Legal News You Can Use: 2025 - 2026 Community Association Legislative Update

LEGAL NEWS YOU CAN USE Big Firm Experience, Small Firm Attention

Kopelowitz Ostrow Ferguson Weiselberg Gilbert

2025–2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE In the aftermath of the Champlain Towers tragedy in Surfside, the Florida Legislature has enacted annual reforms aimed at improving condominium safety, transparency, and governance. While these measures were intended to strengthen oversight and accountability, they have also placed significant financial strain on many associations, driven by stricter building maintenance standards and escalating insurance premiums, raising serious concerns about long-term affordability. However, this year marks perhaps the most extensive set of changes to the condominium laws in recent memory. The new laws affect a wide range of operational and fiscal issues for condominium associations, including virtual meetings, electronic voting, official records, association websites, structural integrity reserve studies, milestone inspections, budgetary and financial matters, hurricane protections, and insurance requirements. Unfortunately, many of these new provisions feel incomplete, overly burdensome on volunteer boards, and in some cases, raise more questions than they answer. By contrast, 2025 brought very few legislative changes for homeowners’ associations. The limited updates that were passed primarily address property management and apply to both condominium and homeowners’ associations alike. That said, we anticipate that many of the recent changes to the Condominium Act may eventually make their way into the HOA Act, once the Legislature has had time to assess their impact and refine the details. As we navigate these changes, it is critical for board members, unit owners, and property managers to understand the evolving legal landscape and how it will impact their communities. Our Firm remains committed to providing practical guidance, strategic advice, and peace of mind throughout this process. We value our relationship with you and look forward to continuing to support your association as you adapt to these new requirements and opportunities. ■

Joshua Krut Attorney

A Publication of KO Lawyers

September 2025

HOW WE CAN HELP Kopelowitz Ostrow Ferguson Weiselberg Gilbert (KO) is a comprehensive legal practice in the areas of community association law, business law, construction law, commercial litigation, class action representation, real estate, catastrophic injury law, family law, employment law, health law, estate planning, probate, and more. Based in South Florida, our firm accepts clients throughout the United States. Our clients range from individuals, community associations, hotels, real estate and construction industry professionals, and employers and employees, to lending institutions, small businesses, public and privately held business entities, government entities, and corporate conglomerates.

Please feel free to contact the experienced lawyers at KO to discuss your matter. Call 954-525-4100 or go to KOLawyers.com

AS SEEN ON

LETTER FROM THE EDITOR

The following pages summarize the most significant legislative changes affecting Florida community associations. Unless otherwise stated, these new laws became effective on July 1, 2025. Please be advised that this summary is for informational purposes only. It is not intended to be, nor should it be considered, legal advice or a comprehensive analysis of all related issues. We recommend consulting with legal counsel before taking action based on the contents of this update. We hope you find this resource helpful in keeping your Association informed and compliant amid the evolving dynamics of community association living, while supporting your efforts to maintain a vibrant and desirable community. As always, please do not hesitate to contact us with any questions or concerns. Our goal is to help you achieve your goals. ■ Joshua Krut Joshua Krut

Partner, Kopelowitz Ostrow Ferguson Weiselberg Gilbert Chair, Community Association, Club & Resort Practice

2 | Kopelowitz Ostrow Ferguson Weiselberg Gilbert

September 2025

Our Community Association, Club and Resort Group is dedicated to providing innovative, responsive and cost- effective legal services to our clients.

Joshua D. Krut Chair & Partner, Community Association, Club & Resort krut@kolawyers.com (561) 998-2006 Recognized by: The Best Lawyers in America®, Community

Association Law Super Lawyers®

Scott Hyman Partner, Community Association, Club & Resort hyman@kolawyers.com

NEW STATUTORY AMENDMENTS

(561) 318-3814 Recognized by: Super Lawyers®

Board Meetings

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Unit Owner Meetings

Page 5

Electronic Voting

Page 6

Official Records and Websites

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Andrea Pearl Attorney, Community Association, Club & Resort; Civil Litigation pearl@kolawyers.com (561) 318-3670

Reserve Funds

Page 9

Structural Integrity Reserve Studies

Page 10

Material Amendments in Nonresidential Condominiums

Page 12

Financial Reports

Page 12

Milestone Inspections

Page 13

Annual Budget Increases

The Legal News You Can Use Newsletter is a publication of KO Lawyers. To subscribe, email krut@kolawyers.com. This publication is intended to educate the general public about community association law and other issues. It is for information purposes only and is not intended to be legal advice. The information in this newsletter may be freely copied and distributed as long as the newsletter is copied in its entirety. Design by Zine (www.zinemarketing.com). Copyright 2025 by KO Lawyers. OFFICES Miami-Dade 2800 Ponce de Leon Blvd, Suite 1100, Coral Gables, FL 33134 Broward 1 West Las Olas Blvd, 5th Floor, Ft. Lauderdale, FL 33301 Palm Beach 200 East Palmetto Park Rd, Suite 103, Boca Raton, FL 33432

