August 11, 2025 • 35 mins
New Florida HOA laws in 2025 impact reserves, inspections, and budgets! Learn what needs to be done to be in compliance.
✅ Is a Reserve Study right for you? 👉 https://www.reservestudy.com/
Major updates are coming for Florida HOAs in 2025! Reserve specialist Will Simons explains House Bill 913, detailing new rules for Structural Integrity Reserve Studies (SIRS), mandatory milestone inspections, and financial compliance. All these things WILL affect HOAs in Florida through board responsibilities, reserve funding, special assessments, and even property values. You can start proactively planning for your Florida HOA now by listening to this episode!
00:00 What's New in Florida's 2025 HOA Legislation?
04:08 What Prompted House Bill 913?
05:18 How Does HB 913 Change Reserve Study Requirements?
06:42 What Exactly is a Structural Integrity Reserve Study (SIRS)?
09:23 Why Do HOAs Need Both Structural and Non-Structural Reserve Studies?
10:49 How Do Florida's HOA Reserve Funding Rules Work?
14:18 What's the Impact of Underfunded HOAs on Property Values?
16:43 Are All Reserve Components Now Mandatory to Fund?
19:41 Ad Break
20:12 Key Highlights and Changes from House Bill 913
21:50 Has the Dollar Threshold for Reserve Funding Increased?
22:37 Why Did So Many HOAs Delay Reserve Compliance?
24:32 How Will Florida Enforce These New HOA Rules?
26:32 Can Special Assessments Replace Reserve Funding?
27:53 Are Florida HOAs Financially Prepared for New Legislation?
30:35 What Are Milestone Inspections and Who Needs One?
32:32 Final Advice for HOA Boards on Compliance and Preparation
The views & opinions expressed in this program are those of the Hosts & Guests, intended to provide general education about the community association industry. The content is not intended to provide specific advice or recommendations for any individual or organization. Please seek advice from licensed professionals.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Will Simons (00:00):
That good news side, the financial flexibility
(00:02):
means that now if you havealternative funding sources,
such as a special assessmentyou've passed, or a bank loan or
a line of credit yourassociation has obtained, you
can design your reserve planaround that. Go ahead and flip
the hourglass upside down onthose things. We're now going to
take care of those with thisthis cash we have so now going
(00:22):
into our reserve plan, we cantake into account the fact that
it now is a full life expectancyahead of it.
Announcer (00:29):
HOA Insights is brought to you by five companies
that c (00:31):
Association Insights and Marketplace Association
Reserves, Community Financials,HOA Invest, and Kevin Davis
Insurance Services. You'll findlinks to their websites and
social media in the show notes.
Robert Nordlund (00:44):
Welcome back to Hoa Insights
Common Areas. I'm RobertNordlund, and I'm here today for
episode number 118 with thepresident of our Florida
regional Association reservesoffice. Will Simons, Rs. The RS
stands for reserve specialist.
Now so many listener questionshave to do with Florida
legislation, even though we'reover four years after the tragic
(01:04):
Champlain towers South collapse,so there's still a lot going on.
The state of Florida continuesto balance the tightening of
standards related to condosafety and not upsetting the
balance of owner freedoms, ownerreactions, board
responsibilities and real estatevalues. So with a significant
new set of revised laws thatwent into effect July one here
(01:27):
of 2025 we felt it was a goodopportunity to get someone on
the show who was on the groundand well versed in this new law
and Florida legislation ingeneral. Well, last week's
episode 117 was another one ofour popular board hero
conversations, this time with aboard member from the Florida
Keys by the name of Lynnochberg. And we titled The
(01:49):
episode experience counts. Andyou'll realize that after just a
few minutes of listening to herstory of being a board member at
her association, she's adelightful lady, and when I
finished recording that episode,my thoughts afterwards were,
wow. Next time in SouthernCalifornia, I need to look her
up and make plans to visit. Iknow there are many of you
(02:11):
listening that are just likeLynn, selflessly and effectively
caring for your association, andwe want to say thank you and
celebrate the hard work you dofor your association. So if you
missed that episode or any otherprior episodes, take a moment
after today's program to listenfrom our podcast website, Hoa
insights.org, or watch on ourYouTube channel, but better yet,
(02:33):
subscribe from any of the majorpodcast platforms so you don't
miss any future episodes. Well,those of you watching on YouTube
can see one of my favorite mugshere. It's an HOA insights mug,
a couple of board memberstalking in front of their
deteriorated Association tryingto figure out if that's really
what they want to do with lowassessments. Anyway, I got that
(02:55):
mug from our merch store, whichyou can browse through from our
Hoa insights.org website, or thelink in the show notes, you'll
find we have some great freestuff there, like board member
zoom backgrounds and somespecialty items for sale, like
the mug. So go to the merchstore, download a free zoom
background, take a moment lookaround and find the mug you'd
(03:17):
like, and email me at podcast atreserves, a.com with your name,
shipping address, mug choice,mentioning episode 118 mug
giveaway, and if you're the 10thperson to email me, I'll ship
that mug to you free of charge.
Well, we enjoy hearing from youresponding to the issues you're
(03:39):
facing at your association. Soif you have a hot topic, a crazy
story, or a question you'd likeus to address, you can contact
us at the same email address,podcast at reserve study.com or
call us at 805-203-3130, butthis episode is on me. As I said
a moment ago, I wanted to sharesome news from Florida. About
(04:01):
this new mid year legislation,what it's about, why it was
written, and what it does. Sowill welcome to the
Will Simons (04:08):
program. Robert, Hey. Hello from Florida. Thanks
for
Robert Nordlund (04:11):
having me Fantastic. Okay, what's this new
bill called, and why did itstart here July one?
Will Simons (04:19):
Yeah, well, this most recent piece of legislation
is House Bill 913, this is theculmination of a process that
really began, I want to say lastsummer, maybe last fall. Prior
to this one, we had a coupleother pieces of legislation in
Florida that addressed the needfor reform for structural
(04:39):
integrity, reserve studies, frommilestone inspections, bunch of
other kind of overdue changes toFlorida law that were, you know,
unfortunately brought about bythe Champlain tower South
tragedy. So this really has beensomething that's been, you know,
beginning in workshops lastfall, and then made it through
this year's legislative cycle inFlorida. And was just, I. Passed
(05:00):
by the legislature maybe a monthsix weeks ago, something like
that, and then it was signedinto law maybe a week or two
ago, and it took effect July 1.
So I should say, I guess itprobably was signed late June,
but took effect July 1. So thisis now the new law of the land
here in Florida.
Robert Nordlund (05:19):
Excellent. And that's a clarification that I
want to make sure everyonehears. It's Florida law. It's
not national law. So the kind ofthings we're talking about today
have to do with Florida andspecifically their legislative
response to Champlain towersouth. Champlain tower South
collapse was 2021 so theystarted some condo safety
legislation. Wasn't the firstone in 2022
Will Simons (05:42):
Yeah, that was Senate Bill 4d. Was the first
official piece of legislationthat came out in summer of 2022
and then that was followed in 23by Senate Bill 154 and then in
2024 we had another house bill,which wasn't exactly meant to
change very much with the CERsrequirements. And just for those
(06:04):
listening, I'm going to say SIRsas an abbreviation. That's s, I
R S, that's structural integrityreserve study. So this is the
fourth year in a row, really,that we've got new legislation,
and I really see that as anongoing effort and a challenge
for the Florida lawmakers torespond to this. It's obviously
a very, very complicated issue,or really combination of issues,
(06:27):
and I've really been impressedwith how diligent the people
involved have been to try to getthis right. So the most recent
addition, or changes to the law,and there, there could be more
coming next year, but for rightnow, this is the latest.
Robert Nordlund (06:42):
Got it now, tell me about you said the SIRs
the structural integrity reservestudy. How is that different
from what people across thecountry might think of as a
reserve study?
