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Articles Posted in Life safety issues

Gary-Mars-2021-2-200x300The firm’s latest Miami Herald “Real Estate Counselor” column authored by Gary M. Mars appears in today’s Neighbors section and is titled “What’s Next for Condo-Safety Reforms After Legislature Fails to Act?”.  The article focuses on the very poor marks that the state legislature has received in newspaper editorials from the Herald and across the state for its failure to pass any condominium-safety reforms after the horrific Champlain Towers tragedy.  It notes the editorials lament that the two chambers ultimately could not reach bicameral agreement on whether to require condominium associations to maintain financial reserves for major structural maintenance and repairs, and they are certainly correct to bemoan the legislative shortfall.  Gary’s article continues:

. . . However, from the point of view of someone who has kept a finger on the pulse of the state’s condominium laws for the past 30 years, the failure of the legislators to pass reforms during the session that began just over six months after the collapse was not surprising. Lawmakers in Florida as well as other states have been grappling with the issues of high-rise structural inspections and condominium association financial reserves for decades, not-to-mention fire sprinkler and suppression systems that can be very difficult and expensive to retrofit into older buildings.

It was perhaps overly auspicious of lawmakers to propose sweeping reforms without having first ironed out many of the important aspects of the proposals in the pre-session legislative meetings. They put forth many of the recommendations from task forces from engineering/construction trade groups and The Florida Bar, but they ultimately could not agree on the details of inspection dates and reserve funding levels.

Miami-Herald-3-27-22-print-page-342x1024Even with no changes to the state’s laws, significant condo-safety reforms are being implemented by lenders after major changes in underwriting requirements from government-sponsored Fannie Mae and Freddie Mac. In fact, many associations have already been struggling to comply with the new requirement from these quasi government agencies for lenders to have the condominium associations for mortgage applicants complete an eight-page form. For towers in their teen years that have never conducted any kind of major engineering inspections, association directors are completely unequipped to attest to their buildings’ current structural integrity in these questionnaires, and the potential legal liabilities would preclude them from making such representations.

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Gary-Mars-2021-2-200x300An article featuring insights from firm shareholder Gary M. Mars appears on the front page of today’s Sun Sentinel.  The article, which is headlined “Failed Condo Safety Bill Leaves Residents, Buyers in Limbo,” focuses on what is in store for condominium safety reforms from lenders and insurers after the measures before the Florida Legislature failed to pass during the 2022 session that ended last week.  The article reads:

. . . Some condo lawyers argue that it was too ambitious to expect that a sweeping safety bill could be passed in a short three-month legislative session.

“I know it was very, very ambitious legislation,” said Gary Mars, a condo lawyer at Siegfried Rivera in Coral Gables.  “It would have taken a lot of effort to get it through all of the machinations developing legislation of this type.”

He noted that not every building is in dire structural straits, or even old enough to be required to follow inspection rules such as the ones in Broward and Miami-Dade counties, which mandate deep-dive studies after 40 years.

Sun-Sentinel-3-21-22-print-page-1-1-100x300“I represent a lot of associations in buildings in their teenaged years,” he said.

“They’re getting sophisticated reports” from their engineers about deferred maintenance issues such as waterproofing, balcony restorations and painting, Mars said.  But the reports don’t cover structural issues.

“They may have wonderful reports, but those reports don’t give the association the ability to check the box” about the building’s overall condition, he said. “There’s not a perfect solution to this problem.”. . .

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The demands for increased access to condominium financial records and structural reports in Florida after the horrific Champlain Towers tragedy are leading to possible changes at the state and local levels, and they just led to a new local ordinance in Miami-Dade County.

On March 1st, the Miami-Dade Board of County Commissioners unanimously approved an ordinance establishing a searchable database for financial statements and structural reports, among other information and documentation, for residential community associations located in Miami-Dade County. The new ordinance requires community associations in Miami-Dade County, including all condominium, cooperative, and homeowners’ associations, to upload certain documents and information to the county’s database, along with a written registration with the Miami-Dade County Department of Regulatory and Economic Resources, by Feb. 1st of each year, beginning on February 1, 2023.