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Investment of Association Funds

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Hurricane Protection Insurance Coverage Mixed-Use Buildings

Page 15

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Division of Condominiums

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My Safe Florida Condominium Pilot Program

Page 18

Property Manager Requirements

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

NEW STATUTORY AMENDMENTS

Board Meetings (Sections 718.103 and 718.112 of the Florida Statutes) With the rise of Zoom and other remote meeting technologies, many associations adopted virtual platforms to conduct board meetings,

allowing directors to participate without being physically present. However, the Condominium Act previously offered no guidance or regulation for these types of meetings, often creating uncertainty and raising questions.

The Condominium Act has now been amended to specifically regulate meetings that are held by video conference (such as Zoom, Microsoft Teams, or similar platforms) by imposing the following requirements: » The notice for any meeting conducted by video conference must state that the meeting will be held via video conference, include a hyperlink and conference telephone number for unit owners to attend the meeting via video conference, and state the address of the physical location where unit owners can also attend the meeting in person. ▪ Note – This appears to support the previously accepted view that associations must offer a “hybrid” meeting format (providing unit owners with both in-person and virtual attendance options) when the board holds a video conference meeting. ▪ Note – This also appears to eliminate the practice of allowing directors to virtually attend board meetings while denying unit owners the same option. » If a board meeting is conducted via video

conference, the video conference must be recorded, and the recording must be maintained as an official record of the association. » If a board meeting is held to consider a proposed annual budget, and if such meeting is conducted by video conference, then a sound transmitting device must be used so that the conversation of members attending remotely may be heard by the board or committee members attending in person, as well as by any unit owners present at the meeting. ▪ Note – Interestingly, this enhanced requirement appears to apply exclusively to budget meetings and does not appear to extend to other types of board meetings. These new requirements may be the most impactful legislative changes of the year in terms of an association’s day-to-day operations. However, the added obligations and burdens could discourage associations from holding board meetings by video conference, potentially undermining the apparent legislative purpose of facilitating video conferences in the first place (i.e., promoting transparency and accessibility for the unit owners). ■

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NEW STATUTORY AMENDMENTS

Unit Owner Meetings (Sections 718.103 and 718.112 of the Florida Statutes)

Similar to the changes affecting board meetings, the Condominium Act was also amended to introduce significant new procedures and requirements for unit owner meetings. Key updates include the following:

» Unit owner meetings, including the annual meeting, may now be conducted in person or via video conference. » If a unit owner meeting is conducted via video conference, the notice must include a hyperlink and call-in conference telephone number for unit owners to attend the meeting, as well as a physical location where unit owners can also attend the meeting in person. ▪ Note – This appears to support the previously accepted view that associations must offer a “hybrid” meeting format (providing unit owners with both in-person and virtual attendance options) when unit owner meetings are held via video conference. » If the annual meeting of the unit owners is conducted via video conference, a quorum of the board members must be physically present at the physical location where unit owners can attend the meeting. ▪ Note – This is a peculiar requirement, considering that there is no obligation for a quorum of the board to be present (whether physically or remotely) at annual meetings that are not conducted via video conference, or at any other type of membership meeting. ▪ Note – The statute does not indicate the consequence if a board quorum is not physically present at an annual meeting conducted by video conference. As a result, it is unclear whether the annual meeting could proceed under those circumstances. If it is ultimately determined that a physical quorum is required, then this could present challenges for associations whose directors might not be physically present at the condominium, potentially requiring directors to travel solely for that purpose and raising legal issues about reimbursement for travel expenses. ▪ Note – As a possible workaround, the meeting notice could state that the annual meeting will be conducted both in person and by video conference,

unless a physical quorum of board members is not present in which case the meeting would proceed in person only. Given the recent adoption of this provision, the legal validity of this potential workaround remains uncertain. ▪ Note – The statute also does not address whether this issue would impact board elections. Arguably, it would not impact the election because a quorum for the annual meeting is not required in order to have a valid election (i.e., an election may be conducted without the occurrence of an annual meeting as long as a sufficient number of election ballots are submitted). » If a unit owner meeting is conducted via video conference, a unit owner may vote electronically. ▪ Note – Additional details on the new electronic voting procedures are provided in the section titled “Electronic Voting.” That said, this new provision raises several unanswered questions. For example: (i) Does this new provision imply that unit owners may not vote electronically (or that associations are not required to accept electronically transmitted ballots) when a meeting is not held by video conference?; and (ii) Does this new provision apply to the new alternative e-mail ballot option (discussed in the section titled “Electronic Voting”) and to a traditional electronic voting system, or only to the latter? Depending on how these questions are interpreted, this new provision could potentially conflict with the new electronic voting statutes. In any event, this represents a shift from previous law, which only entitled unit owners to vote electronically when the board opted to make the electronic voting system available for a particular vote (except in the case of elections where the board was required to honor a unit owner’s request to vote electronically in all future elections after an electronic voting system had been implemented). » If a unit owner meeting is conducted via video