Will Simons (06:53):
Yeah, what I've been trying to emphasize to
people is that it is still areserve study. It's still based
on a physical analysis and afinancial analysis for a
property. What's different abouta CERs from a conventional
reserve study is that inFlorida, we now kind of separate
out a subset of components whichare now considered, you know,
structural and those aremandatory to be funded in a
(07:16):
different way from nonstructural components so on.
Then on the structural side ofthings, we're looking
specifically at the roof,painting and waterproofing, the
structure of a building, windowsand doors, plumbing, electrical,
fire protection, and any otherbig ticket item that would
otherwise possibly compromise oraffect one of those things on
(07:38):
the list. So that's what you'llfind in a sirs. Now, as we know,
condos and co ops and otherproperties consist of much more
than that. You've got interiorcommon areas, lobbies, hallways,
swimming pools, elevators, airconditioning systems, you know,
tons and tons of other stuff,which are all traditional
reserve components but have notspecifically been selected for
(08:00):
that structural integritydesignation. So these days, what
we do for our clients and whatother providers are doing for
their clients, typically is tworeports. We will have the CERs
and then a, you know, a non SERSor a non structural reserve
study. Both of them, really,though, follow a lot of the same
principles, the samemethodology, you know, the
(08:21):
backbone of any good reservestudy starts with the component
list, with having an accurateunderstanding of what is there,
what is its life expectancy,what is its replacement cost,
and then translating that intoan actionable funding plan so
that the client has enough moneywhen they need it, and they
don't get caught by surprise andneed to rely on any outside
sources of funds that is trueand consistent with any reserve
(08:44):
study that's ever been done. Theonly difference now is the CERs
focuses a little bit morenarrowly on those things.
Robert Nordlund (08:50):
So you said a couple of things. There's the
mandatory side, the CERs side isa list of specific components or
projects at a property. And thenthere's the non mandatory, all
the, I want to say, normal stuffthat happens at a community
association. So what you have iskind of part A and part b2,
(09:13):
parts that together help a boardmember. And we're talking to
board members here understandwhat their total obligations
are.
Will Simons (09:23):
Yeah, that's very important, I think, for people
to understand that, toappreciate the total financial
picture for an association, youreally have to have both. We've
talked to some buildings in thelast couple of years who just
wanted to do the structural sideonly, and some others who said,
we've got a SIRs now we justwant to do the non structural
side. I really would try toavoid that. I would try to keep
(09:43):
your your reserve planning kindof in a comprehensive,
coordinated fashion, so thatyou're whenever somebody is
looking at the reserve budget,they're seeing the totality of
the property, because it's veryeasy to get caught by surprise.
You know, one of the things Imentioned there was elevators,
particularly with higher.
Buildings. Elevators are one ofthe most expensive things that
you'll need to budget for, butthey're not considered
(10:04):
structural components under thatlaw. So, you know, we really
just want to emphasize to peoplethat you can't, you know, close
one eye and expect to see thewhole thing, right? You have to
have the both studies together,representing the entire
property?
Robert Nordlund (10:21):
Yeah. I imagine, if you're in a was it
13 stories for Champlain towersouth? Um, yeah, something like
that, yeah. And all of a sudden,two of the three elevators
aren't working, and the thirdone is unreliable. Your life's
really going to change if you'reon the 11th or 12th or 13th
floor,
Will Simons (10:37):
yeah, no doubt about it, especially in Florida,
where we have a lot of retireesand folks that would not look
too fine, look too kindly attaking the stairs on a hot day
for 10 or 12 stories. So yeah,absolutely.
Robert Nordlund (10:49):
Well, I also want to explore a little bit
about the mandatory and nonmandatory that's an issue in
Florida, because almost for whatcan we say for decades? Haven't
the owners there had a line itemveto for reserve funding?
Will Simons (11:06):
Yeah, if this, if we had the magic wand that that
we that we would like to have, Iwould turn back time and change
this. You know, decades ago, andit would have done a lot of
people a lot of a lot of good.
But yeah, for a long time,association residents, not the
board of directors, but theresidents of a property have the
final say so on whether or notthey would include reserve
(11:29):
funding in their annual budget.
So what would happen,traditionally or typically, is
the board is charged withpreparing the annual budget.
They have to put together abudget that includes adequate
reserve funding for theircomponents, but then there would
be a step where the membershipcould vote to waive those
reserve funds, or not put themoney away, or to partially fund
(11:49):
them. So we have a lot ofproperties in Florida that
historically did little tonothing when it came to reserve
funding, and they were illegallyallowed to do that. Well,
Robert Nordlund (12:00):
wait, I want to make sure you say that clearly
they were legally allowed to dothat,
Will Simons (12:05):
correct? Yes, they were within their rights to do
that. They provided that theywent through the motions right,
they would have to get anadequate vote taken. But if that
took place, they would be ableto enjoy, say, enjoy an annual
budget that did not have anyreserve money in it. Now, if you
look at that from theperspective of a brand new
(12:26):
building, right, where theirreserve obligations feel very
far off, you can kind ofunderstand the mentality, right?
The board might say, Okay,here's Plan A we have to show
you this number that's gotreserve money in it, and it's
going to cost you, you know,$400 a month. Well, here's Plan
B, if we take out all thereserve money, it's $200 or $250
(12:48):
a month. Which would you guyslike? And if you're sitting here
in a brand new building, it'svery easy to to not care or to
turn a blind eye to those thingsthat are, you know, going to be
somebody else's problem way downthe road, fast forward and over
time, if every generation ofowners who comes and goes
through that building has thatsame mentality, nobody's picking
(13:09):
up the tab, right? It just getsshifted and shifted and shifted
until those projects start tocome due. Now you're looking at
a roof replacement or a bigpainting project, or whatever it
may be that you have not beensaving for over all this time,
and so traditionally, that wouldbe a special assessment or a
bank loan to pay for that. Andpeople kind of shrug and move on
(13:30):
and say, Okay, next time thathappens, it'll be somebody
else's issue. Well, this, thishas gone on in Florida for a
long, long time, and it's veryunfortunate, because now we've
got a lot of aging propertieswhere the rate of saving has not
kept up with the rate ofdeterioration of their
components, and they're findingthemselves in a tough spot.
Robert Nordlund (13:49):
Yeah, I think it was Warren Buffett said
regarding investors, when thetide goes out, you find out
who's who isn't who isn'twearing a bathing suit. And I
think this is one of thosesituations where people are
looking around in Florida andsaying, oh, yikes, we've been at
with your hypothetical. We'vebeen at 250 a month, and we
(14:11):
should have been at 400 a month.
Will Simons (14:13):
That's 100 and now it's going to be 700 a month,
and because we're making up forlost time, right?
Robert Nordlund (14:18):
Exactly. And that's that's a hard thing. And
so that's why, if you're in the49 other states, and you're
hearing about the condo crisisin Florida, we're talking about
a lot of associations that havebeen kind of from my California
point of view, the owners havebeen going to Disney World
instead of setting aside fundstowards reserves. Again, from an
(14:39):
outside point of view. It Itfeels kind of crazy, because
Mother Nature and Father Timedon't care what the reserve
requirements are, they're gonnado what they do, and that's wear
down a building. So, yeah, yeah.
So it's catch up time.
Will Simons (14:56):
It's definitely unfortunate, you know, and I
think part of it is just. Kindof just maybe a little bit of
complacency, but, but again,these people were not breaking
the law. This was an allowableoption, and it was the norm in a
lot of places. And so, you know,for a long time, I've always
kind of felt that, you know,historically, associations that
did do a good job of funding thereserves, right, that they were
(15:18):
being responsible putting awaythat money kind of took a hit in
the marketplace, in the sensethat, if I'm a condo buyer and
I'm looking at two buildings,and one has a healthy reserve
fund and is budgeting properly,but the dues are higher. There
500 a month, yeah, compared tothe the other building across
the street, where, you know,little to no reserves, not as
(15:40):
much in the budget, but theirannual, you know, assessment, or
their monthly assessment, islower. To the uninformed buyer,
that second building might looka little bit more attractive.