MCboard-300x169The ordinance provides that the documents uploaded to the database will be publicly accessible on the county’s website, and will also be searchable. Some of the documents to be attached to the annual registration submitted to the county include the following: the name of the community association; the name and contact information for the association’s property manager or other designated agent; a list of all officers and directors of the association, including their contact information; a link to the association’s website, if any; a legible copy of the association’s governing documents; a list containing the association’s planned capital projects from the date of registration through February 1st of the following year; a copy of the association’s current budget and financial statements, including any applicable current or approved special assessments; and all reports issued within the last 10 years on the structural status of the property governed by the association, including recertification reports, if applicable.

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The new condominium safety financing requirements from Fannie Mae and Freddie Mac have drawn a great deal of attention, but the Florida Legislature appears to be poised to go one step further in its response to the horrific Champlain Towers tragedy.

The Florida House and Senate are both moving forward with bills that would add new inspection requirements on condominium buildings. A bill that is now ready to go before the full Senate, SB 1702 would require condominiums that are three stories or taller and located within three miles of the coast to undergo initial inspections 20 years after completion and every seven years thereafter. Buildings in other areas would be required to be inspected after 30 years and every 10 years thereafter.

Flalegislature-300x169The Florida House has taken up its own version of the bill (HB 7069). Its proposal would require initial inspections to occur 25 years after completion, and buildings further inland would have their first inspection at 30 years. Additional inspections would be required every 10 years.

The House and Senate bills also include differences over reserve studies, which are used to determine the level of funds a condominium community needs to maintain in reserve for future renovations and repairs. The differences between the two bills are likely to soon be consolidated into a final bill for bicameral consideration.

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Gary-Mars-2021-2-200x300When the editors of the Miami Herald decided they would like to feature a new column to provide timely legal knowledge on real estate topics for the readers of its Neighbors community news section that appears on Sundays, they turned to the attorneys of Siegfried Rivera as the exclusive contributors for the newspaper’s new Real Estate Counselor.  The inaugural edition of the new monthly column authored by the firm’s Gary M. Mars appears in today’s edition and as is titled “All Eyes on Florida Legislature for High-Rise Condo Safety Reforms.”  It focuses on the status of reforms after the horrific tragedy of the Champlain Towers South collapse.  Gary’s article reads:

. . . So far, the most significant changes have come at the federal level from Fannie Mae and Freddie Mac, two government-sponsored companies that acquire residential loans to offer mortgage-backed securities for investors in the secondary market. They both have a massive influence over the terms for mortgages offered by lenders, and they recently released new requirements for loans for residences in high-rise buildings with five or more attached units to meet their standards for acquisition. The changes, which are now being adopted and implemented by major residential lenders, place a heavy focus on structural and financial stability, and they reinforce the importance of meticulous documentation of all appraisals, meeting minutes, financial statements, engineering reports, inspection reports and reserve studies.

Miami-Herald-1-23-22-1006x1024Fannie’s new requirements are already in effect, while Freddie’s will take effect for all mortgages with settlement dates on or after Feb. 28. Its new standards will exclude from eligibility any condo loans for units in communities with what it considers to be critical repair needs, which are defined as those that significantly impact a community’s safety, soundness, structural integrity or habitability, and/or that impact unit values, financial viability or marketability. These include all life-safety hazards, violations of any laws or ordinances, building code violations, fire-safety deficiencies and others.

Subsequently, properties that have already identified elements requiring attention and begun their remediation efforts may become ineligible until such work is completed.

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As my fellow firm partner Laura Manning-Hudson wrote recently in this blog, Fannie Mae’s new condo-safety financing requirements for condo buyers are now in place. Following suit, federal mortgage buyer Freddie Mac has also announced similar requirements for condominium loans to meet its standards for acquisition for its mortgage-backed securities for investors. Both of these changes are heralds of the stricter mandates that condominium associations are likely to see as a result of the horrific tragedy of the collapse of the Champlain Towers South in Surfside, Florida.