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Electronic Voting (Section 718.128 of the Florida Statutes)

The Condominium Act permits associations to conduct elections and other unit owner votes through an internet-based online voting system if the board adopts a resolution authorizing its use. This system is commonly known as “electronic voting.”The new laws modify the procedures governing electronic voting as follows:

» The new legislation removes the prior requirement for associations to provide at least 14 days’ notice to unit owners before holding a board meeting to adopt a resolution for electronic voting. ▪ Note – This means that the board may now adopt such a resolution at a regular board meeting using the standard notice procedures, which generally only require posting the meeting notice on condominium property at least 48 hours in advance. » If at least 25% of the voting interests of an association petition the board to adopt a resolution for electronic voting for the next scheduled election, the board must hold a meeting within 21 days after receipt of the petition to adopt such resolution. The board must receive the petition within 180 days after the date of the last scheduled annual meeting. ▪ Note – This is the first time that the Condominium Act has provided a formal process for unit owners to initiate the consideration of electronic voting. ▪ Note – It is debatable whether the statute’s specific wording actually requires the board to approve or implement electronic voting upon receipt of such a petition. However, the intent of the statute is likely to impose that requirement. In addition, the Condominium Act now permits unit owners to submit electronic ballots outside of the traditional electronic voting system (where unit owners vote by logging onto a third-party website). The procedures for submitting such electronic ballots are as follows: » An association must designate an e-mail address for

receipt of electronically transmitted ballots, unless it has adopted an electronic voting system. » A unit owner may electronically transmit a ballot to the e-mail address designated by the association without complying with the statutes or the rules providing for the secrecy of ballots. » A ballot that is electronically transmitted to the association must include all of the following: ▪ A space for the unit owner to type in his or her unit number; ▪ A space for the unit owner to type in his or her first and last name, which also functions as the signature of the unit owner for purposes of signing the ballot; and ▪ A statutory disclaimer stating that the unit owner waives ballot secrecy by voting via e-mail. The disclaimer must be written in capitalized letters and in a font size larger than any other font size used in the e-mail from the association to the unit owner. » A unit owner must transmit their completed ballot to the e-mail address designated by the association no later than the scheduled date and time of the meeting during which the matter is being voted on. » The association must count completed ballots that are electronically transmitted to the designated e-mail address, as long as the completed ballots comply with the foregoing requirements. » There is a rebuttable presumption that an association has reviewed all folders associated with the e-mail address designated by the association to receive ballots — continued on next page

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— continued from page 5 Unit Owner Meetings

▪ Note – Previous law only required the meeting to be held within 45 miles of the condominium property. » Associations may no longer satisfy the notice posting requirement for unit owner meetings by broadcasting the notice on a closed-circuit cable television system. ▪ Note – While previous law permitted this practice, it was rarely used, so the practical impact of this change is expected to be minimal for most associations. » Similar to the concerns noted in the section titled “Board Meetings,” these new requirements and burdens could discourage associations from holding unit owner meetings by video conference, potentially undermining the apparent legislative purpose of facilitating video conferences in the first place (i.e., promoting transparency and accessibility for the unit owners). ■ ballot state the name of the association and/or the date, time, and place of the meeting for which it is given? Does the submission of an e-mail ballot count towards quorum? What is meant by the new statutory language that the disclaimer must be written “in a font size larger than any other font size used in the e-mail from the association to the unit owner.” These and other uncertainties will likely require clarification through future legislative action or judicial interpretation. Whether or not an association has implemented a traditional electronic voting system may now have a significant impact on how meetings must be noticed and the kind of voting methods that must be accepted. Additionally, as noted in the section titled “Unit Owner Meetings,” a new statutory provision permits unit owners to vote electronically when a unit owner meeting is conducted by video conference. As discussed in that section, that new provision could potentially conflict with the broader electronic voting statutes addressed above or lead to interpretive issues. ■