Hey, the dues are less overhere. Otherwise, these buildings
look and feel about the same. Tome, not really digging into the
financial statements, my realtorsaid, This building's Great.
Well, what do I know thedifference? So if you were in
(16:01):
that first building, right,you're almost kind of getting
penalized in the market a littlebit by your your property value
may be suffering because you'renot as attractive to that pool
of buyers. So what I think ishappening now with this new law,
and that, you know, the lastcouple years have resulted in
this kind of a leveling of theplaying field, I think now that
everybody's going to be mandatedto fund their reserves properly.
(16:23):
That's going to balance thingsout. Now, it might take a little
bit of time. It might take alittle bit of friction and
frustration, but this is a goodthing for the state of Florida.
Ultimately, people are going tobe paying the appropriate
amounts right, paying the truecost of ownership to live in
these buildings, which,historically, I don't think they
were quite doing that.
Robert Nordlund (16:43):
Yeah, and you said a phrase, they're mandated
to fund their reserves properly.
Still in Florida, they're onlymandated to fund a few of their
components. They can still waivefunding for, as you said, the
air conditioner, the elevator,the carpeting, all that kind of
stuff.
Will Simons (17:00):
Yeah, that is true, right? So that in this last
couple years of legislation,they did improve that it is now
more difficult to waive fundingfor those non structural
components. Now requires abasically a simple majority, 51%
vote of the owners to do thatwas in prior years, typically
was a majority of a quorum ofowners. So if you had 100 units
(17:24):
in a building, and a quorum was,you know, 35 owners, well, you
would only need a majority of 35so you could have 18 people who
decide the fate for all 100people, because they're the ones
who showed up and were vocal atthe meeting. Now it's 51 out of
100 owners would have to show upto make that vote. So that's a
step in the right direction too.
I mean, obviously we don't thinkthere's ever a good reason to
(17:44):
waive reserve funding thatdoesn't make the problem go
away. You're just gonna have topay for it in another fashion,
some other time. But yeah, thatthat's a, you know, a half step
in the right direction.
Robert Nordlund (17:56):
Yeah, I realize I'm wringing my hands here just
thinking about that kind ofstuff, so the people watching on
YouTube can see what I'mthinking about this. But yeah,
it's a good challenge for peopleacross state lines, in Georgia
or up the coast in Virginia oranywhere else. They're saying,
like, wait, wait a minute,they're only paying part of what
(18:20):
they should have been paying.
So, yeah, there's going to be arebalancing. But are you
beginning to see at all the orget a sense that the new condo
buyers are looking for thereported reserve fund strength
to find out if they're buyinginto a strong association or a
weak Association? Has thatstarted to happen yet?
Will Simons (18:40):
Yeah, I think so.
Anecdotally, I hear about that.
We get calls from people who arein the process of trying to buy
a condo, and whether it's themor their lender that's requiring
it. There is more of a focus andintention on this. Spoke at a
panel discussion earlier thisyear for the Miami chapter of
the National Association ofRealtors, their whole room full
(19:01):
of realtors who are all askingvery intelligent questions about
condo reserves and, you know,budgets and fund amounts and
requirements that, you know,five years ago, 10 years ago, I
don't know that that would havebeen a topic of discussion, or
if it would have been, you know,an afterthought. So, yeah, I
think that the whole market istaking these things more
seriously now as they should.
Yeah,
Robert Nordlund (19:23):
well, that's That's a good thought. That's a
sobering thought. And I have anumber of additional questions I
want to find out, and I'm sureour audience does too, but it's
time to take a quick break tohear from one of our generous
sponsors, after which we'll beback with more common sense for
common areas and news aboutFlorida legislation.
Paige Daniels (19:41):
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condominium board? Making theright financial decisions for
your community's future iscrucial. At Association
reserves, we're proud to servecommunities nationwide,
specializing in reserve studiestailored to your community's
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property's assets. Forecastfuture expenses and develop a
(20:02):
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condominium association, we'vegot you covered. Visit
reservestudy.com to learn moreand get a proposal for your
association.
Robert Nordlund (20:12):
Now we're back well during the break, Will and
I were speaking about thelegislation itself, and
realizing that we owe you anexplanation about what this
legislation actually says anddoes. So will take us down the
path of some of the hype, thekey points or the highlights of
this new legislation that wentinto effect, July 120, 25 in
Florida.
Will Simons (20:33):
Sure. Yeah, there's, there's a lot to it. I
believe the final bill text is190 something pages, so Yikes. I
won't pretend to cover it in anygreat detail. I mean, there's
stuff that touches on milestone,inspection requirements,
responsibilities for developers,board member obligations, things
like that. So I'll try to focuson some of the really important
(20:55):
stuff. This is not a tear downand rebuild of any prior
legislation. It's a fine tuningof it, the list of components
required in a CERs did notchange, except for one, you
know, small but importantdetail, the dollar threshold for
what constitutes a kind ofsignificant dollar amount has
been raised from $10,000 to$25,000 so I think that was,
(21:18):
that was fine. That's good. The$10,000 number had been in place
for decades and hadn't beenupdated in quite a long time. So
effectively, what that means is,Well, traditionally, condos had
to fund reserves for roofingpainting and pavement
resurfacing and anything over$10,000 so now all condos in the
state, not just those subject tothe service requirements, can
(21:41):
actually enjoy that thatincrease. Aren't
Robert Nordlund (21:43):
there some significant projects that are
still 1011, $12,000 that theyarguably should
Will Simons (21:50):
fund through reserves, absolutely, just
because the log gives you thatoption doesn't mean you should
take it, right? If you're in a12 unit building, that $25,000
cost is more than two grand perowner, right? So you don't want
to get caught by surprise forthat. So just because you know
the law gives that option, Ithink each building needs to
look at what is a significantthreshold for them and then plan
(22:14):
accordingly. So you knowprocedurally how to do a CERs
didn't really change in this.
One of the very important thingswas the deadline has shifted. So
initially the requirement to getyour CERs done was December 31
2024 very few relativelyspeaking associations met that
deadline. So that's beenextended to December 31 2025 so
about another six months fromnow,
Robert Nordlund (22:38):
why do you think so many associations were
slow to get started on planningfor I want to say inevitable
deterioration, finding out wherethey stand. I
Will Simons (22:48):
think it's a combination of things. I think
there was just some initialsluggishness, because the laws
were changing every year. Ithink if you go back to 2022 and
you look at what the requirementwas, that changed pretty
dramatically from 22 to 23another major change that
happened in 2023 was theyexpanded the pool of providers
(23:09):
who could actually do theserves. Initially, you had to be
a licensed architect orengineer, and traditionally,
those people don't do researchstudies, or at least not as kind
of a primary line of business.
So when they allowed companieslike ours to really, you know,
do the entire process, thatreally expanded the pool of
providers. But that waseffectively summer of 2023 so
that was only 18 months of timeto to enjoy that that extra
(23:32):
capacity. One result of thattoo, was that every reserve
study provider in the in thestate got very busy very
quickly, and so there werestretches of time where it was
hard to even get a proposal fromsomebody. So I don't think that
there was, you know, completeapathy on the part of a lot of
associations. They just couldn'tget a good quality provider that
(23:53):
they trusted in enough time,
Robert Nordlund (23:56):
because companies like you were just
playing busy and hiring andtraining as hard as you could.
Yeah,
Will Simons (24:03):
exactly. I think there was also somewhat of a
question mark aroundenforcement, right? There was
not any real clear answer to,you know, what happens if you
don't get it done by thatdeadline? You know, there was a
lot of associations that I thinkwere maybe just kind of sitting
on the sideline waiting to seewhat would happen. That is
(24:23):
another new aspect of thisyear's bill that is significant.
So the DB PR, the Florida whichis, yeah, Department of Business
and Professional Regulation.
Robert Nordlund (24:33):
So much of this just rolls off your tongue.
