What Is A Florida Condo Structural Integrity Reserve Study? Buyers, Owners Rush To Find Out Before 2025
This Miami Condo Market Intelligence Report™ issue is the fifth of what was to be a five-part series examining changes due to the Surfside disaster. We have decided to extend the series by two weeks.
Volume 2024, Issue 26 (Subscribe here)
Our five-part series on the Florida Condo Law was scheduled to end with this issue of the Miami Condo Market Intelligence Report™.
Given the role that the Structural Integrity Reserve Study (SIRS) is expected to play in the looming 2025 Florida Condo Association Financial Cliff, we have decided - based on the tremendous response from readers - to dedicate this week’s newsletter solely to SIRS.
In doing so, we hope to assist readers to better understand what a SIRS is, what it requires of associations and what it will do to condo maintenance fees and special assessments next year and beyond.
Under our newly revised editorial plan, this Florida Condo Law series will be expanded by two additional newsletters to what will ultimately be a seven-part series.
Next week for part six, we plan to wrap up our deep dive into the 2024 revisions to the Florida Condo Law.
The seventh - and final - part of the series is scheduled to be published in two weeks and focus on the statistical trends emerging for older condo units in South Florida.
Watch and/or listen to our four-part video narration of the 2024 revisions to the Florida Condo Law
It is a lot of information but we are confident our reports will assist you to better understand current market conditions in South Florida.
It is worth noting that we are sharing a portion of our research for free with subscribers to our newsletter and readers of CondoVultures.com. If you want access to all of our published information and charts, we would encourage you to join the newly launched Miami Condo Market Investing Club™.
The objective of the Club is to create a community that shares realtime, actionable information on the latest real estate trends, opportunities and service providers in South Florida.
The Club is also ideally suited for Do-It-Yourself (DIY) condo buyers who can rely on our latest statistics, expert opinions and access to consulting services.
Additionally, we encourage you to listen or view our podcast wherever you get podcasts. The podcast is also available on Apple, Spotify and/or YouTube.
As a reminder, we are always available for consulting, expert witness work and buyside brokerage services just as we have been since 2006. If you want more information, please visit CondoVultures.com or call the office at 305.865.5859.
— Peter Zalewski, Founder of the Miami Condo Market Investing Club™
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What Is A Structural Integrity Reserve Study? Florida Condo Buyers, Owners Rush To Find Out Before 2025
If you live in a Florida condo and don’t know what a SIRS is, consider this your introduction to an acronym that will likely dominate all future association discussions and debates about maintenance fees and special assessments for the foreseeable future.
The SIRS acronym stands for Structural Integrity Reserve Study.
In basic terms, it is a two-part evaluation conducted by experts - such as engineers, architects and reserve specialists - to determine the physical and financial status of all residential structures in a condo association that are at least three-stories high.
Florida requires a SIRS to be conducted every 10 years. The SIRS provides a roadmap for condo association board members - who are usually volunteers that own in a project - to better understand the physical condition of the buildings in a community and what it will cost to maintain them in the future.
A SIRS is not to be confused with a Milestone Study.
A Milestone Study focuses on ensuring condo buildings do “not pose a threat to the public health, safety, or welfare,” according to Florida Statute 553.899.
Just like a SIRS, a Milestone Study is required for residential condos that are at least three-stories high.
A Milestone Study, however, is conducted in the year that a condo building celebrates its 25-year anniversary of receiving a Certificate of Occupancy (CO).
A CO is basically an “all clear” for people to start moving into - and/or residing in - a newly completed building.
It is worth noting, a Milestone Study, in certain circumstances, does not have to be conducted until the 30-year anniversary of receiving a CO for those condos that are located at least three miles from the coastline. Apparently, condo building located inland from the coast face less structural impact from the Atlantic Ocean and/or Gulf of Mexico.
If you are unclear, think of this way. A SIRS is a 10-year plan - with an estimated budget created and supplied by experts - for the upkeep and renovations of a condo project while a Milestone Study is used to identify and address longer term “distress” and safety issues for buildings in an association.
Condo board members - many of whom are not construction experts - use the SIRS and Milestone Study to plan ahead accordingly for their respective communities.
At least, that was apparently the objective of the law until June 24, 2021 when the Champlain Towers South condo collapsed in the town of Surfside on the barrier island of Miami-Dade County.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida Legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in 2025.
As part of the changes, condo boards are rushing to comply with a recently passed Florida law that goes into effect in January 2025. The law requires associations that were built before July 2022 to conduct and complete a SIRS on their respective communities by the end of 2024.
Based on the SIRS results, condo associations are required to begin funding the necessary work in their 2025 budgets. Unlike previous years, associations can no longer defer the work and the cost under the law.
People are dubbing this moment as the 2025 Condo Association Financial Cliff as it expected to result in significantly higher costs for unit owners. News reports are already chronicling condo owners selling their units at deep discounts ahead of 2025.
Some industry watchers have compared this moment to an inflection point on par with the Category 5 Hurricane Andrew that devastated South Miami-Dade County in August 1992.
Since the 2021 collapse, older units are said to be tougher to sell, insurance prices are spiking year-over-year and association maintenance fees and special assessments are squeezing owners to the brink.
More detailed information about the SIRS law and a video narration of the 2024 revisions to Florida’s SIRS law are behind this paywall.
If you sign up now for the Miami Condo Market Investing Club™, you will have access to the rest of this report as well as all of our published reports, statistics and proprietary research.
Please note, we are not attorneys and only attempting to understand the Florida Condo Law. If you have any legal questions, please consult your attorney for legal advice.