The Florida legislature’s special session held this week resulted in new laws aimed to promote condominium building safety. Senate Bill 4D passed the House of Representatives and Senate each, and was signed into law by Governor Ron DeSantis on May 26, 2022.

The legislation comes nearly one year after the devastating partial collapse of the Champlain Towers South residential condominium in Surfside, Florida. Following the tragedy, Florida’s legislature grappled with proposed legislative during the regular session in March 2022, but the condominium building safety laws proposed ultimately were not passed at that time. The special session presented a second, and successful, opportunity to revisit these proposals. The new laws represent statewide and industry-wide efforts to prevent similar tragedies in the future by mandating a variety of preventative measures, including:

  • “Milestone inspections” of condominium buildings at least three stories in height must be performed when the structures reaches 30 years since its Certificate of Occupancy and every 10 years thereafter. For similarly situated condominium buildings that are within 3 miles of a coastline, the milestone inspection must be performed when the structure reaches 25 years, and every 10 years thereafter.
  • A “structural integrity reserve study” is now required to be performed at least every 10 years after the condominium’s creation for each building on the condominium property that is three stories or higher. The study must include the roof, load bearing walls, floor, foundation, fireproofing and fire protection systems, plumbing, and any item with a deferred maintenance or replacement cost that exceeds $10,000.00.
  • Furthermore, Members cannot opt-out of the mandatory funding of reserves for structural integrity components, regardless of a membership vote approving same.
  • Requiring inspection reports and studies to be kept as Official Records and available and published to Members.
  • Clear developer requirements for building inspections, structural integrity reserve study, and funding requirements prior to transition to the residents.
  • Engagement of the Florida Department of Business and Professional Regulation and local municipalities to track condominium buildings and the inspection reporting.

While the legislation presents new requirements from the current regulations, it is not the first time that inspections have been required by the Condominium Act. In 2008, House Bill 995 was adopted, requiring inspections for three-story condominium buildings every 5 years, though a majority of voting interest could opt-out of this requirement. That law was later repealed in 2010; at that time, many advocates for repealing the law cited reducing fiscal costs in the wake of the Great Recession.

When does the new law take effect?

Continue Reading New condominium building laws adopted in Florida seek to prevent future Surfside tragedies

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Leaving Real Property to Loved OnesOwning real property has always been a staple investment vehicle for people throughout history. One attractive feature of investing in real property is that it may also double as a Homestead. In other cases, real estate investments may be rental, commercial or recreational (i.e. your log cabin or private island).

Whatever the case may be, it is important to understand that real estate can be owned in several ways, each of which has important legal consequences when it comes to leaving it to your loved ones upon death. Failing to understand how you legally own your property and how it will be passed on to your loved ones can lead to unintended, and often unforeseen consequences.

Outright Gifts at Death

  1. Gifts In Your Will. Leaving real property to someone at your death can be accomplished via your Last Will and Testament. Your Estate Planning Attorney can help you create the proper testamentary language to direct that ownership of a certain parcel of property be transferred to your chosen loved one(s). This method is very straightforward and initially, often less expensive than other options. However, making this kind of gift in a Last Will and Testament usually requires the person in charge of your estate when you die (the “Personal Representative”) to submit your Last Will and Testament to the probate court and begin the probate process to transfer the asset pursuant to the terms of your Last Will and Testament. Probate can be expensive, public and time-consuming.
  2. Gifts from a Trust. Many Revocable Living Trusts are designed to serve as a substitute for a Last Will and Testament by directing who among your loved ones should receive certain items of property at your death, including real estate. The Trust, similar to a Will, can also distribute your real property to your loved one(s) pursuant to your wishes. However, the Trustee, instead of your Personal Representative will transfer the property to your designated recipient privately during the Trust Administration. One of the primary benefits of a Trust is that, as long as you transfer your property’s title to the Trust before you die, the Trustee will have the necessary power to make the post death transfer to your intended beneficiaries. Probate will be unnecessary, saving your estate and trust beneficiaries significant costs and delay.
  3. Gifts Using Enhanced Life Estate Deeds. A number of states have passed laws that allow property owners to record with the local land records office, a deed that transfers the title automatically (without the need of a probate court) to a named beneficiary at the death of the original land owner. This method for transferring real estate outright to the person whom you intend to receive it at your death can be very simple and cost-effective. Not every state allows this type of transfer, so it is important to check your state laws or consult with an attorney knowledgeable in this area before attempting to use such a tool. Florida has a unique type of deed, named the “Enhanced Life Estate Deed” (a/k/a “Lady Bird Deed”), which allows for this type of title transfer.