Sure, I'm
Will Simons (24:37):
glad it sounds like that to you. It feels like a
mouthful, but they are the kindof enforcement body in the state
that oversees condominiums andCo Ops, and they have been
granted additional powers underthis bill to find to issue civil
fines to associations who do notmeet the deadline, possibly also
to remove board members fromtheir positions. So I know our
(24:57):
audience has got a lot of boardmembers in it, and. That you
care about that position in yourcommunity, and you have not done
your CERs or won't have it doneby the end of this year, you are
at risk from being removed fromthat position. The DBPR has
taken this pretty seriously.
They've also been granted someadditional budgets, some
additional staff this year toexpand their enforcement
(25:18):
capabilities. I know it's a bigissue, and so this year, the
Florida Legislature reallyfocused on that kind of in two
ways, right? They said, We wantyou to be more responsible.
We're going to enforce this, butwe're also going to give more
flexibility to associations.
That's kind of the good news.
Bad news. That good news side,the financial flexibility means
that now if you have alternativefunding sources, such as a
(25:42):
special assessment you'vepassed, or a bank loan or a line
of credit your association hasobtained, you can design your
reserve plan around that. Okay,so if you have an association
that was looking at a milliondollar project, you got your
SIRs done last year, and thereyou just couldn't fund that
money very quickly. You had todo a special assessment or
(26:05):
borrow it. That's okay. You cannow go back to your service
provider and update that study,saying, Hey, we now have this
cash that's readily available toour board to spend on these
projects. Go ahead and flip thehourglass upside down on those
things. We're now going to takecare of those with this this
cash we have so now going intoour reserve plan, we can take
into account the fact that itnow is a full life expectancy
(26:26):
ahead of
Robert Nordlund (26:28):
it, good, and that'll change their funding
requirements significantly.
Will Simons (26:32):
Oh, yeah, it should decrease them, right? So if
you're in one of theseassociations that you know went
through the process in the lastyear, two, three years, and has
now obtained this money that youdidn't have before it's time to
update your CERs to take thatinto account, and in fact, you
actually have to. So the part ofthe new law says that any before
(26:53):
you adopt any new annual budget,if the funding of reserves does
not align with your most recentCERs, you must obtain an updated
one good news is that does notmean you have to start from
scratch. Okay, you probablydon't have to have another
inspection done. This may justbe a quick we call it a no site
visit update, where it's justcorrespondence with the provider
(27:15):
telling them, Hey, here's ournew projects, here's our new
account balance. Generate a newfinancial analysis for us based
on that, it's going to be muchquicker turnaround, much lower
cost than what you pay for yourcomprehensive serves that you've
already done well.
Robert Nordlund (27:28):
It seems like there's also this momentum
factor that there was a lot ofassociations that were really
liking living in their maybesheltered little reality of not
funding for ongoingdeterioration, and maybe they
just were holding out hope thatit wasn't true, and with all the
(27:49):
changes in legislation, maybe itwas going to change back.
Will Simons (27:53):
Yeah. I mean, it has been a tough time for
associations in Florida. Lastseveral years, we've had several
major hurricanes. The insurancepremiums have gone up
dramatically for a lot of a lotof properties. They are hurting
financially in a couple ofdifferent ways. And these new
reserve requirements for a lotof people have felt like
somewhat of a punishment, orthis, you know, kicking them
(28:15):
when they're down. And it reallyis not that. I mean, the data
that we've seen from the, youknow, about 1000 SIRs that we've
prepared is that the net averageincrease to the owners is, you
know, 100, 200 bucks a month formost properties. This is not,
you know, completely, you know,budget destruction day. No, it
(28:37):
shouldn't be right. So it'suncomfortable. It might be
difficult for some people. Idon't want to, you know, say
that there's not outlierbuildings where they really are
in a lot of trouble, but I wouldargue that that would have been
the case either way. You know,in a world where the tower never
collapses and these new fundingrequirements were never instant,
you know, put in place, thesebuildings still would have had
(28:59):
all the same projects that theynow need to do, and they would
have been in difficult financialcircumstances either way. So I
think this is done, is just tobe illuminated a problem that
was manifesting for a long time.
Robert Nordlund (29:10):
Yeah, well, I'm thinking back, didn't Champlain
towers south? I'm thinking roughnumbers here. Weren't they about
to launch a $8 million specialassessment or rehabilitation
project divided by what 135units, something like that. It
was
Will Simons (29:26):
something like that. Yeah, the the dollar
amount might have even more, Ithink it, I know it crept up a
little bit by the time of thetower collapse. It was, you
know, certainly millions ofdollars. I know they were about
to begin work, or had begun workon a roof project. So, you know,
that's just part of the sadnessof that story, is that they were
trying to turn things around.
They had obtained some money.
(29:47):
They were, you know, pullingthemselves up by their
bootstraps, and just, you know,sadly, ran out of time, and it's
just a terrible wake up call.
But that, yeah, that was thefinancial reality. They were
about a 40 year old property.
That traditionally had not putenough money away and found
themselves facing a bunch ofbig, expensive projects that
were all kind of hitting at thesame time. And
Robert Nordlund (30:08):
my thinking is, if that the way Chaplain tower
South was, there's got to be10s, if not hundreds, of other
ones that are right up to that.
And like you said, outlierproperties, not necessarily all,
but there's a lot of propertiesthat got way behind with a lot
of catch up projects to do, andit is going to be expensive for
a number of associations, atleast for a while. Hey, you also
(30:29):
mentioned the word a milestoneinspection. Can you tell people
what you're talking about there?
Will Simons (30:35):
Yeah. So a milestone inspection is not
required for all condo and Co Opproperties. It's only for older
properties. So typically, thefirst one would be due at 30
years. You know, that's kind ofthe state requirement, unless
there is a local requirementthat requires it sooner. You
know, if their city or countymay have a different timeline
(30:55):
that's more restrictive, they'dhave to abide by that. But
typically it's first one wouldbe due at the 30 year, you know,
Mark of the the building, codate, and then every 10 years
thereafter, and a milestoneinspection must be done by an
architect or an engineer. And itis, is more narrowly focused.
It's, it's a specifically aninspection of the structure of
(31:16):
the building. It starts withwhat's called a phase one
inspection, which is just avisual inspection. If the
inspector sees no signs ofsignificant deterioration or
nothing that is alarming. That'sbasically it. You know, they
they pass. And, you know, ifthere's any repairs required,
they would have to do those, andthen they're good. And kind of,
(31:37):
you know, get a 10 year bill ofhealth there. If there is any
substantial deterioration, itgoes to a phase two, which is
much more intense, that's, youknow, going beyond a visual
inspection using diagnosticmethods, maybe, you know,
tapping into concrete, you know,really kind of going beneath the
surface to see what's wrong andthen correcting it from there.
So if a property has had thatdone within the last couple
(32:01):
years, that's part of this newhouse bill 913, is they can also
now pause their reserve fundingcontributions while they sort
out the results of thatmilestone inspection. So if they
had some immediate need for amajor, you know, structural
repairs or waterproof companies
Robert Nordlund (32:17):
here, or something like that, yeah, yeah,
the
Will Simons (32:20):
state wants them to focus on correcting those issues
first, and then resume yourreserve funding, you know, as
soon as you're able. But that'sanother example of kind of the
financial flexibility that wasbuilt
Robert Nordlund (32:32):
into this one.
I like that. And gets back tothat starting point. Is it? It's
all about safety, right? Well,Will? We? Could this? More and
more about this, but it's beengreat talking with you and the
time we have today for the showand having you on the program.
Any closing thoughts to add atthis time? No, I think we
covered
Will Simons (32:52):
it pretty well. I mean, there's, there's going to
be a lot more coverage of thisbill. There already are quite a
few webinars and bulletins.
