Table of Contents
Summary
Here is a summary of SB4D and the new rules for COA/COOP inspections, as well as their implications on the Florida real estate condos sale market:
- SB4D was enacted in response to the Surfside condominium collapse, which resulted in 100 deaths and hundreds of injuries.
- The law has two main requirements: Milestone Structural Reporting (MSR) and Structural Integrity Reserves Study (SIRS).
- SB4D applies to residential and commercial condominiums and co-ops with 3 or more stories and 4 or more units.
- Inspections and reporting can cost between $50k-$100k.
- Budget reserves need to be in place by December 2024.
- Board members can be personally liable for failure to comply with SB4D.
- Sellers have a duty to provide a copy of the MSR and SIRS to buyers.
- Insurance and mortgage underwriters will require copies of the MSR and SIRS to insure and lend on the complexes, potentially affecting individual units as well.
- Realtors must navigate the challenges of selling units with these new requirements without scaring clients or failing to disclose necessary information.
- Changes to the law are being discussed, including holding contractors liable for installation defects and giving local government building offices violation powers for failure to comply.
As a result of these new regulations, real estate agents and property managers must adjust their strategies and practices to ensure compliance with SB4D. This may present an opportunity for investors and buyers who can capitalize on the changing market dynamics and potentially find properties at lower median sales prices due to the increased costs and complexity of managing waterfront condos. However, it is essential to remain aware of the potential risks and liabilities associated with these changes and to work closely with professionals who are knowledgeable about the new regulations.
Masterclass Video Replays
Masterclass 1 Replay: How Senate Bill 4D Changes the World of Realtors & Condo Board Members
Masterclass 2 Replay: SB4D and Condo Sales: How to Comply, Close Deals, and Avoid Liability
Masterclass 3 Replay: SB4D FAR/BAR Addendums, Unmasking Fake Sellers, Title Advance Fights MV Perpetual Listing Agreements
Masterclass 4 Replay: How to Prepare for Milestone Inspections Process, Changes by SB-154
Realtor Resources for SB4D
Introduction to SB4D
The tragic Surfside condominium collapse in Florida led to the enactment of Senate Bill 4D (SB4D), introducing new inspection and reserve requirements for condominiums and co-ops. As real estate professionals, property managers, and investors adjust to the new regulations, it is essential to understand the implications of SB4D on the Florida real estate market forecast. In this blog post, we’ll discuss the key aspects of SB4D and explore its impact on buying and selling properties in Florida.
Understanding SB4D: Key Requirements and Scope
SB4D was enacted to prevent another catastrophe like the Surfside collapse. It introduced two primary requirements for condominiums and co-ops with 3 or more stories and 4 or more units:
- Milestone Structural Reporting (MSR): Inspections to ensure the building’s structural integrity and safety.
- Structural Integrity Reserves Study (SIRS): Budgeting for repairs and maintenance, with mandatory reserve requirements.
These inspections and reserve studies can cost between $50k-$100k, and the budget reserves must be in place by December 2024.
SB4D Liability for Board Members and Sellers
Board members can be held personally liable for failure to comply with SB4D. They must ensure that their associations follow the new regulations to avoid potential legal issues.
Sellers also have a duty to provide a copy of the MSR and SIRS to buyers. Insurance and mortgage underwriters will require these documents to insure and lend on the complexes, potentially affecting individual units as well.
How to Prepare for the Milestone Inspection Process – Changes by SB154
As professionals in the ever-evolving real estate industry, it is vital to stay well-informed about the latest changes and legislation that may impact your clients’ interests. Below are the steps you can take to get ready for the milestone inspection process changes by SB154:
- Phase I & II Inspections Demystified: Gain a comprehensive understanding of Phase I & II inspections and their significance for your clients.
- Unlocking the Power of Structural Integrity Reserve Studies (SIRS): Discover the essential steps to implementing SIRS correctly. Understand why SIRS has become more critical than ever in the current real estate climate and how it can provide your clients with peace of mind.
- Unveiling the Proposed Changes in SB154: Get up-to-speed on the proposed changes outlined in SB154.
What Your Buyers and Sellers Need to Know
- Phase I and Phase II inspection reports should be submitted to the property manager and all unit owners.
- Local building officials have the ability to assess penalties for incompliance. (The State has already approved the budget for agents to investigate compliance).
- If an association fails to complete a SIRS, they are breaching its relationship with the unit owners.
- Effective December 31, 2024, all reserves should be fully funded.
SB4D Challenges for Realtors and Property Managers
Real estate professionals must navigate the challenges of selling units with these new requirements without scaring clients or failing to disclose necessary information. Realtors should remain informed about the changes to the law and work closely with professionals who are knowledgeable about the new regulations.
Opportunities and Risks in the Changing Market
The introduction of SB4D may present opportunities for investors and buyers who can capitalize on the changing market dynamics and potentially find properties at lower prices due to the increased costs and complexity of managing waterfront condos. However, it is crucial to remain aware of the potential risks and liabilities associated with these changes.
Future Implications and Florida Housing Market Predictions
As the Florida real estate market forecast adjusts to the new regulations, we can expect some growing pains in the coming years. However, after this initial period, prices will likely stabilize, and the market will become more predictable and secure overall. One thing is for sure: the cost of living in waterfront condos will increase due to the new regulations.
Florida Housing Market Predictions
Senate Bill 4D will have an impact on Florida real estate housing market. Condominium associations managing older buildings (40 years +) without a reserve may struggle to comply with SB4D requirements.
Florida realtors predict that the median sales price for a condo near the water may decrease for buildings that have not undergone the Milestone inspection.
Another factor to consider is the fact that it will be difficult for buyers to get a mortgage approved for buildings with issues. Make sure you are protecting your buyers and sellers with the FAR/BAR Financing Contingency clause.
We will continue to monitor the Florida housing market forecast and update our Florida housing market predictions. We believe that the Florida housing market will not be affected as much as the national housing market or housing market crash. Florida job market is still strong and attracting real estate business from other states.
Conclusion
SB4D has introduced significant changes to the Florida real estate market, impacting condominiums and co-ops alike. As real estate professionals, property managers, and investors navigate these new regulations, staying informed and working with knowledgeable experts will be crucial to ensure compliance and minimize risks. Ultimately, understanding and adapting to SB4D will help create a safer and more secure real estate market in Florida.
