Experts Sound Alarm As Florida Condo Boards Drag Their Feet On Reserve Studies

Condo associations across Florida are doing everything they can to avoid the costs tied to the state-mandated Structural Integrity Reserve Study.

Instead of moving to comply, boards are stalling, aiming to scale back scopes or pleading with engineers to let them skid by, while others are banking on the hope that enforcement will be delayed or the law rolled back, engineers, consultants and contractors said at Bisnow’s South Florida Condo Summit on Wednesday.

Reasons for missed requirements vary, and so do the negotiations, said Audrey Ortiz-Blackmon, vice president of business development for Coast to Coast General Contractors. The company works with associations on repairing buildings so they can pass the structural integrity inspection.

“They get very creative,” Ortiz-Blackmon said onstage at the Design Center of the Americas in Dania Beach. “They immediately start wanting to figure out how they can take shortcuts and slash.”

The mandate, enacted in 2022, requires condo buildings three stories or higher and 30 years or older to undergo structural evaluations every 10 years and begin funding reserves, with a compliance deadline of conducting the studies by Dec. 31, 2024.

The law was aimed at strengthening Florida’s building safety after the 2021 condo collapse in Surfside that killed 98 people.

Even with two years to comply — and being allowed to waive or partially waive reserves one final time last year, if approved by the majority of condo owners — a majority of condo associations that meet the requirements didn't complete the SIRS.

Roughly 44% of condo owners in Miami-Dade County, 41% in Broward County and 28% in Palm Beach County completed their SIRS, the South Florida Business Journal reported.

Some associations have asked engineers to trim the list of required repairs or have misrepresented how much assessment work has been completed, speakers said. 

Misha Mladenovic, president of m2e Consulting Engineers, said some condo boards have paid only for visual inspections, only to then be forced to find qualified firms and most likely start the process over, not only delaying compliance but increasing the cost.

“I can't go and certify something made on somebody else's assessment,” Mladenovic said. 

In one case, a client offered Mladenovic $5K to sign off on a building just to push it forward, he said.

“It was essentially kicking the can down the road until the legislation either changed or modified to the point where it's going to be tolerable from a financial standpoint,” Mladenovic said.

The reserve requirements have been nudging the market toward a financial cliff.

Besides some buildings needing to cover potentially millions of dollars in repairs, the cost to insure a condo rose by 27.7% between 2022 and 2024. The average cost of a condo association policy has increased by 103%, from $72,570 to $147,381, the Sun Sentinel reported in September.

The soaring costs have pushed values for condos 30 years or older into a downward spiral, with average sale prices dropping 21% since 2023, according to an October ISG World report.

And while some condo owners have been forced to sell due to the mounting costs of repairs, others are simply playing chicken, seeing how far they can take it before they are penalized by the state, insurers or lenders.

“There are essentially people who still believe that it will never come to pass,” Mladenovic said.

Private insurers are already retreating from condo properties that can’t demonstrate active maintenance and compliance. Even if a roof is repairable, coverage may be denied unless associations commit the funds upfront, said Matthew Maffai, senior vice president at insurance firm Marsh.

“The less that you can show as being active on the front foot to comply with these issues, the harder it is to find a limit taker to insure your risk,” Maffai said.

Despite the time to prepare and the spotlight on the issue, Bilzin Sumberg partner Joe Hernandez said there are still associations that are seemingly unaware of the reserve requirements.

“I’ve had calls from associations as early as a few weeks ago that had no idea — that are waking up today figuring out that there's this new law they have to comply with — which is stunning to me,” Hernandez said. “But I think that explains why there's so much noncompliance.”

Whether associations were unaware or are trying to delay the assessments and repairs, lawmakers have made it clear going into Florida’s legislative session, which began in March, they aren’t looking to rescue condo owners — especially those who have neglected proper upkeep for years.

While there are no legal penalties for not abiding by the requirements, Florida legislators are still looking to ensure consequences are present.

Rep. Vicki Lopez introduced a bill that would restrict Florida’s state-run insurance program, Citizens Property Insurance Corp., from issuing or renewing policies to condo associations that haven't completed their SIRS, the Miami Herald reported.

Despite the rising costs and the push to corner condo owners to comply, industry professionals emphasized that the warnings aren’t exaggerated and buildings need to be assessed for basic safety.

“Neither building departments nor engineers, and certainly not property management [companies], are in the business of crying wolf just to create drama,” Mladenovic said. “It’s not professional — and the consequences are too serious.”

CORRECTION, APRIL 21, 10:45 A.M. E.T.: A previous version of this story misstated the timeline regarding condo associations' ability to waive or partially waive structural reserve funding. The story has been updated.