Gifting Real Estate to Multiple Individuals

Continue Reading 7 Ways to Leave Real Property to Loved Ones

grandparents homeThe short answer to this question is no. Naming your child as the recipient of your home in your will does not give them any right to your home while you are still living. However, understanding why requires a little more explanation.

Title Is Key

When it comes to real property such as a house, the person who has title to (or legal ownership of) the property controls the property. The title holder (owner) can lease, mortgage, refinance, sell, gift, or do anything else with the property. When you purchased your home, you received title to it through a deed. This deed proves you are the owner and you have all rights to your property.

A Will Is Effective Only upon Your Death

Continue Reading If I Give My Home to My Child in My Will, Can They Take My Home While I Am Still Alive?

Forgetting to turn on the air conditioner before heading back up north for the summer and coming back to find mold growth.

An undetected pipe leak.

Forgotten running faucets that spill over onto the floor and beyond.

These types of incidents can be inconvenient and expensive for anyone, but they pose a heightened threat to any of the persons living in the approximately 1.5 million residential condominium units in Florida.

By its nature, condominium ownership requires cooperation and some forfeited freedom of its residents by putting neighbors in close proximity to each other with shared common elements. As summarized by Florida Fourth District Court of Appeal,

[c]ondominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization.”

Hidden Harbour Estates, Inc. v. Norman, 309 So.2d at 181–82. This close proximity of living creates an expanded zone of risk, with the action (or inaction) of one person potentially affecting multiple neighbors.

As a result, unit owners are charged with being more diligent in the use of their units. For example, some condominiums pass rules regarding the frequency of cleaning out dryer vents to reduce the risk of a fire. In a single family residential home, neglecting to change a dryer vent can be done at one’s own risk; in a condominium where a fire can quickly cause widespread destruction to an entire building, that risk is unknowingly being assumed by all of the unit owners – not just the resident who opts to run the dryer for a fifth time instead of folding laundry.

But regardless of the language in governing documents that require owners to maintain their units, or take certain actions and refrain from others, accidents happen. When damage results, who is responsible? More often than not, the answer to the question “who is responsible for fixing this?” is, frustratingly for owners and associations, “it depends.” And it depends on a number of factors.

Maintenance Obligations

Continue Reading Distinguishing between maintenance responsibility and financial responsibility in the wake of damage to condominium property

Henderson Franklin was again honored to sponsor 2022 Market Trends, which took place on March 16, 2022, with speakers Randy Thibaut, founder of Land Solutions, Inc., Denny Grimes, President of Denny Grimes & Team at Keller Williams Realty, and Justin Thibaut, CEO of Land Solutions, Inc.

The presentation discussed the current conditions of the real estate market in Southwest Florida and provided a future forecast about what the market may look like in the coming year. The presentation also focused on the primary areas of the real estate sector: residential development, resale properties, and the commercial market.

Overall, the end of 2021 was a continuation of the rapid growth that comprised 2020 and 2021, as waves of new residents and businesses entered into the market. All sectors of the market are currently seeing growth, but nowhere is this more evident than with residential development and resale, as low inventory coupled with high demand has prompted price fairly dramatic price increases across the three counties of Lee, Collier and Charlotte. The ultimate question, however, will be whether this will continue or will the market begin to decline as prices continue to creep up higher.

Residential Development

real estateIn 2021, Southwest Florida saw a 47% increase in new single-family residential permits issued amongst the three counties, with Lee County seeing the highest increase of 59%. Total residential permits increased 39% percent to approximately 25,000 permits. These percentage increases, while dramatic, still pale in comparison to the number of permits issued in 2005, which numbered around 44,000 permits prior to the crash in 2008. Similarly, multi-family residential permits increased by 19% over the last year.

These numbers illustrate that low resale inventory is driving up the prices, leading buyers to seek new construction and rental properties. Presently, the current inventory of resale properties cannot match the demand of new homebuyers entering the market, leading to homes rising in value by as much as 77% in some areas over the last year.

Continue Reading The Pulse of Southwest Florida Real Estate: A Recap of 2022 Market Trends

When using trusts in estate planning, a key element includes transferring the trustmaker’s real estate into the trust by recording a deed with the local recording authority. This step is crucial for ensuring that the trustee has the authority to manage and ultimately sell or transfer the property should the trustmaker become incapacitated or die.

If the trustmaker were to die without retitling the property in the trust’s name, the property may have to pass through the probate process even if the trustmaker had a will. Probate is a state court process that often involves significant expenditures of time and money and causes complications that many people would rather avoid.

However, an important question arises regarding the type of deed that should be used for transferring real property into the trust’s name. There are several types of deeds that can be used, one of which is a general warranty deed. The other types of deeds commonly used in the United States for transferring property are quitclaim deeds and special warranty deeds.

