Milestone Inspections and SIRS: What Florida Boards Do When Reserves Fall Short

Which of the two requirements is actually in front of you?

Boards run them together and plan against the wrong one. The milestone inspection is an examination of the building; a licensed architect or engineer looks for substantial structural deterioration, and only a finding of it sends you into a second phase of testing. The structural integrity reserve study is not an examination at all. It is a funding exercise, run at least every ten years for each building of three habitable stories or higher, covering roof replacement, painting and pavement resurfacing regardless of amount, plus any item carrying a deferred maintenance or replacement cost over $25,000. The first tells your board what is wrong with the building. The second puts a figure on what your association must now hold against it, and that is the one that changed the arithmetic for older Florida buildings.

Why this lands as a funding problem

Because the study covers components a board has usually been carrying as deferred maintenance. Work that had been pushed into some later year now has a number, a professional signature and a date attached to it. For a building with healthy reserves that is an accounting change. For an older building it arrives all at once, alongside whatever the inspection turned up.

What are your board's real options?

There are four. A special assessment is the fastest and the most common, and it lands hardest on the owners least able to absorb it; boards find its practical ceiling when they find out how many owners simply cannot pay. A loan to the association spreads the cost into a monthly increase, but a lender asked to sit behind the building's existing mortgages prices that position accordingly, and a loan covering only the arrears leaves the deferred maintenance outstanding and the units still without available financing. Waiting is the option the deadlines are closing; the inspection dates and the reserve-study cycle both run on the statute's calendar. The fourth is a change in what each owner holds, and it is the one we work on.

Does a conversion pay for the repairs?

No, and your board should hear that from us first. A conversion writes no cheque for a structural scope. What it changes is the financing position of the building and of every household in it: a condominium owner holds real property with a deed and hundreds of financing options, where a shareholder holds stock in a corporation and is limited to the few lenders who will take it. That is why conversion plans have been able to do work an assessment could not. In one of our own buildings the new condominium took a single loan that paid off three existing mortgages, cleared the outstanding taxes and unpaid invoices, funded the elevator and facade work the building could not start, partly replenished the reserve and carried the conversion costs, with no out-of-pocket cost to members and repayment through the monthly fees. None of that was new money falling on the building. It was the same obligation, refinanced on terms only a deeded property can reach.

Our own agreements ask nothing of the cooperative or its shareholders before the deeds are delivered, which matters most for the building this page describes: a board with no money for repairs has none for a process that wants paying up front. Terrace Towers in Miami Beach came to us in that position, with a facade restoration ordered by city and county building officials and an underlying mortgage coming due. All 144 units were converted with no out-of-pocket funds from the ownership, the funding was completed and the restoration started.

What vote would a Florida conversion need?

Your own governing documents come first. Where they set a procedure, that procedure controls; where they are silent, Florida's cooperative default is two-thirds of the units. That default sits in section 719.1055, which speaks to amending cooperative documents, acquiring real property and materially altering common areas; a full conversion into condominium form is a further step, and Chapter 718 governs it. Which vote governs that step is a question for your counsel, and it is worth settling before your board schedules anything.

The two numbers travel together, and nobody should be planning around an estimate of either. Your engineer supplies the scope. A feasibility study of your cooperative supplies the rest, at no cost and no obligation to your board or its members, by reading your governing documents, reviewing your financial condition including the underlying loan obligation, and setting an independent appraisal of your units as condominiums beside them. With both in hand your board can weigh an assessment against a loan against a change in ownership form. Until then the special assessment wins every argument by default, and default is a poor reason to send a bill to the people least able to pay it.