There's law firms that areproviding their kind of cheat
sheet summaries of it. So forpeople who want to learn more,
we're going to be doing awebinar on July 15 where I'll
speak for probably about an houron this topic, taking questions
from the audience. So by thetime you hear this podcast, they
(33:15):
may have already been completed,but we'll definitely record that
make that available. So, yeah, Idon't have anything else to add
other than, uh, thanks to allwho joined us today, and we hope
you got some good informationfrom this
Robert Nordlund (33:28):
fantastic Well, if you'd like to get in touch
with will or our Floridaregional office, you can learn
more about their office andtheir staff@reserves.com and
just want to let you know, we'llhave a direct link in the show
notes to that and to clarify,will your team prepares reserve
sites all across Florida andadjacent states in the
southeast?
Will Simons (33:48):
That's right, yeah, yeah, the majority of our teams
in Florida, but we, yeah, wecover, you know, kind of the
whole Gulf region. So I want
Robert Nordlund (33:56):
to get this program closed up so I can get
you back to handling proposalsand training your staff and
taking care of reserves day. Soto our audience, we hope you
learned some HOA insights fromour discussion today that helps
you bring common sense to yourcommon areas. We look forward to
having you join us for anothergreat episode next week.
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(35:02):
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That good news side, the financial flexibility
(00:02):
means that now if you havealternative funding sources,
such as a special assessmentyou've passed, or a bank loan or
a line of credit yourassociation has obtained, you
can design your reserve planaround that. Go ahead and flip
the hourglass upside down onthose things. We're now going to
take care of those with thisthis cash we have so now going
(00:22):
into our reserve plan, we cantake into account the fact that
it now is a full life expectancyahead of it.
Announcer (00:29):
HOA Insights is brought to you by five companies
that c (00:31):
Association Insights and Marketplace Association
Reserves, Community Financials,HOA Invest, and Kevin Davis
Insurance Services. You'll findlinks to their websites and
social media in the show notes.
Robert Nordlund (00:44):
Welcome back to Hoa Insights
Common Areas. I'm RobertNordlund, and I'm here today for
episode number 118 with thepresident of our Florida
regional Association reservesoffice. Will Simons, Rs. The RS
stands for reserve specialist.
Now so many listener questionshave to do with Florida
legislation, even though we'reover four years after the tragic
(01:04):
Champlain towers South collapse,so there's still a lot going on.
The state of Florida continuesto balance the tightening of
standards related to condosafety and not upsetting the
balance of owner freedoms, ownerreactions, board
responsibilities and real estatevalues. So with a significant
new set of revised laws thatwent into effect July one here
(01:27):
of 2025 we felt it was a goodopportunity to get someone on
the show who was on the groundand well versed in this new law
and Florida legislation ingeneral. Well, last week's
episode 117 was another one ofour popular board hero
conversations, this time with aboard member from the Florida
Keys by the name of Lynnochberg. And we titled The
(01:49):
episode experience counts. Andyou'll realize that after just a
few minutes of listening to herstory of being a board member at
her association, she's adelightful lady, and when I
finished recording that episode,my thoughts afterwards were,
wow. Next time in SouthernCalifornia, I need to look her
up and make plans to visit. Iknow there are many of you
(02:11):
listening that are just likeLynn, selflessly and effectively
caring for your association, andwe want to say thank you and
celebrate the hard work you dofor your association. So if you
missed that episode or any otherprior episodes, take a moment
after today's program to listenfrom our podcast website, Hoa
insights.org, or watch on ourYouTube channel, but better yet,
(02:33):
subscribe from any of the majorpodcast platforms so you don't
miss any future episodes. Well,those of you watching on YouTube
can see one of my favorite mugshere. It's an HOA insights mug,
a couple of board memberstalking in front of their
deteriorated Association tryingto figure out if that's really
what they want to do with lowassessments. Anyway, I got that
(02:55):
mug from our merch store, whichyou can browse through from our
Hoa insights.org website, or thelink in the show notes, you'll
find we have some great freestuff there, like board member
zoom backgrounds and somespecialty items for sale, like
the mug. So go to the merchstore, download a free zoom
background, take a moment lookaround and find the mug you'd
(03:17):
like, and email me at podcast atreserves, a.com with your name,
shipping address, mug choice,mentioning episode 118 mug
giveaway, and if you're the 10thperson to email me, I'll ship
that mug to you free of charge.
Well, we enjoy hearing from youresponding to the issues you're
(03:39):
facing at your association. Soif you have a hot topic, a crazy
story, or a question you'd likeus to address, you can contact
us at the same email address,podcast at reserve study.com or
call us at 805-203-3130, butthis episode is on me. As I said
a moment ago, I wanted to sharesome news from Florida. About
(04:01):
this new mid year legislation,what it's about, why it was
written, and what it does. Sowill welcome to the
Will Simons (04:08):
program. Robert, Hey. Hello from Florida. Thanks
for
Robert Nordlund (04:11):
having me Fantastic. Okay, what's this new
bill called, and why did itstart here July one?
Will Simons (04:19):
Yeah, well, this most recent piece of legislation
is House Bill 913, this is theculmination of a process that
really began, I want to say lastsummer, maybe last fall. Prior
to this one, we had a coupleother pieces of legislation in
Florida that addressed the needfor reform for structural
(04:39):
integrity, reserve studies, frommilestone inspections, bunch of
other kind of overdue changes toFlorida law that were, you know,
unfortunately brought about bythe Champlain tower South
tragedy. So this really has beensomething that's been, you know,
beginning in workshops lastfall, and then made it through
this year's legislative cycle inFlorida. And was just, I. Passed
(05:00):
by the legislature maybe a monthsix weeks ago, something like
that, and then it was signedinto law maybe a week or two
ago, and it took effect July 1.
So I should say, I guess itprobably was signed late June,
but took effect July 1. So thisis now the new law of the land
here in Florida.
Robert Nordlund (05:19):
Excellent. And that's a clarification that I
want to make sure everyonehears. It's Florida law. It's
not national law. So the kind ofthings we're talking about today
have to do with Florida andspecifically their legislative
response to Champlain towersouth. Champlain tower South
collapse was 2021 so theystarted some condo safety
legislation. Wasn't the firstone in 2022
Will Simons (05:42):
Yeah, that was Senate Bill 4d. Was the first
official piece of legislationthat came out in summer of 2022
and then that was followed in 23by Senate Bill 154 and then in
2024 we had another house bill,which wasn't exactly meant to
change very much with the CERsrequirements. And just for those
(06:04):
listening, I'm going to say SIRsas an abbreviation. That's s, I
R S, that's structural integrityreserve study. So this is the
fourth year in a row, really,that we've got new legislation,
and I really see that as anongoing effort and a challenge
for the Florida lawmakers torespond to this. It's obviously
a very, very complicated issue,or really combination of issues,
(06:27):
and I've really been impressedwith how diligent the people
involved have been to try to getthis right. So the most recent
addition, or changes to the law,and there, there could be more
coming next year, but for rightnow, this is the latest.
Robert Nordlund (06:42):
Got it now, tell me about you said the SIRs
the structural integrity reservestudy. How is that different
from what people across thecountry might think of as a
reserve study?
Will Simons (06:53):
Yeah, what I've been trying to emphasize to
people is that it is still areserve study. It's still based
on a physical analysis and afinancial analysis for a
property. What's different abouta CERs from a conventional
reserve study is that inFlorida, we now kind of separate
out a subset of components whichare now considered, you know,
structural and those aremandatory to be funded in a
(07:16):
different way from nonstructural components so on.