— continued from previous page Electronic Voting conference, it must be recorded, and the recording must be maintained as an official record of the association. » If a unit owner meeting is held to consider a proposed annual budget, and if such meeting is conducted by video conference, then a sound transmitting device must be used so that the conversation of members attending remotely may be heard by the board or committee members attending in person, as well as by any unit owners present at the meeting. ▪ Note – Interestingly, this enhanced requirement appears to apply exclusively to budget meetings and does not appear to extend to other types of unit owner meetings. » A unit owner meeting must be held at the location provided in the association’s bylaws or, if the bylaws are silent as to the location, within 15 miles of the condominium property or within the same county as the condominium property. if a board member, an officer, a licensed manager, or an agent of the association provides a sworn affidavit attesting to such review. The foregoing procedures represent a significant change to the statutory framework governing how associations conduct voting. They also raise several unresolved questions. For example, can unit owners electronically transmit ballots (i.e., submit an “e-mail ballot”) even if the association has implemented a traditional electronic voting system? Does this alternative e-mail ballot option only apply to elections, or is it available for all types of unit owner votes? Can a unit owner submit an e-mail ballot from any e-mail address (and if so, how can the association verify that the e-mail ballot was transmitted by an authorized individual?)? Can an association require a unit owner to separately confirm that they submitted an e-mail ballot to help prevent potential fraud? Is an association required to prepare and provide the e-mail ballot form to be used by unit owners? Must the e-mail

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Official Records and Websites (Section 718.111 of the Florida Statutes) The Condominium Act specifies the types of official records that associations are required to maintain, many of which must also be posted on the association’s website. The official records include items like the governing documents, meeting minutes, membership roster,

insurance policies, association contracts, financial records, and voting records. The new laws modify the procedures governing the maintenance and accessibility of official records and websites in the following manner: First, an association must maintain the following items as part of its official records: records commits a misdemeanor of the second degree, and they must be removed from office and a vacancy declared. ▪ Note – Under previous law, this misdemeanor offense only

» Hard copy records and electronic records that contain the minutes of all meetings of the association, the board, any committee, and the unit owners. ▪ Note – Previous law did not contemplate electronic records of meeting minutes, nor did it explicitly require committee meeting minutes to be maintained as part of the official records. » A recording of all meetings that are conducted by video conference. ▪ Note – Previous law did not require video recordings to be maintained as part of the official records. » All bank statements and ledgers. ▪ Note – We believe these items were previously required to be maintained as part of the official records, but the legislative amendments now make that requirement explicit. » All affidavits required by the Condominium Act. ▪ Note – This includes, without limitation, all required mailing affidavits. Second, if there are approved minutes for a meeting held by video conference, recordings of those meetings must be maintained for at least 1 year after the date the video recording is posted on the association’s website. ▪ Note – The legislation does not address the requirement for keeping video recordings of meetings when there are no approved minutes for the meeting or when the recording is not posted on the website. Arguably, in such cases, the recording must be permanently maintained. Third, a director or member of the board or association or a community association manager who willfully and knowingly or intentionally violates the statutory obligations and requirements with respect to the provision of official

applied if an individual violated the statutory obligations or requirements two or more times within a 12-month period. The new legislation lowers that threshold, making it “easier” for individuals to face criminal charges. While the criminalization of such conduct has always raised concerns in the legal industry, this change further underscores the potential for misuse and increases the risk of unfair or excessive enforcement. Fourth, in addition to the previously required items, an association must also post the following documents on its website: » The approved minutes of all board meetings over the preceding 12 months; » The video recording or a hyperlink to the video recording for all meetings of the association, the board, any committee, and the unit owners which are conducted by video conference over the preceding 12 months; and » A copy of all affidavits required by the Condominium Act. Fifth, any document required to be posted on the association’s website under the Condominium Act must be uploaded within 30 days after the association receives or creates that document. ▪ Note – Previous law did not impose a timing requirement for posting these documents. Finally, a reminder that effective January 1, 2026, associations managing condominiums with 25 or more units (which do not contain timeshare units) will be required to post digital copies of certain documents on its website or make them available through a mobile application. Currently, this requirement only applies to condominiums with 150 or more units. This change was enacted during the 2024 legislative session, but it does not take effect until January 1, 2026. ■

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NEW STATUTORY AMENDMENTS

Reserve Funds (Section 718.112 of the Florida Statutes)

In addition to covering annual operating expenses, an association’s budget must include separate reserve accounts for capital expenditures and deferred maintenance. These reserve funds are intended to cover significant repairs or replacements that arise periodically, such as a roof replacement or a structural repair. The purpose of reserve funds is to ensure that the association has sufficient money available when major repairs or replacements are needed, thereby avoiding the need to impose large, unexpected special assessments on unit owners. The required funding levels for these reserves are generally based on the association’s most recent SIRS.