Freddie Mac’s new requirements, which take effect for all mortgages with settlement dates on or after Feb. 28, exclude from eligibility for acquisition any loans for units in condominium communities with what it considers to be critical repair needs. Subsequently, properties that have already identified elements requiring attention and begun their construction and remediation efforts may become ineligible until such repairs and renovations are completed.

fmac-300x300The federal agency defines critical repairs as those that significantly impact a community’s safety, soundness, structural integrity or habitability, and/or that impact unit values, financial viability or marketability. These include all life-safety hazards, violations of any laws or ordinances, building code violations, fire-safety deficiencies, and others.

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The first major national condominium safety reform after the horrific tragedy of the collapse of the Champlain Towers South in Surfside, Fla., was announced in October when federal mortgage lender Fannie Mae said it will no longer back loans on units in residential buildings showing signs of structural deficiencies and deferred maintenance.

The federal mortgage underwriter’s new Temporary Requirements for Condo and Co-Op Projects are aimed at addressing the structural and financial health of buildings. The requirements mandate an in-depth review of safety, soundness and structural integrity conditions to determine a condominium tower’s eligibility. The end result will likely eliminate many thousands of condominium communities across the country from this vital source of financing for buyers.

Starting on January 1, 2022, Fannie Mae will no longer back and accept loans for condominium units in properties with significant deferred maintenance or which have been directed by a regulatory authority or inspection agency to make repairs due to unsafe conditions. fmae-300x212Units in such buildings will remain ineligible for purchase by Fannie Mae until the required repairs have been made and documented.

The conditions and deficiencies that meet the criteria for disqualification include full or partial evacuations, damage or deferred maintenance that affects structural integrity, and the need for substantial repairs for one or more of a building’s structural or mechanical elements including the foundation, roof, load bearing structures, electrical system, HVAC, plumbing, and others. Also, properties that have failed to pass local regulatory inspections or recertifications will not be eligible.

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Five months after the tragic collapse of the Champlain Towers South condominium in Surfside, Fla., several major organizations have developed a number of high-rise condo safety reforms and recommendations. However, most Florida counties and municipalities appear to be holding off in expectation of statewide changes to legislation during the next legislative session that starts in January.

The Community Associations Institute, which is the largest organization representing the interests of associations in the world, has issued a report with a number of public policy recommendations aimed at providing solutions for legislators addressing high-rise building safety. In addition, seven of Florida’s top architecture and engineering trade groups created a task force that has recommended re-inspections after 30 years with follow-ups every 10 years, and The Florida Bar has also completed the report and recommendations from its Condominium Law Life Safety Task Force.

CAI’s public policy recommendations cover the areas of reserve studies and funding, building maintenance, and structural integrity. The organization believes its recommendations should be considered for adoption into state law to support the existing statutory framework for the development, governance, and management of community associations. It is planning to release model statutory language in support of its policy recommendations.

In addition, federal mortgage lender Fannie Mae has released new project requirements for condominiums and housing cooperatives that will begin Jan. 1 for loans secured by units in high-rise buildings containing five or more attached units. The requirements place a heavy focus on structural and financial stability, and reinforces the importance of meticulous documentation of all appraisals, meeting minutes, financial statements, engineering reports, inspection reports, and reserve studies.

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The Community Associations Institute, the leading organization representing the interests of condominium associations and HOAs, is considering several policy reform recommendations on matters such as building inspections as well as reserve studies and funding in the wake of the devastating tragedy of the Champlain Towers South collapse in Surfside, Fla.

According to a recent post in its Ungated blog at blog.caionline.org, the organization’s Government and Public Affairs Committee convened a special meeting recently to hear the recommendations from three task forces on new public policy reforms as well as best practices and guidance for local, state and federal legislators.

CAI-logoThe three task forces focused on building inspections and maintenance; reserve study and funding plans; and insurance and risk management. They have recommended that the committee focus on reforms such as having developers provide a preventive maintenance schedule for all components that are the responsibility of the community association, not just the components included in the reserve study. They also recommended baseline inspections and regular inspections based on specific intervals, the protocols for which can be found in the American Society of Civil Engineers’ Guideline for Structural Condition Assessment of Existing Buildings, and disclosures of the findings to homeowners, residents and local governments.

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