Then on the structural side ofthings, we're looking
specifically at the roof,painting and waterproofing, the
structure of a building, windowsand doors, plumbing, electrical,
fire protection, and any otherbig ticket item that would
otherwise possibly compromise oraffect one of those things on
(07:38):
the list. So that's what you'llfind in a sirs. Now, as we know,
condos and co ops and otherproperties consist of much more
than that. You've got interiorcommon areas, lobbies, hallways,
swimming pools, elevators, airconditioning systems, you know,
tons and tons of other stuff,which are all traditional
reserve components but have notspecifically been selected for
(08:00):
that structural integritydesignation. So these days, what
we do for our clients and whatother providers are doing for
their clients, typically is tworeports. We will have the CERs
and then a, you know, a non SERSor a non structural reserve
study. Both of them, really,though, follow a lot of the same
principles, the samemethodology, you know, the
(08:21):
backbone of any good reservestudy starts with the component
list, with having an accurateunderstanding of what is there,
what is its life expectancy,what is its replacement cost,
and then translating that intoan actionable funding plan so
that the client has enough moneywhen they need it, and they
don't get caught by surprise andneed to rely on any outside
sources of funds that is trueand consistent with any reserve
(08:44):
study that's ever been done. Theonly difference now is the CERs
focuses a little bit morenarrowly on those things.
Robert Nordlund (08:50):
So you said a couple of things. There's the
mandatory side, the CERs side isa list of specific components or
projects at a property. And thenthere's the non mandatory, all
the, I want to say, normal stuffthat happens at a community
association. So what you have iskind of part A and part b2,
(09:13):
parts that together help a boardmember. And we're talking to
board members here understandwhat their total obligations
are.
Will Simons (09:23):
Yeah, that's very important, I think, for people
to understand that, toappreciate the total financial
picture for an association, youreally have to have both. We've
talked to some buildings in thelast couple of years who just
wanted to do the structural sideonly, and some others who said,
we've got a SIRs now we justwant to do the non structural
side. I really would try toavoid that. I would try to keep
(09:43):
your your reserve planning kindof in a comprehensive,
coordinated fashion, so thatyou're whenever somebody is
looking at the reserve budget,they're seeing the totality of
the property, because it's veryeasy to get caught by surprise.
You know, one of the things Imentioned there was elevators,
particularly with higher.
Buildings. Elevators are one ofthe most expensive things that
you'll need to budget for, butthey're not considered
(10:04):
structural components under thatlaw. So, you know, we really
just want to emphasize to peoplethat you can't, you know, close
one eye and expect to see thewhole thing, right? You have to
have the both studies together,representing the entire
property?
Robert Nordlund (10:21):
Yeah. I imagine, if you're in a was it
13 stories for Champlain towersouth? Um, yeah, something like
that, yeah. And all of a sudden,two of the three elevators
aren't working, and the thirdone is unreliable. Your life's
really going to change if you'reon the 11th or 12th or 13th
floor,
Will Simons (10:37):
yeah, no doubt about it, especially in Florida,
where we have a lot of retireesand folks that would not look
too fine, look too kindly attaking the stairs on a hot day
for 10 or 12 stories. So yeah,absolutely.
Robert Nordlund (10:49):
Well, I also want to explore a little bit
about the mandatory and nonmandatory that's an issue in
Florida, because almost for whatcan we say for decades? Haven't
the owners there had a line itemveto for reserve funding?
Will Simons (11:06):
Yeah, if this, if we had the magic wand that that
we that we would like to have, Iwould turn back time and change
this. You know, decades ago, andit would have done a lot of
people a lot of a lot of good.
But yeah, for a long time,association residents, not the
board of directors, but theresidents of a property have the
final say so on whether or notthey would include reserve
(11:29):
funding in their annual budget.
So what would happen,traditionally or typically, is
the board is charged withpreparing the annual budget.
They have to put together abudget that includes adequate
reserve funding for theircomponents, but then there would
be a step where the membershipcould vote to waive those
reserve funds, or not put themoney away, or to partially fund
(11:49):
them. So we have a lot ofproperties in Florida that
historically did little tonothing when it came to reserve
funding, and they were illegallyallowed to do that. Well,
Robert Nordlund (12:00):
wait, I want to make sure you say that clearly
they were legally allowed to dothat,
Will Simons (12:05):
correct? Yes, they were within their rights to do
that. They provided that theywent through the motions right,
they would have to get anadequate vote taken. But if that
took place, they would be ableto enjoy, say, enjoy an annual
budget that did not have anyreserve money in it. Now, if you
look at that from theperspective of a brand new
(12:26):
building, right, where theirreserve obligations feel very
far off, you can kind ofunderstand the mentality, right?
The board might say, Okay,here's Plan A we have to show
you this number that's gotreserve money in it, and it's
going to cost you, you know,$400 a month. Well, here's Plan
B, if we take out all thereserve money, it's $200 or $250
(12:48):
a month. Which would you guyslike? And if you're sitting here
in a brand new building, it'svery easy to to not care or to
turn a blind eye to those thingsthat are, you know, going to be
somebody else's problem way downthe road, fast forward and over
time, if every generation ofowners who comes and goes
through that building has thatsame mentality, nobody's picking
(13:09):
up the tab, right? It just getsshifted and shifted and shifted
until those projects start tocome due. Now you're looking at
a roof replacement or a bigpainting project, or whatever it
may be that you have not beensaving for over all this time,
and so traditionally, that wouldbe a special assessment or a
bank loan to pay for that. Andpeople kind of shrug and move on
(13:30):
and say, Okay, next time thathappens, it'll be somebody
else's issue. Well, this, thishas gone on in Florida for a
long, long time, and it's veryunfortunate, because now we've
got a lot of aging propertieswhere the rate of saving has not
kept up with the rate ofdeterioration of their
components, and they're findingthemselves in a tough spot.
Robert Nordlund (13:49):
Yeah, I think it was Warren Buffett said
regarding investors, when thetide goes out, you find out
who's who isn't who isn'twearing a bathing suit. And I
think this is one of thosesituations where people are
looking around in Florida andsaying, oh, yikes, we've been at
with your hypothetical. We'vebeen at 250 a month, and we
(14:11):
should have been at 400 a month.
Will Simons (14:13):
That's 100 and now it's going to be 700 a month,
and because we're making up forlost time, right?
Robert Nordlund (14:18):
Exactly. And that's that's a hard thing. And
so that's why, if you're in the49 other states, and you're
hearing about the condo crisisin Florida, we're talking about
a lot of associations that havebeen kind of from my California
point of view, the owners havebeen going to Disney World
instead of setting aside fundstowards reserves. Again, from an
(14:39):
outside point of view. It Itfeels kind of crazy, because
Mother Nature and Father Timedon't care what the reserve
requirements are, they're gonnado what they do, and that's wear
down a building. So, yeah, yeah.
So it's catch up time.
Will Simons (14:56):
It's definitely unfortunate, you know, and I
think part of it is just. Kindof just maybe a little bit of
complacency, but, but again,these people were not breaking
the law. This was an allowableoption, and it was the norm in a
lot of places. And so, you know,for a long time, I've always
kind of felt that, you know,historically, associations that
did do a good job of funding thereserves, right, that they were
(15:18):
being responsible putting awaythat money kind of took a hit in
the marketplace, in the sensethat, if I'm a condo buyer and
I'm looking at two buildings,and one has a healthy reserve
fund and is budgeting properly,but the dues are higher. There
500 a month, yeah, compared tothe the other building across
the street, where, you know,little to no reserves, not as
(15:40):
much in the budget, but theirannual, you know, assessment, or
their monthly assessment, islower. To the uninformed buyer,
that second building might looka little bit more attractive.
Hey, the dues are less overhere. Otherwise, these buildings
look and feel about the same. Tome, not really digging into the
financial statements, my realtorsaid, This building's Great.
Well, what do I know thedifference? So if you were in
(16:01):
that first building, right,you're almost kind of getting
penalized in the market a littlebit by your your property value
may be suffering because you'renot as attractive to that pool
of buyers. So what I think ishappening now with this new law,
and that, you know, the lastcouple years have resulted in
this kind of a leveling of theplaying field, I think now that
everybody's going to be mandatedto fund their reserves properly.
(16:23):
That's going to balance thingsout. Now, it might take a little
bit of time. It might take alittle bit of friction and
frustration, but this is a goodthing for the state of Florida.