New legislation enacted this year introduces the following changes to the procedures and requirements governing an association’s reserve funds: » The budget must include reserve accounts for any item that has a deferred maintenance expense or replacement cost exceeding $25,000, or an inflation-adjusted amount annually determined by the Division of Condominiums, whichever is greater. ▪ Note – Under previous law, reserve accounts were required for items having a cost exceeding $10,000, and there was no adjustment for inflation. This change should help reduce the number of items for which an association is required to collect reserves. » Reserves for SIRS-related items may be funded by regular assessments, special assessments, lines of credit, or loans. A special assessment, a line of credit, or a loan for this purpose requires the approval of a majority vote of the total voting interests of the association. ▪ Note – This new provision creates a special approval process for obtaining alternative funding to pay for SIRS-related items. However, it is unclear whether the legislature intended to make such alternative funding easier or more difficult to obtain. For example, some sets of governing documents permit the association to pass a special assessment or obtain a loan through a board vote alone, while others require approval by a supermajority of the membership. As a result, the impact of this change may vary depending on the specific provisions in each association’s governing documents. » A unit-owner-controlled association that must have a SIRS may secure a line of credit or a loan to fund capital expenses required by a milestone inspection or a SIRS. The line of credit or loan must be sufficient to fund the cumulative amount of any previously waived or unfunded portions of the reserve funding amount required to be funded by statute and by the most recent SIRS. Funding from the line of credit or loan must be immediately available for access by the board to fund required repair, maintenance, or replacement expenses without further approval by the members of the association.

A special assessment, a line of credit, or a loan secured for this purpose and related details must be included in the association’s annual financial statement. ▪ Note – This new provision is somewhat unclear, as it does not specify whether the procedures for obtaining a line of credit or loan to fund these expenses are meant to differ from those outlined in the preceding bullet point. However, a reasonable interpretation is that the board may use the borrowed funds for a milestone inspection or a SIRS, without needing further unit owner input, once the financing has been obtained or approved by the unit owners (as applicable). This is another area that may require clarification through future legislation. Nonetheless, the overarching legislative intent appears to be to ensure associations have a reliable means of readily accessing funding for structural maintenance, and to require clear disclosure of the funding source in their annual financial statements. » The funding procedures outlined above for SIRS related items and milestone inspections do not apply to associations controlled by a developer, an association in which the non-developer unit owners have been in control for less than 1 year, or an association controlled by one or more bulk assignees or bulk buyers. ▪ Note – It is unclear whether, in these cases, the procedures for securing such alternative funding would be controlled by the association’s bylaws or if such alternative funding would be outright prohibited. » For a budget adopted on or before December 31, 2028, if the association has completed a milestone inspection within the previous 2 calendar years, the board, upon the approval of a majority of the total voting interests of the association, may temporarily pause, for a period of no more than 2 consecutive annual budgets, reserve fund contributions or reduce the amount of reserve funding for the purpose of funding repairs recommended by the milestone inspection. An association that has paused reserve contributions in this manner must have a SIRS performed before the continuation

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Structural Integrity Reserve Studies (Section 718.112 of the Florida Statutes)

A structural integrity reserve study (“SIRS”) is a study of an association’s reserve funds required for future major repairs and replacement of the condominium property. Among other things, a SIRS provides a reserve funding schedule with a recommended annual reserve amount so that the association can afford the estimated replacement cost or deferred maintenance expense of each item of condominium property by the end of the estimated remaining useful life of the item. The intended goal of a SIRS is to help an association plan for future capital projects so that the association can afford the projects when they become necessary. Generally, a SIRS must be completed at least every 10 years after the condominium’s creation.

This year’s new legislation implements the following changes to the procedures and requirements governing a SIRS: » Associations existing on or before July 1, 2022, which are controlled by unit owners other than the developer, must have a SIRS completed by December 31, 2025. ▪ Note – Under previous law, associations falling within this category were required to complete a SIRS by December 31, 2024. The new legislation extends the deadline for certain associations to complete a SIRS. » If an association completes a milestone inspection, or an inspection completed for a similar local requirement, the association may delay performance of a required SIRS for no more than the 2 consecutive budget years immediately following the milestone inspection in order to allow the association to focus its financial resources on completing the repair and maintenance recommendations of the milestone inspection. ▪ Note – This new provision appears intended to provide some relief, even if only temporary, for associations which have fulfilled their milestone inspection requirements. » A SIRS is required for each building on the condominium property that is three habitable stories or higher in height, as determined by the Florida Building Code. ▪ Note – Previous law required a SIRS for every building that is three stories or higher in height, regardless of whether each story is habitable. Under the revised law, buildings with three stories that include non-habitable levels (such as a garage) now appear to be excluded from the SIRS requirement. ▪ Note – Other sections of the statutes concerning SIRS requirements were not similarly changed and still specify that a SIRS must be conducted for each building that is “three stories or higher in height,” without referencing whether those stories must be

