Senate Bill 4-D And The Champlain Towers South Disaster: A Problem In Response To A Problem

• Published date: 21 October 2022
• Subject Matter: Real Estate and Construction, Real Estate
• Law Firm: Bilzin Sumberg Baena Price & Axelrod LLP
• Author: Martin A. Schwartz and Kevin M. Koushel

On June 24, 2021, we witnessed one of the most disturbing events in recent memory. A residential condominium building in Surfside partially collapsed overnight leaving 98 people dead and the surviving residents without a home. The actual cause of the Champlain Towers South tragedy is still under investigation, but several disparate factors are likely to blame. The state took immediate action and appointed a task force to make recommendations on how to prevent a similar tragedy.

The task force was comprised of eight attorneys, each of whom had extensive experience with condominium law on behalf of real estate developers or associations. After several months of inquiries and hearings with key stakeholders, the task force published its report (task force report),¹ which proposed significant changes to the Florida Condominium Act (condo act).²

State lawmakers responded by introducing many condominium bills in the 2022 regular legislative session, but none of them passed. This failure was widely criticized in the media³ until suddenly, during the 2022 third special session called for other purposes, a new bill miraculously appeared, passed with unanimous support, and became law in less than a week on May 26.⁴ This was Florida Senate Bill 4-D: Building Safety.

At first glance, S.B. 4-D makes a laudable attempt at addressing the physical issues facing Florida's aging condominium stock.⁵ Its primary effect is to create two mandatory pillars of protection: 1) periodic milestone inspections and 2) structural integrity reserve studies.⁶ But after months of digesting the new legislation, the prevailing consensus is that it may create more problems than it solves and ironically result in the elimination of many more Florida condominiums.⁷

The Task Force Report

Florida recognized the condominium form of ownership of real property almost 60 years ago.⁸ Since then, real estate developers have built thousands of condominium projects all over the state. The longstanding perception was that a condominium unit provided a more affordable housing option than a single-family residence.

This form of ownership, however, requires that the unit owners determine the operational and maintenance standards of the condominium. Perhaps practical in theory, but, as exemplified after Champlain Towers South,⁹ residents of a condominium rarely agree on anything. Consequently, dissension and apathy often impede important decisions, including those related to building maintenance, repair, and replacement.¹⁰

This common pitfall drives the underlying cynicism throughout the task force report. It essentially proposed that government should shorten the leash on condominium self-governance because unit owners, as a whole, are incapable of protecting themselves. Those who disagreed ' or initially preferred to wait until disclosure of the actual cause of the tragedy ' could not overcome the immense political pressure to change the law quickly.

With this in mind, the task force identified 12 "areas of inquiry" that, in its view, establish the basis for future physical and financial stability of condominium buildings and associations. The list included 1) board of directors' obligation for maintenance, repair, and replacement; 2) special assessments and borrowing; 3) inspection reports and transparency; 4) association compliance with inspection report requirements and remedies of unit owners; 5) reserve studies, reserve waivers, and funding reserves; 6) developer warranties and liability and design professional liability; 7) termination of condominiums for economic waste/obsolescence; 8) DBPR Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund; 9) unit owner financing; 10) community association managers and consulting professionals; 11) local government accountability; and 12) association insurance.¹¹

The task force's subsequent recommendations for changes to the condo act targeted many of these areas. Its primary challenge was striking a balance between the need for a safe structure and the associated economic burden on unit owners. Unfortunately, thousands of condominium unit owners have limited or fixed incomes,¹² so, when faced with the option to waive or reduce reserves for capital projects, these individuals may choose their wallets over anything else. The task force was aware of this dilemma, but the predominant evaluation after the tragedy was that certain items "should not be left to chance."¹³

Accordingly, the task force report evolved into a comprehensive analysis of relative points that, if implemented or improved, might have prevented the Champlain Towers South tragedy. But what it failed to acknowledge is that Champlain Towers South was built in 1981, and many older condominiums in Florida with less reserves and the absence of structural repairs have had no major structural issues. This suggests, as alluded to above, that the task force report may be a premature reassessment of existing regulation under the condo act and other relative policies surrounding condominium safety.

S.B. 4-D: Building Safety

The inability...