Weeks after the Champlain Towers South building collapse in Surfside that left 98 people dead last summer, the Florida bar convened a special task force to come up with potential reforms that could prevent this type of tragedy does not happen again.
Appointed the Advisory Working Group on Personal Safety in Condominium Law and Policy, the Florida Bar has released its final reportt recommendations to legislators in October. In the wake of this report, the Miami-Dade State Attorney’s Office released its own grand jury report, also outlining a series of potential reforms and recommendations.
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A significant portion of both reports address questions about how to handle deferred maintenance work, delayed repairs, and how to get condominium boards to overcome pushback from residents who are unwilling to pay for needed repairs, or who maybe can’t afford the necessary repairs.
These were all the problems that residents of the Champlain Towers South had faced before it collapsed. The backlog of necessary repairs and the pushback of residents to pay for necessary improvements are well documented in reports that have emerged since the collapse. Federal investigators are still assessing what specifically could have caused the building to collapse.
For its part, Miami-Dade County is proposing the idea of requiring that buildings be “recertified” for life safety and structural integrity to 30 years after the end of construction, up from the current 40-year recertification that’s on the books.
Champlain Towers South was just beginning its 40-year recertification process when tragedy struck.
As of Tuesday, January 11, the Florida legislature will begin its 2022 session. At the time of writing, no bills implementing condominium law reform have yet been tabled. The only bill tabled that specifically mentions the Surfside condo collapse is a resolution by Republican Miami State Senator Ileana Garcia, who would express her “gratitude” to the first responders who worked at the scene of the disaster.
One Invoice Filed by Miami Democrat Jason Pizzo would enact a long list of condo reforms in the wake of the Surfside tragedy, though she doesn’t mention the tragedy by name. This bill would require condominium boards to set aside reserves for possible repairs, require more frequent inspections and create a detailed list of items that inspectors should examine. The bill, tabled on January 10, has yet to be heard.
Another one Invoice, filed by Republican Palm Coast state senator Travis Hutson, would make it more difficult to prosecute a developer for construction defects that cause damage. This bill was introduced when questions were raised as to whether the Champlain Towers collapse was caused by construction defects.
A reform is is already in force, although not technically at the government level. Fannie Mae and Freddie Mac, government-sponsored companies with disproportionate influence in the real estate market, are starting to require banks to collect a wide range of information on building maintenance records and the repairs needed for new mortgages in buildings that have five or more units.
Since the two government-sponsored companies buy massive amounts of loans directly from banks, the companies can essentially force banks to comply with the new rules and disclosures.
“It’s going to start to unveil the dirty little secret of ownership, which is: in condo and homeowner’s association communities – not just in South Florida, but across the country – when people buy, they often don’t calculate what the cost of maintaining the property is, ”Michael Gelfand, West Palm Beach-based condominium lawyer, told WLRN of the reform.
Senator Pizzo has introduced a bill, but what reforms – if any – could Florida lawmakers actually push through and make law?
Below is a conversation with Bill Sklar, who chaired the Florida Bar Task Force. He spoke with WLRN about the policy recommendations the task force is giving to Florida lawmakers.
The conversation has been edited slightly for clarity.
WLRN: One of the biggest challenges for condominium owners and condo associations comes down to a question of money, and more specifically the fact that repairs and maintenance don’t come cheap, but somebody’s got it. one ultimately has to foot the bill. But inside buildings and condominium associations, there is often resistance to spending the kind of money that might be needed to be responsible in the long run. So how do you imagine this is something that can be tackled?
SKLAR: The misconception is that people come from all over the world to South Florida and all over Florida, and that’s a wonderful thing and they get a key. They pay off their condo and take out a mortgage and they think it’s all over. And they think they have nothing to do. But they still have to pay for [repairs] like a single family home.
We have mandatory reserves [for condo building repairs and maintenance] in Florida, but they are not large enough as currently required. They are not sturdy. They are ridiculous.
They are intended for repaving, repairing the roof and repainting. And basically, that’s it. And the rest is discretionary for items over $ 10,000.
So what we have come up with are stronger reserves over a period of time. The basis for that would be inspection reports – accredited inspections as the basis for these costs. And if they want to waive or reduce those amounts, we suggest a loan program through a bank, line of credit, or government program.
We also suggested that there might be infrastructure funds available. Infrastructure funds that would allow not free money, but a low subsidized or government guaranteed loan, which would make money at very low interest rates: one or two percent.
We know that the Champlain Towers South building in Surfside underwent several inspections before the collapse last July. But is there a way to do better inspections? Maybe with more force, with more follow-up from city, county or state officials?
First, there must be inspection standards. And we come up with a thirteen-point list that includes things like inspections of swimming pools, elevators, and different parts of the building’s structural integrity.
And once that report is made, there must be a duty of a council to communicate it to all owners and provide a copy to local building officials. We recommended in our report that within 10 days of such an inspection report, it should be provided to every owner.
Regarding disclosure, the Florida Association of Realtors agrees with us and wants these inspection reports to be available so that sellers can fully disclose them to their buyers. And I’m not saying sellers don’t want to, they just don’t have the reports. As I said, unit owners do not receive the reports. The board must have an obligation to deliver these reports to the owners, and promptly.
There is another issue tracing back to local government that is of concern, and it’s a very sensitive issue for counties and cities: Local governments are protected if there is negligence in building inspections, and we suggest that the legislator reconsider this protection, given that it is up to local governments to do more, and that is a problem.
And as you can imagine, it would kick in if there was actual neglect.
To the right.
In the world of condos and the way these properties are managed, there are a variety of potential conflicts of interest that come into play. For example, if a property management company decides that very expensive repairs need to be done on the property. , they can in fact be fired by the board of directors. And the board members themselves are often placed in a situation where they might have to take money out of pocket to fix problems in the building, which they might not want to do. Or maybe they don’t want to make tough decisions to stay on the good side of their neighbors, their fellow citizens. Is there a way around this?
The way to deal with it is to have third party professionals.
If you have a requirement every five years – as we’ve suggested – for a Certified Structural Engineer to provide a report, it’s not the management company that says “You have to spend the money”, he is an independent engineer. Independent of the board of directors, independent of the manager. Don’t kill the messenger! By going through an accredited third party, you take the blame off the manager, you take the blame off the board. So if the owner of the unit says “Why did you do this? Why did you find out that we are going to have to spend $ 100,000 or $ 1 million? “
They can say, “We have no choice in this matter. We were following the new law. And that is why we need a new law.
Unlike other categories of real estate – commercial, office buildings, schools, municipal buildings – where you have third parties like lenders, investors, private equity firms that require inspections and maintenance protocols, in residential condos, everything is left to the discretion of the volunteers, albeit with well-meaning boards of directors.
And I am not in favor of regulation for the sake of regulation, nor of any taxes or charges. This is not what it is about. It’s about investing in your property like any other home or commercial property. It’s not just: “I paid for my condo, I have a key, I send my evaluation. See you later. ”I wish it was that easy!
It is the same maintenance that should be done in a house. Just on a larger scale.
In fact, what do you think the odds are that any of these proposed reforms will become law in the state of Florida at this time?
Several members and staff told me there was a desire to have a bill. What will it be, how far will it go to address maintenance and reserves, inspection and transparency – I honestly can’t tell you today. I would only speculate.