“habitable.” This inconsistency creates potential ambiguity which may need to be addressed and clarified in future legislative sessions. » A SIRS is not required for single-family, two-family, three-family, or four-family dwellings with three or fewer habitable stories above ground. ▪ Note – Previous law only provided exemptions for single-family, two-family, and three-family dwellings. » A SIRS must include any item that has a deferred maintenance expense or replacement cost exceeding $25,000 (or an inflation-adjusted amount annually determined by the Division of Condominiums, whichever is greater) if the failure to replace or maintain such item would negatively affect other SIRS related items as determined by the visual inspection portion of the SIRS. ▪ Note – Under previous law, a SIRS was required to include items having a cost exceeding $10,000, and there was no provision for inflation-based adjustments. » The SIRS must include a recommendation for a reserve funding schedule based on a baseline funding plan that provides a reserve funding goal in which the reserve funding for each budget year is sufficient to maintain the reserve cash balance above zero. The SIRS may recommend other types of reserve funding schedules, provided that each recommended schedule is sufficient to meet the association’s maintenance obligation. ▪ Note – This imposes an additional layer of responsibility on the professional performing the SIRS. » The SIRS must take into consideration the funding method or methods used by the association to fund its maintenance and reserve funding obligations through regular assessments, special assessments,

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NEW STATUTORY AMENDMENTS

— continued from previous page Structural Integrity Reserve Studies

— continued from page 9 Reserve Funds

of reserve contributions in order to determine the association’s reserve funding needs and to recommend a reserve funding plan. ▪ Note – This new provision appears intended to provide some relief, even if only temporary, for associations which have fulfilled their milestone inspection requirements. ▪ Note – This permitted “pause” does not apply to an association controlled by a developer, an association in which the non-developer unit owners have been in control for less than 1 year, or an association controlled by one or more bulk assignees or bulk buyers. » If the local building official determines that the entire condominium building is uninhabitable due to a natural emergency, the board may pause the contribution to its reserves or reduce reserve funding until the local building official determines that the condominium building is habitable. ▪ Note – Previous law only permitted the board to do this if a majority of the unit owners approved it. » If an association votes to terminate the condominium, the members may vote to waive the maintenance of reserves recommended by the association’s most recent SIRS. » An association’s reserve accounts may be pooled for two or more required components. Reserve funding for SIRS components may only be pooled with other SIRS components. The reserve funding indicated in the proposed annual budget must be sufficient to ensure that available funds meet or exceed projected expenses for all components in the reserve pool based on the reserve funding plan or schedule of the most recent SIRS. A vote of the members is not required for the board to change the accounting method for reserves to a pooling accounting method or a straight-line accounting method. ▪ Note – This is a significant change from previous law, which historically required unit owner approval to change the accounting method for reserves in certain situations. It also addresses a gap in the prior law regarding the pooling of SIRS reserves. ▪ Note – It is unclear whether this would permit associations to pool reserve funds that were previously collected, or only to pool reserve funds that are collected after the accounting method is changed. This uncertainty stems in part from another statutory provision which prohibits the use of reserve funds for other purposes without a unit owner vote. ■

lines of credit, or loans. If the SIRS is performed before the association has approved a special assessment or secured a line of credit or a loan, the SIRS must be updated to reflect the funding method selected by the association and its effect on the reserve funding schedule, including any anticipated change in the amount of regular assessments. ▪ Note – This places an additional responsibility on the association to obtain an updated SIRS whenever it approves a special assessment or secures a line of credit or loan to fund its maintenance and reserve funding obligations. » The association must obtain an updated SIRS before adopting any budget in which the reserve funding from regular assessments, special assessments, lines of credit, or loans do not align with the funding plan from the most recent version of the SIRS. ▪ Note – This is likely to present challenges, as obtaining an updated SIRS within such a short timeframe will often be impractical or even impossible. » An officer or a director of an association must sign an affidavit acknowledging receipt of the completed SIRS. The new laws also introduce certain disclosure requirements regarding potential conflicts of interest involving professionals and contractors. In particular: » Any design professional or licensed contractor who bids to perform a SIRS must disclose in writing to the association their intent to bid on any services related to any maintenance, repair, or replacement that may be recommended by the SIRS. » Any design professional or licensed contractor who submits a bid for performing any services recommended by the SIRS may not have an interest, directly or indirectly, in the firm or entity providing the SIRS or be a relative of any person having a direct or indirect interest in such firm, unless such relationship is disclosed to the association in writing. ▪ Note – As used in this provision, the term “relative” means a relative within the third degree of consanguinity by blood or marriage. » If a design professional or licensed contractor fails to provide the written disclosure of the interests or relationships required above: (i) the vendor’s contract is voidable and terminates upon the association filing a written notice terminating the contract; and (ii) the vendor may be subject to professional discipline by the State. ■

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Material Amendments in Nonresidential Condominiums (Section 718.110 of the Florida Statutes)

