HOA Reserves After Surfside: What Changed for Condos
June 24, 2021
Champlain Towers South collapsed in Surfside, Florida, killing 98 people. The 12-story beachfront condo had known structural problems, deferred maintenance, and underfunded reserves. The board had been struggling for years to fund necessary repairs.
The tragedy exposed what industry insiders already knew: many condo associations were chronically underfunded, deferring critical maintenance to keep assessments low. The difference after Surfside is that legislators finally paid attention.
What Florida Changed
Florida's response was sweeping. Senate Bill 4-D (2022) and subsequent amendments in 2023 and 2024 fundamentally changed how condo reserves work in the state.
Structural Integrity Reserve Studies (SIRS)
Condo associations for buildings three stories or taller must now complete a Structural Integrity Reserve Study. This isn't the same as a regular reserve study. A SIRS must be conducted by a licensed engineer or architect and must specifically evaluate:
- •Roof
- •Load-bearing walls and primary structural members
- •Foundation
- •Fireproofing and fire protection systems
- •Plumbing
- •Electrical systems
- •Waterproofing and exterior painting
- •Windows and exterior doors
No More Waiving Reserves
Before Surfside, Florida condo boards could vote annually to waive or reduce reserve funding. A majority of unit owners could decide that fully funding reserves was too expensive, and the board would comply. This practice was widespread — it kept monthly assessments artificially low while deferred maintenance accumulated.
Starting in 2025, condo associations can no longer waive or reduce reserves for the structural components identified in the SIRS. The reserves must be fully funded based on the engineer's recommendations. No exceptions.
Milestone Inspections
Florida now requires milestone structural inspections for condo buildings three stories or taller that are 30 years old (or 25 years old if within 3 miles of the coast). Phase 1 is a visual inspection by a licensed engineer. If problems are found, Phase 2 involves more detailed testing.
These inspections must be completed and the reports made available to unit owners. They become part of the association's official records and will show up in resale document packages.
The Financial Impact
The numbers are staggering. Condo associations across Florida that had been deferring maintenance for decades suddenly needed to fund reserves at levels they'd never contemplated.
Special assessments are exploding. Associations that need $5 million in structural repairs and have $500,000 in reserves are hitting unit owners with massive special assessments. We've seen assessments of $50,000 to $150,000 per unit in older buildings. Some exceed $200,000.
Monthly assessments are rising sharply. Even without special assessments, the requirement to fully fund structural reserves means monthly dues are increasing 30-100% in many communities. A condo that charged $400/month might now charge $700-$800/month to comply with reserve funding requirements.
Some buildings are becoming unmarketable. When a 50-year-old building needs $10 million in structural work and the 100 unit owners can't afford $100,000 each, the building becomes difficult to sell — or impossible to insure. Several Florida condo buildings have faced "deconversion," where the entire building is sold to a developer rather than funded by individual owners.
What This Means for Document Reviews
If you're reviewing HOA documents for a Florida condo, the post-Surfside landscape requires additional scrutiny.
Check the SIRS. The Structural Integrity Reserve Study should now be part of the resale package. Read it carefully. What's the estimated cost of future repairs? How does the current reserve balance compare to what's needed?
Look for pending special assessments. Board meeting minutes are particularly important now. Boards in older buildings are actively discussing how to fund structural reserves, and special assessments are often on the horizon even if they haven't been formally approved yet.
Review the milestone inspection. If the building required a milestone inspection, the report should be available. Phase 2 findings, in particular, can indicate serious structural concerns.
Compare the budget. The association's annual budget should now reflect the higher reserve funding requirements. If it doesn't, that's a red flag — the board may be out of compliance or delaying implementation.
Check insurance. Post-Surfside, insurance for older Florida condos has become extremely expensive. Some buildings have seen premiums triple or quadruple. Others have lost coverage entirely and are operating with Citizens (the state's insurer of last resort) or no coverage at all.
Beyond Florida
While Florida's legislation was the most dramatic, other states are following suit.
California updated its Davis-Stirling Act to require more detailed reserve disclosures and to discourage boards from deferring maintenance.
Maryland passed legislation requiring structural assessments for older condo buildings.
Several other states — including Illinois, Virginia, and Hawaii — have introduced or are considering similar reserve and inspection requirements.
The post-Surfside trend is clear: the era of voluntarily underfunded reserves is ending. State legislators are mandating financial responsibility, and the costs are landing on unit owners.
For Buyers: What to Ask
If you're buying a condo, especially in a building more than 20 years old, ask these questions before making an offer:
- 1.Has the building completed its required structural inspections? What were the findings?
- 2.Has a Structural Integrity Reserve Study been completed? What does it recommend?
- 3.What is the current reserve fund balance, and what percentage is funded?
- 4.Are there any pending or proposed special assessments?
- 5.How much have monthly assessments increased in the last three years?
- 6.What is the building's insurance status and premium trend?
The New Normal
Surfside didn't create the problem of underfunded condo reserves. It revealed it. The regulatory response is painful — especially for owners in older buildings who've enjoyed artificially low assessments for years.
But the alternative was clear: continue deferring maintenance and hope nothing collapses. That gamble is no longer acceptable.
For the closing industry, this means more documents to review, more complex financial analysis, and more buyer education. The resale package for a Florida condo is heavier than it's ever been. The stakes are higher too.