware, was the rule in Florida until Florida’s Supreme Court threw it to the curb in the 1985 case of Johnson v. Davis.

Johnson v. Davis changed the law in Florida by ending caveat emptor in residential sales. The seller of a home who knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer must now disclose them to the buyer. Caveat emptor remains in commercial transactions.

The legislature sought to bring order to condominium development and sales by adopting the Florida Condominium Act of 1963 (the Act). In the years since, the legislature has visited the Act often, adding new protections for both purchasers and owners. Many of those revisions have been prompted by problems reported by owners and even the Florida Bar. Most recent effort by the legislature in this area was prompted by the 2021 collapse of the Champlain Towers South Condominium in Surfside Florida.

Florida statutes now mandate milestone inspections for condominiums and co-ops that are three stories or taller once they turn 25 or 30 years old, depending upon proximity to the coastline. Associations must update these inspections every 10 years. Condominium associations must reserve for structural repairs and cannot waive those reserves which means the reserves must be fully funded and money available for all structural repairs and replacements. Associations must also complete a reserve study to make sure the reserves are fully funded for these items.

Deadline to complete these inspections is December 31, 2024. It is anticipated the new law will mean substantial expense to condominium owners, not only for inspection but also for reserves and repairs.

The legislature was not content to simply mandate inspections and repairs. It wanted to be sure buyers are aware of the structural status, reserve funding requirements and possible future expense under the new law since these expenses are anticipated to be substantial. To do that, the legislature mandate that all residential condominium sales contracts after December 31, 2024, include right of the buyer to terminate the contract within three days after receipt of the structural inspection report and the structural integrity reserve study.

The legislature mandated milestone inspections and structural integrity reserve studies. It did not limit those to existing condominiums. With new condominiums, the developer must provide a turnover inspection report when control of the owner’s Association is transferred to the owners.

The sales contract must not only notify the buyer of the right to terminate but must also state whether the association is required to have a milestone inspection, a turnover inspection report, or a structural integrity reserve study and has not completed the inspection report or study if that is the case.

The statute may cause a mass exodus from condominiums in Florida when owners are unable or unwilling to pay the expenses associated with milestone inspections or reserves and repairs. Something that will substantially impact prices. Only time will tell.

The legislature did not limit its recent concerns to condominiums. It continues to be worried about property insurance and most recently turned its attention to flood insurance. Beginning with contracts signed on October 1, 2024, residential sellers must now complete a “Flood Disclosure” form and provided to a buyer at or before the time the sales contract is signed.

The statutory form is set forth below:
 

FLOOD DISCLOSURE

Flood Insurance: Homeowners’ insurance policies do not include coverage for damage resulting from floods. Buyer is encouraged to discuss the need to purchase separate flood insurance coverage with Buyer’s insurance agent.

(1) Seller has not filed a claim with an insurance provider relating to flood damage on the property, including, but not limited to, a claim with the National Flood Insurance Program.

(2) Seller has not received federal assistance for flood damage to the property, including, but not limited to, assistance from the Federal Emergency Management Agency.

(3) For the purposes of this disclosure, the term “flooding” means a general or temporary condition of partial or complete inundation of the property caused by any of the following:

1. The overflow of inland or tidal waters.

2. The unusual and rapid accumulation of runoff or surface waters from any established water source, such as a river, stream, or drainage ditch.

3. Sustained periods of standing water resulting from rainfall.

The expansion of residential buyer protection in Florida is not only good for buyers but is also likely good for the real estate industry in general. Florida’s Condominium Act and its genesis in a desire to minimize fears of buying swampland. These new statutory protections are intended to make sure buyers understand aspects of buying a Florida home with which they might not be familiar up north. In any event, the protections are here and will likely increase over time.