The Condominium Act generally prohibits declaration amendments which change the configuration or size of any unit in any material fashion, materially alter or modify the appurtenances to the unit, or change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium, unless both of the following conditions are met: (i) the record owner of the affected unit and all record owners of liens on that unit join in the execution of the amendment; and (ii) all record owners of all other units in the condominium approve the amendment. These types of amendments are sometimes referred to as “material amendments.” This year’s legislation creates an exception to this general rule for nonresidential condominiums which are formed on or after July 1, 2025. In those types of condominiums, a “material amendment” may be adopted with the consent of the record owners of all affected units and all record owners of liens on those units, and the approval of owners of nonaffected units is not required. ■

Financial Reports (Section 718.111 of the Florida Statutes)

Associations are required to complete an annual financial report of the previous year’s financial activities and provide the report to unit owners. The new laws modify the procedures for preparing, maintaining and providing financial reports in the following manner: » An association must deliver to each unit owner a copy of the most recent financial report within 180 days after the end of the fiscal year. ▪ Note – Previous law required an association to deliver the most recent financial report within 120 days after the end of the fiscal year. The change allows for a slightly longer timeframe to complete the task. » In lieu of delivering the most recent financial report, an association may instead provide a notice to unit owners stating that a copy of the report will be mailed, hand delivered or electronically delivered to them, at no charge, within 5 business days of receiving an owner’s written request. The report must be delivered in the format requested by the owner. ▪ Note – Previous law required an association to provide both the financial report and the above-referenced notice. — continued on next page

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Milestone Inspections (Section 553.899 of the Florida Statutes)

— continued from previous page Financial Reports

The new law eliminates this unnecessary, duplicative, and wasteful requirement. » Evidence of compliance with this delivery requirement must be made by an affidavit executed by an officer or director of the association. In addition, the type of financial report an association must prepare generally depends on its total annual revenues. For example, the amount of an association’s revenue may determine whether it must prepare “compiled,” “reviewed,” or “audited” financial statements. However, the Condominium Act permits an association to prepare a “lower tier” financial report than would otherwise be required based on its revenue (such as opting for reviewed financial statements instead of audited ones). Some associations might choose a lower-tier report due to the less stringent requirements. To qualify for this option, an association must hold a vote of the membership. The new laws raise the approval threshold, now requiring a majority of all voting interests to authorize the preparation of a lower-tier financial report. Previous law only required approval from a majority of the voting interests present at a meeting. ■

A “milestone inspection” is a structural inspection of a building, including an inspection of the load-bearing elements, the primary structural members, and the primary structural systems, which is performed by a licensed architect or engineer. Generally, a milestone inspection must be performed by December 31 of the year in which the building reaches 30 years of age and every 10 years thereafter. This year’s new legislation implements the following changes to the procedures and requirements governing a milestone inspection: » A milestone inspection is required for a building that is three habitable stories or more in height as determined by the Florida Building Code and that is subject, in whole or in part, to the Condominium Act. ▪ Note – Previous law required a milestone for a building that is three stories or more in height, regardless of whether each story is habitable. Under the revised law, buildings with three stories that include non-habitable levels (such as a garage) now appear to be excluded from the milestone requirement. » A licensed architect or engineer who bids to perform a milestone inspection must disclose in writing to the association their intent to bid on any services related to any maintenance, repair or replacement which may be recommended by the milestone inspection. » Any design professional or licensed contractor who submits a bid to the association for performing any services recommended by the milestone inspection may not have an interest, directly or indirectly, in the firm or entity providing the milestone inspection or be a relative of any person having a direct or indirect interest in such firm, unless such relationship is disclosed to the association in writing. ▪ Note – As used in this provision, the term “relative” means a relative within the third degree of consanguinity by blood or marriage. » If a design professional or licensed contractor fails to provide the written disclosure of the interests or relationships required above: (i) the vendor’s contract is voidable and terminates upon the association filing a written notice terminating the contract; and (ii) the vendor may be subject to professional discipline by the State. ■

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2025-2026 COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Annual Budget Increases (Section 718.112 of the Florida Statutes)

Condominium associations are required to adopt an annual budget outlining proposed expenditures for the maintenance, management and operation of the association. However,

the statutes provide unit owners with certain rights to participate in the budget process if the proposed budget exceeds 115% of assessments for the preceding fiscal year. Recent legislative changes dramatically modify both the rights of unit owners and the procedures governing this process. Under the new laws:

