In May 2022, amendments to Florida’s Building Code and Condominium Code went into effect in order to address the State’s condominium infrastructure crisis brought to light by the tragic collapse of the Surfside condominium complex on June 24, 2021, that killed 98 people. As part of those amendments, many condominiums will now be required to perform “Milestone Structural Inspections” and structural integrity reserve studies, as well as fully fund capital reserves in order to pay for any repairs found necessary by those inspections and studies. While these amendments will hopefully go a long way to preventing another catastrophic collapse, the financial impact on condominiums to pay for the inspections, reserve studies, and necessary repairs could be quite difficult, as the costs of these new requirements are to be borne by the condominiums themselves.
Accordingly, many condominiums may look to borrow the money necessary to pay for the inspections, studies, or reserves. To that end, unless an association’s governing documents expressly prohibit the borrowing of money, Chapter 617 of the Florida Statutes (under which most condominiums are formed), allows associations to borrow money.
If an association were to borrow money to pay for the requisite inspections, studies, or reserves, it could then impose special assessments to repay the loan, as allowed by Fla. Stat. § 718.116 and most associations’ governing documents. The association could also leverage its general and special assessments as collateral for the loan, which would give the association the right to foreclose on and sell any unit that failed to pay its assessments and use the proceeds to repay the loan.
In sum, associations have the statutory and potentially contractual authority to borrow money to pay for the obligations imposed by the new amendments to the Building and Condominium Codes.
For additional information, please contact Matthew Bernstein at mbernstein@florida-law.com.