Ultimately, people are going tobe paying the appropriate
amounts right, paying the truecost of ownership to live in
these buildings, which,historically, I don't think they
were quite doing that.
Robert Nordlund (16:43):
Yeah, and you said a phrase, they're mandated
to fund their reserves properly.
Still in Florida, they're onlymandated to fund a few of their
components. They can still waivefunding for, as you said, the
air conditioner, the elevator,the carpeting, all that kind of
stuff.
Will Simons (17:00):
Yeah, that is true, right? So that in this last
couple years of legislation,they did improve that it is now
more difficult to waive fundingfor those non structural
components. Now requires abasically a simple majority, 51%
vote of the owners to do thatwas in prior years, typically
was a majority of a quorum ofowners. So if you had 100 units
(17:24):
in a building, and a quorum was,you know, 35 owners, well, you
would only need a majority of 35so you could have 18 people who
decide the fate for all 100people, because they're the ones
who showed up and were vocal atthe meeting. Now it's 51 out of
100 owners would have to show upto make that vote. So that's a
step in the right direction too.
I mean, obviously we don't thinkthere's ever a good reason to
(17:44):
waive reserve funding thatdoesn't make the problem go
away. You're just gonna have topay for it in another fashion,
some other time. But yeah, thatthat's a, you know, a half step
in the right direction.
Robert Nordlund (17:56):
Yeah, I realize I'm wringing my hands here just
thinking about that kind ofstuff, so the people watching on
YouTube can see what I'mthinking about this. But yeah,
it's a good challenge for peopleacross state lines, in Georgia
or up the coast in Virginia oranywhere else. They're saying,
like, wait, wait a minute,they're only paying part of what
(18:20):
they should have been paying.
So, yeah, there's going to be arebalancing. But are you
beginning to see at all the orget a sense that the new condo
buyers are looking for thereported reserve fund strength
to find out if they're buyinginto a strong association or a
weak Association? Has thatstarted to happen yet?
Will Simons (18:40):
Yeah, I think so.
Anecdotally, I hear about that.
We get calls from people who arein the process of trying to buy
a condo, and whether it's themor their lender that's requiring
it. There is more of a focus andintention on this. Spoke at a
panel discussion earlier thisyear for the Miami chapter of
the National Association ofRealtors, their whole room full
(19:01):
of realtors who are all askingvery intelligent questions about
condo reserves and, you know,budgets and fund amounts and
requirements that, you know,five years ago, 10 years ago, I
don't know that that would havebeen a topic of discussion, or
if it would have been, you know,an afterthought. So, yeah, I
think that the whole market istaking these things more
seriously now as they should.
Yeah,
Robert Nordlund (19:23):
well, that's That's a good thought. That's a
sobering thought. And I have anumber of additional questions I
want to find out, and I'm sureour audience does too, but it's
time to take a quick break tohear from one of our generous
sponsors, after which we'll beback with more common sense for
common areas and news aboutFlorida legislation.
Paige Daniels (19:41):
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specializing in reserve studiestailored to your community's
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(20:02):
solid funding plan, whetheryou're a small HOA or a large
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Robert Nordlund (20:12):
Now we're back well during the break, Will and
I were speaking about thelegislation itself, and
realizing that we owe you anexplanation about what this
legislation actually says anddoes. So will take us down the
path of some of the hype, thekey points or the highlights of
this new legislation that wentinto effect, July 120, 25 in
Florida.
Will Simons (20:33):
Sure. Yeah, there's, there's a lot to it. I
believe the final bill text is190 something pages, so Yikes. I
won't pretend to cover it in anygreat detail. I mean, there's
stuff that touches on milestone,inspection requirements,
responsibilities for developers,board member obligations, things
like that. So I'll try to focuson some of the really important
(20:55):
stuff. This is not a tear downand rebuild of any prior
legislation. It's a fine tuningof it, the list of components
required in a CERs did notchange, except for one, you
know, small but importantdetail, the dollar threshold for
what constitutes a kind ofsignificant dollar amount has
been raised from $10,000 to$25,000 so I think that was,
(21:18):
that was fine. That's good. The$10,000 number had been in place
for decades and hadn't beenupdated in quite a long time. So
effectively, what that means is,Well, traditionally, condos had
to fund reserves for roofingpainting and pavement
resurfacing and anything over$10,000 so now all condos in the
state, not just those subject tothe service requirements, can
(21:41):
actually enjoy that thatincrease. Aren't
Robert Nordlund (21:43):
there some significant projects that are
still 1011, $12,000 that theyarguably should
Will Simons (21:50):
fund through reserves, absolutely, just
because the log gives you thatoption doesn't mean you should
take it, right? If you're in a12 unit building, that $25,000
cost is more than two grand perowner, right? So you don't want
to get caught by surprise forthat. So just because you know
the law gives that option, Ithink each building needs to
look at what is a significantthreshold for them and then plan
(22:14):
accordingly. So you knowprocedurally how to do a CERs
didn't really change in this.
One of the very important thingswas the deadline has shifted. So
initially the requirement to getyour CERs done was December 31
2024 very few relativelyspeaking associations met that
deadline. So that's beenextended to December 31 2025 so
about another six months fromnow,
Robert Nordlund (22:38):
why do you think so many associations were
slow to get started on planningfor I want to say inevitable
deterioration, finding out wherethey stand. I
Will Simons (22:48):
think it's a combination of things. I think
there was just some initialsluggishness, because the laws
were changing every year. Ithink if you go back to 2022 and
you look at what the requirementwas, that changed pretty
dramatically from 22 to 23another major change that
happened in 2023 was theyexpanded the pool of providers
(23:09):
who could actually do theserves. Initially, you had to be
a licensed architect orengineer, and traditionally,
those people don't do researchstudies, or at least not as kind
of a primary line of business.
So when they allowed companieslike ours to really, you know,
do the entire process, thatreally expanded the pool of
providers. But that waseffectively summer of 2023 so
that was only 18 months of timeto to enjoy that that extra
(23:32):
capacity. One result of thattoo, was that every reserve
study provider in the in thestate got very busy very
quickly, and so there werestretches of time where it was
hard to even get a proposal fromsomebody. So I don't think that
there was, you know, completeapathy on the part of a lot of
associations. They just couldn'tget a good quality provider that
(23:53):
they trusted in enough time,
Robert Nordlund (23:56):
because companies like you were just
playing busy and hiring andtraining as hard as you could.
Yeah,
Will Simons (24:03):
exactly. I think there was also somewhat of a
question mark aroundenforcement, right? There was
not any real clear answer to,you know, what happens if you
don't get it done by thatdeadline? You know, there was a
lot of associations that I thinkwere maybe just kind of sitting
on the sideline waiting to seewhat would happen. That is
(24:23):
another new aspect of thisyear's bill that is significant.
So the DB PR, the Florida whichis, yeah, Department of Business
and Professional Regulation.
Robert Nordlund (24:33):
So much of this just rolls off your tongue.
Sure, I'm
Will Simons (24:37):
glad it sounds like that to you. It feels like a
mouthful, but they are the kindof enforcement body in the state
that oversees condominiums andCo Ops, and they have been
granted additional powers underthis bill to find to issue civil
fines to associations who do notmeet the deadline, possibly also
to remove board members fromtheir positions. So I know our
(24:57):
audience has got a lot of boardmembers in it, and. That you
care about that position in yourcommunity, and you have not done
your CERs or won't have it doneby the end of this year, you are
at risk from being removed fromthat position. The DBPR has
taken this pretty seriously.
They've also been granted someadditional budgets, some
additional staff this year toexpand their enforcement
(25:18):
capabilities. I know it's a bigissue, and so this year, the
Florida Legislature reallyfocused on that kind of in two
ways, right? They said, We wantyou to be more responsible.
We're going to enforce this, butwe're also going to give more
flexibility to associations.
That's kind of the good news.
