In recent months, a significant development in Florida's real estate landscape has gone relatively unnoticed by many potential condo buyers and owners. Senate Bill 4D, also known as the “Surfside Bill,” was passed in May 2022 to address the safety and maintenance concerns of condos and cooperatives in the state. 

This comprehensive legislation requires a statewide inspection program for condos and cooperatives with three stories or more. But, with definitions getting blurred and deadlines approaching, we could see a negative impact on buyers and sellers! 

Let’s delve into the details of Senate Bill 4D, its implications, and the challenges it poses for condo buyers and associations.

Understanding Senate Bill 4D

First, let’s break this down. The bill aims to ensure the structural integrity and safety of condos and cooperatives through a two-pronged inspection process. The first aspect involves assessing the structural integrity of the buildings, while the second aspect requires a reserve study to evaluate the association's funds for deferred maintenance projects. 

The reserve study determines if adequate funds are available for things like repairs, replacements, and other maintenance expenses.

Exploring the Reserve Study

The reserve study plays a vital role in assessing a condo association's financial health. It examines the associations' reserves to fund deferred maintenance projects and unforeseen emergencies. 

These reserves are accumulated through a portion of the regular dues paid by condo owners. By conducting a reserve study, associations ensure they have sufficient funds to cover future maintenance projects, preventing the need for sudden and burdensome special assessments.

The Challenges and Impact

Now here are the difficulties this bill provides. One of the primary challenges posed by Senate Bill 4d is the timeline for completing the studies. 

The deadline for completing the reserve study varies based on the age of the condo. If the Certificate of Occupancy (CO) was issued on or before July 1st, 1992, the study must be completed by December 31st, 2024. For condos that turn 30 years old after 1992, the study must be conducted by the end of the year they reach that milestone.

An even more significant challenge is the availability of professionals qualified to conduct these studies. The limited number of experts in the field may result in delays and increased costs for associations. 

Furthermore, the financial burden imposed by potential assessments and increased association dues raise concerns about the affordability of condo ownership, particularly for fixed-income residents.

Implications for Buyers and Sellers

For sellers and listing agents, the obligation is to disclose whether the reserve study has been completed. If completed, a summary of the inspection report should be provided. 

If not, a statement from the condo association confirming the study's pending status must be given. This information empowers buyers to make informed decisions regarding potential future assessments and associated risks.

Buyers and their agents play a crucial role in conducting due diligence. They absolutely must review the condo association's meeting notes to identify any ongoing assessments, potential issues flagged, and timelines for completing the reserve study. 

It is essential for buyers to thoroughly understand the financial implications and potential risks associated with purchasing a condo subject to Senate Bill 4D.

Bonus: The Geographical Impact

While the impact of Senate Bill 4d spans across Florida, it is more prevalent in coastal areas. 

Condos within three miles of the coastline are subject to the regulations, regardless of age—major metropolitan areas such as Miami, Panama City, Daytona, and Tampa-St. Pete faces significant challenges due to the age and proximity of their condo developments.

Bottom Line

Senate Bill 4D has highlighted crucial safety and maintenance concerns within Florida's condo market. But as the legislation unfolds, amendments will likely be made to address ambiguities and unintended consequences.

While uncertainties remain, education and thorough due diligence are crucial for buyers and sellers to navigate this changing landscape effectively. Start with our latest episode with Attorney Justin Cerrato!