» If a board proposes in any fiscal year an annual budget which requires assessments against unit owners which exceed 115% of assessments for the preceding fiscal year, the board must simultaneously propose a substitute budget to be considered by the unit owners that does not include any discretionary expenditures that are not required to be in the budget. ▪ Note – This marks a significant departure from previous law, which only gave unit owners the right to consider a substitute budget if at least 10% of all voting interests submitted a written request for a special meeting within 21 days of the board’s final adoption of the budget. Additionally, previous law did not require the board to prepare a substitute budget even if such a request was made. ▪ Note – The statutes do not define the term “discretionary” expenditure or otherwise clarify its intended meaning. However, a different portion of the Condominium Act (Section 718.504) identifies certain expenses that must be included in an association’s budget, and many governing documents outline required services and expenditures. Presumably, any expense that is not listed in the statute or required by the governing documents could be considered “discretionary,” but there is no definitive guidance on that point. » Any determination of whether assessments exceed 115% of assessments for the prior fiscal year shall exclude any authorized provision for required reserves for repair or replacement of the condominium property, anticipated expenses of the association which the board does not expect to be incurred on a regular or annual basis for the repair, maintenance or replacement of SIRS-related items, and insurance premiums. ▪ Note – The phrase “for the repair, maintenance, or

replacement of SIRS-related items” is a new addition to the statute. ▪ Note – Previous law excluded “reasonable” reserves (rather than “required” reserves) from the calculation used to determine whether a budget’s assessments exceeded 115% of assessments for the prior fiscal year. ▪ Note – Previous law excluded “assessments for betterments to the condominium property” from this 115% calculation. That exclusion has now been removed from the statute. » The substitute budget must be proposed at the budget meeting before the adoption of the annual budget. » At least 14 days before such budget meeting in which a substitute budget will be proposed, the board must deliver to each unit owner a notice of the meeting. » Unit owners must consider and may adopt a substitute budget at the meeting. » A substitute budget is adopted if approved by a majority of all voting interests unless the bylaws require adoption by a greater percentage of voting interests. ▪ Note – This provision raises several unresolved questions. For example, does this mean that unit owners will vote during a board meeting, or does it effectively transform the budget meeting into a hybrid board/ member meeting? Are unit owners permitted to vote at this meeting by proxy or through electronic voting? Can the unit owners adjourn the meeting if a quorum is not present or if insufficient votes are obtained? These and other uncertainties will likely require clarification through future legislative action or judicial interpretation. » If a substitute budget is not adopted, the annual budget previously initially proposed by the board may be adopted. ■

14 | Kopelowitz Ostrow Ferguson Weiselberg Gilbert

NEW STATUTORY AMENDMENTS

Hurricane Protection (Section 718.113 of the Florida Statutes)

Investment of Association Funds (Section 718.111 of the Florida Statutes)

Last year, the legislature made significant changes to the laws governing hurricane shutters and similar types of storm protection. One notable change provided that unit owners are not responsible for the cost of removing or reinstalling hurricane protection if such removal is necessary for the maintenance, repair or replacement of property for which the association is responsible. This year, the legislature clarified and adjusted those provisions in the following manner: » An association’s declaration may provide that a unit owner is responsible for the cost of removing or reinstalling hurricane protection, even if the removal is necessary for the maintenance, repair or replacement of property for which the association is responsible. » If an association’s declaration does not specify who is responsible for the costs of such removal or reinstallation, then the board will determine if the removal or reinstallation of hurricane protection must be completed by the unit owner or the association. ▪ If such removal or reinstallation is completed by the association, the costs incurred by the association may not be charged to the unit owner. ▪ If such removal or reinstallation is completed by the unit owner, the association must reimburse the unit owner for the cost of the removal or reinstallation or the association must apply a credit toward future assessments in the amount of the unit owner’s cost to remove or reinstall the hurricane protection. » The new legislation removes a provision that previously allowed an association to assess a unit owner when the association removes or reinstalls hurricane protection in situations where such work was the unit owner’s responsibility. ▪ Note – This removal arguably means that an association can only charge a unit owner for those costs if the authority to do so is explicitly stated in the declaration. However, the statute does not clearly address this issue, leaving some uncertainty. ■

Historically, the Condominium Act has not specified the types of investment vehicles a board of directors may use to manage association funds. Instead, boards have been bound by the association’s governing documents and general fiduciary duty principles to guide their investment decisions. Recent legislative changes have clarified this issue by establishing the following: » In fulfilling its duty to manage operating and reserve funds of its association, a board must use best efforts to make prudent investment decisions that carefully consider risk and return in an effort to maximize returns on invested funds. » An association may invest reserve funds in one or any combination of certificates of deposit or in depository accounts at a community bank, savings bank, commercial bank, savings and loan association, or credit union without a vote of the unit owners. ▪ Note – This provision does not address the investment of non-reserve funds, leaving uncertainty regarding the permitted investment vehicles, and the appropriate procedures or requirements, for such investments. Presumably, the investment of these funds would be governed by the association’s governing documents. ▪ Note – This change could benefit associations by allowing them to generate passive income from reserve funds to help offset costs. ■

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