Bad news. That good news side,the financial flexibility means
that now if you have alternativefunding sources, such as a
(25:42):
special assessment you'vepassed, or a bank loan or a line
of credit your association hasobtained, you can design your
reserve plan around that. Okay,so if you have an association
that was looking at a milliondollar project, you got your
SIRs done last year, and thereyou just couldn't fund that
money very quickly. You had todo a special assessment or
(26:05):
borrow it. That's okay. You cannow go back to your service
provider and update that study,saying, Hey, we now have this
cash that's readily available toour board to spend on these
projects. Go ahead and flip thehourglass upside down on those
things. We're now going to takecare of those with this this
cash we have so now going intoour reserve plan, we can take
into account the fact that itnow is a full life expectancy
(26:26):
ahead of
Robert Nordlund (26:28):
it, good, and that'll change their funding
requirements significantly.
Will Simons (26:32):
Oh, yeah, it should decrease them, right? So if
you're in one of theseassociations that you know went
through the process in the lastyear, two, three years, and has
now obtained this money that youdidn't have before it's time to
update your CERs to take thatinto account, and in fact, you
actually have to. So the part ofthe new law says that any before
(26:53):
you adopt any new annual budget,if the funding of reserves does
not align with your most recentCERs, you must obtain an updated
one good news is that does notmean you have to start from
scratch. Okay, you probablydon't have to have another
inspection done. This may justbe a quick we call it a no site
visit update, where it's justcorrespondence with the provider
(27:15):
telling them, Hey, here's ournew projects, here's our new
account balance. Generate a newfinancial analysis for us based
on that, it's going to be muchquicker turnaround, much lower
cost than what you pay for yourcomprehensive serves that you've
already done well.
Robert Nordlund (27:28):
It seems like there's also this momentum
factor that there was a lot ofassociations that were really
liking living in their maybesheltered little reality of not
funding for ongoingdeterioration, and maybe they
just were holding out hope thatit wasn't true, and with all the
(27:49):
changes in legislation, maybe itwas going to change back.
Will Simons (27:53):
Yeah. I mean, it has been a tough time for
associations in Florida. Lastseveral years, we've had several
major hurricanes. The insurancepremiums have gone up
dramatically for a lot of a lotof properties. They are hurting
financially in a couple ofdifferent ways. And these new
reserve requirements for a lotof people have felt like
somewhat of a punishment, orthis, you know, kicking them
(28:15):
when they're down. And it reallyis not that. I mean, the data
that we've seen from the, youknow, about 1000 SIRs that we've
prepared is that the net averageincrease to the owners is, you
know, 100, 200 bucks a month formost properties. This is not,
you know, completely, you know,budget destruction day. No, it
(28:37):
shouldn't be right. So it'suncomfortable. It might be
difficult for some people. Idon't want to, you know, say
that there's not outlierbuildings where they really are
in a lot of trouble, but I wouldargue that that would have been
the case either way. You know,in a world where the tower never
collapses and these new fundingrequirements were never instant,
you know, put in place, thesebuildings still would have had
(28:59):
all the same projects that theynow need to do, and they would
have been in difficult financialcircumstances either way. So I
think this is done, is just tobe illuminated a problem that
was manifesting for a long time.
Robert Nordlund (29:10):
Yeah, well, I'm thinking back, didn't Champlain
towers south? I'm thinking roughnumbers here. Weren't they about
to launch a $8 million specialassessment or rehabilitation
project divided by what 135units, something like that. It
was
Will Simons (29:26):
something like that. Yeah, the the dollar
amount might have even more, Ithink it, I know it crept up a
little bit by the time of thetower collapse. It was, you
know, certainly millions ofdollars. I know they were about
to begin work, or had begun workon a roof project. So, you know,
that's just part of the sadnessof that story, is that they were
trying to turn things around.
They had obtained some money.
(29:47):
They were, you know, pullingthemselves up by their
bootstraps, and just, you know,sadly, ran out of time, and it's
just a terrible wake up call.
But that, yeah, that was thefinancial reality. They were
about a 40 year old property.
That traditionally had not putenough money away and found
themselves facing a bunch ofbig, expensive projects that
were all kind of hitting at thesame time. And
Robert Nordlund (30:08):
my thinking is, if that the way Chaplain tower
South was, there's got to be10s, if not hundreds, of other
ones that are right up to that.
And like you said, outlierproperties, not necessarily all,
but there's a lot of propertiesthat got way behind with a lot
of catch up projects to do, andit is going to be expensive for
a number of associations, atleast for a while. Hey, you also
(30:29):
mentioned the word a milestoneinspection. Can you tell people
what you're talking about there?
Will Simons (30:35):
Yeah. So a milestone inspection is not
required for all condo and Co Opproperties. It's only for older
properties. So typically, thefirst one would be due at 30
years. You know, that's kind ofthe state requirement, unless
there is a local requirementthat requires it sooner. You
know, if their city or countymay have a different timeline
(30:55):
that's more restrictive, they'dhave to abide by that. But
typically it's first one wouldbe due at the 30 year, you know,
Mark of the the building, codate, and then every 10 years
thereafter, and a milestoneinspection must be done by an
architect or an engineer. And itis, is more narrowly focused.
It's, it's a specifically aninspection of the structure of
(31:16):
the building. It starts withwhat's called a phase one
inspection, which is just avisual inspection. If the
inspector sees no signs ofsignificant deterioration or
nothing that is alarming. That'sbasically it. You know, they
they pass. And, you know, ifthere's any repairs required,
they would have to do those, andthen they're good. And kind of,
(31:37):
you know, get a 10 year bill ofhealth there. If there is any
substantial deterioration, itgoes to a phase two, which is
much more intense, that's, youknow, going beyond a visual
inspection using diagnosticmethods, maybe, you know,
tapping into concrete, you know,really kind of going beneath the
surface to see what's wrong andthen correcting it from there.
So if a property has had thatdone within the last couple
(32:01):
years, that's part of this newhouse bill 913, is they can also
now pause their reserve fundingcontributions while they sort
out the results of thatmilestone inspection. So if they
had some immediate need for amajor, you know, structural
repairs or waterproof companies
Robert Nordlund (32:17):
here, or something like that, yeah, yeah,
the
Will Simons (32:20):
state wants them to focus on correcting those issues
first, and then resume yourreserve funding, you know, as
soon as you're able. But that'sanother example of kind of the
financial flexibility that wasbuilt
Robert Nordlund (32:32):
into this one.
I like that. And gets back tothat starting point. Is it? It's
all about safety, right? Well,Will? We? Could this? More and
more about this, but it's beengreat talking with you and the
time we have today for the showand having you on the program.
Any closing thoughts to add atthis time? No, I think we
covered
Will Simons (32:52):
it pretty well. I mean, there's, there's going to
be a lot more coverage of thisbill. There already are quite a
few webinars and bulletins.
There's law firms that areproviding their kind of cheat
sheet summaries of it. So forpeople who want to learn more,
we're going to be doing awebinar on July 15 where I'll
speak for probably about an houron this topic, taking questions
from the audience. So by thetime you hear this podcast, they
(33:15):
may have already been completed,but we'll definitely record that
make that available. So, yeah, Idon't have anything else to add
other than, uh, thanks to allwho joined us today, and we hope
you got some good informationfrom this
Robert Nordlund (33:28):
fantastic Well, if you'd like to get in touch
with will or our Floridaregional office, you can learn
more about their office andtheir staff@reserves.com and
just want to let you know, we'llhave a direct link in the show
notes to that and to clarify,will your team prepares reserve
sites all across Florida andadjacent states in the
southeast?
Will Simons (33:48):
That's right, yeah, yeah, the majority of our teams
in Florida, but we, yeah, wecover, you know, kind of the
whole Gulf region. So I want
Robert Nordlund (33:56):
to get this program closed up so I can get
you back to handling proposalsand training your staff and
taking care of reserves day. Soto our audience, we hope you
learned some HOA insights fromour discussion today that helps
you bring common sense to yourcommon areas. We look forward to
having you join us for anothergreat episode next week.
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