By Penny Manship, Burg Simpson Eldredge Hersh Jardine, P.C.
Within days of the tragic partial collapse of the 12-story beachfront condominium at Champlain Tower South in Surfside, Florida, on June 24, 2021, the leadership of Community Associations Institute (CAI) met and began outreach to other organizations with a goal of providing policy recommendations to ensure such a catastrophe never happens again.
In October 2021, CAI published the Condominium Safety Public Policy Report: Reserve Studies and Funding, Maintenance, and Structural Integrity (Report). The Report was the result of more than three-months of investigation by three task forces and over 600 volunteers, engaged in meetings, conversations, surveys, research, interviews, and identification of clear recommendations. It provides policy positions adopted and approved by CAI regarding “Reserve Study and Funding” and “Building Maintenance and Structural Integrity.”
Reserve Study and Funding Policy Positions:
CAI recommends state laws that mandate reserve studies and funding for all community associations. The Report contains recommendations for public policies to be adopted into state laws, including but not limited to:
- mandatory reserve studies at transition/turnover from declarant to homeowner control and at a periodic basis thereafter;
- mandatory reserve funding for all community associations; and
- mandatory disclosures to new buyers.
While the Report acknowledges that it is unknown if updated standards in this area would have prevented the collapse at Champlain Towers South, the authors noted that “80% of community managers, board members, and contractors in community associations surveyed across the U.S. felt it was critical that their association have adequate reserves in the event of a major infrastructure failure or construction need.” Clearly, education regarding the purpose of reserve studies and funding is necessary because, while they are important planning tools for budgeting for replacement and repairs based upon normal life cycles, they are not intended to deal with existing building conditions or defective original construction.
The Report also contains a Summary of State Reserve Fund Laws as of October 2021. The table below summarizes those states with mandatory existing reserve study and operating funds requirements.
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Mandatory Requirement
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States Where Adopted
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Reserve studies for condominium associations
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California, Colorado, Delaware, Hawaii, Nevada, Oregon, Utah, Virginia, Washington State
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Reserve studies for developers
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California, Delaware, Florida, Nevada, and Oregon
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Reserve funding for condominium associations
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Connecticut, Delaware, Florida, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Nevada, Ohio, and Oregon
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Reserve funding for developers
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Arizona, Delaware, Florida, Nevada, Oregon, and Wisconsin
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Building Maintenance and Structural Integrity Policy Positions:
CAI recommends laws that impose additional requirements upon developers at turnover and prior thereto, including but not limited to:
- providing a complete set of final approved architectural and engineering design drawings;
- inspections during construction to ensure general conformance with plans and specifications;
- providing preventative maintenance manuals; and
- disclosure of future “Building Inspection Requirements.”
With respect to this last requirement, the Report sets forth CAI’s recommendations for “[m]andatory building inspections of the major structural elements owned or maintained by the community association for all multi-family buildings of concrete, load bearing masonry, steel, or hybrid structural systems such as heavy timber including podium decks.” The inspection recommendations, which apply to new construction and existing buildings, set forth the following timelines and scopes:
First Inspection:
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- New construction: within 5 years after occupancy
- Existing buildings (more than 10 years old): within 2 years of passage of statutory requirement
- Purpose: Baseline for future inspections and identify issues of immediate concern; recommendation for next inspection in accordance with timing set for period inspections below
Periodic Inspections:
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- Every 10 years for first 20 years since construction and 5 years thereafter, unless prior inspection recommends sooner
- Purpose: Monitor progressive deterioration and identify issues of immediate concern; recommendation for timing of next inspection
Immediate Inspection(s):
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- Any time there is a concern about safety or stability of structure
Scope of Inspections:
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- Protocol set forth in ASCE Standard SEI/ASCE 11-99 (latest edition) Guideline for Structural Condition Assessment of Existing Buildings or other industry standards
The Report also recommends legislation that empowers a community association’s governing board to impose a special assessment or borrow funds necessary for “emergent life safety repairs” without a vote of the membership, regardless of any provisions in the governing documents to the contrary.
CAI’s Federal Legislative Action Committee also addressed in the Report “Federal Solutions and Policy Priorities.” The priorities discussed include easing financial burdens on local governments, engaging federal housing agencies regarding loan products, and easing financial impacts on homeowners through changes to income tax codes.
CAI’s Best Practice recommendations are also included in the Report with respect to reserve studies and funding and building maintenance.
We should all recognize that this is only the beginning of what is sure to be a long process of changes on the federal, state, local and community levels. Community managers, board members, and homeowners must continue to be involved in educating themselves on how proposed legislation, regulations, and changes to governing documents will impact their communities and keep them safe.
Penny Manship is an attorney at Burg Simpson Eldredge Hersh Jardine, P.C. She has over 20 years of experience representing homeowners associations and homeowners in construction defect litigation. She is a member of the CAI-RMC Mountain Conference Committee.