Although a full discussion of the differences among the types of deeds is not possible in an article of this length, the following information briefly explains each type of deed and why someone might want to use it when transferring ownership of real property.

Quitclaim Deeds

When someone (grantor) wants to transfer whatever property rights they have in a parcel of property, they can use a quitclaim deed. When an individual drafts and signs a quitclaim deed, they are, in effect, making a statement that whatever they own regarding the property described in the deed is now transferred to the grantee.

real estateWhat makes quitclaim deeds unique, however, is that the grantor who creates and signs the quitclaim deed is also putting the grantee on notice that they make no promises whatsoever that they actually own the property. If they do own the property, it is effectively transferred using the quitclaim deed after it has been recorded with the local recording authority. But if it turns out that the grantor did not, in fact, own the property, the grantee cannot bring a claim against the grantor unless they can prove that the grantor knowingly intended to defraud the grantee. However, if the grantor thought they owned the property but in fact did not own it because of some problem with the title, the grantee would have no ability to make the grantor legally liable for the error.

However, it is still common for individuals to use quitclaim deeds when transferring real property into a family trust for estate planning purposes. They (or their attorneys) reason that a quitclaim deed transfers any ownership interest that you may have in the property to your trust so that your trust can hold and manage it if you become incapacitated or die. Then, when the time comes to sell the property, the purchaser will, presumably, buy title insurance to cover any past defects in the title when they take the property.

General Warranty Deeds

Continue Reading Using Real Estate Deeds in Estate Planning

Florida Gulf Coast University recently released the January 2022 edition of the Southwest Florida Regional Economic Indicators. The report shares economic data for the region, including an update on the real estate market status across the coastal counties of Lee, Charlotte and Collier. Overall, the report indicates that the real estate market is leveling off after fairly dramatic swings brought about by the COVID-19 pandemic.

Building Permits

Single-family building permits, the metric which indicates the number of new homes under construction, saw an increase of 40% from November 2020 to November 2021. Yet, while this growth indicates increases in new construction from earlier stages of the pandemic, a comparison of more recent numbers actually shows a slow decline over the latter half of 2021.

For example, at the peak of the pandemic housing boom in May 2021, approximately 1,100 new single-family permits were issued by Lee County. However, that number dropped over 18% to roughly 900 permits the County issued by November 2021. These numbers seem to indicate that in the early stage of the pandemic, new construction fell off, likely due to concerns over the economy, material and supply shortages, labor shortages, and a variety of other pandemic-related factors.

In 2021, Florida attracted thousands of new residents seeking to enjoy warmer weather and less stringent COVID restrictions. However, it appears now the population influx into the state may be beginning to slow, which in turn is resulting in a leveling off in new construction. Whether this pattern continues now that more seasonal residents are returning to the area remains to be seen.

Existing Single Family Home Sales & Active Listings

Continue Reading State of the SWFL Real Estate Market

vacation rentalBeginning January 3, 2022, Collier County will require registration of “short-term vacation rentals.” This includes any “habitable space . . . for a term of six months or less. . . . .” unless exempted under state law. To view the Ordinance, click here.

Some may recall that Collier County had a similar rental registration ordinance between 1996 and 2010. The old rental registration requirement was annual beginning in 1999, and a yearly fee was required. The new registration is a one-time requirement (although changes to ownership or the owner’s designated contact person must be reported to the County within ten days).

What do short-term property owners need to do to comply?

In most cases, to have a “code-compliant” rental in unincorporated Collier County, an owner must: Continue Reading New Collier County Short-Term Rental Registration Begins January 2022

construction defectFlorida’s construction industry has been one of the biggest beneficiaries of the COVID-19 pandemic. Whether it is newly constructed homes or renovations to existing homes, the construction industry has weathered the need for residential construction with surprising strength. However, the boom of new construction projects has accompanied an uptick in litigation concerning construction problems, such as design defects, poor workmanship and code violations.

What is a Chapter 558 Notice?

Florida’s Legislature enacted Chapter 558 (“Ch. 588”), known as the construction defect statute, to promote communication between the parties and potentially resolve disputes without the need for litigation to combat the marked increase in court filings.

A property owner alleging a construction defect must provide the contractor, subcontractor, supplier, design professional, and others with written notification of the alleged defect(s) at least 60 days before filing a lawsuit, describing that defect in “reasonable detail.”

Upon receipt of a Ch. 558 Notice, contractors may forward “downstream” notices to subcontractors, suppliers or design professionals whom it reasonably believes is responsible for each defect specified in the notice of claim, noting the specific defect and party responsible.

What qualifies as a construction defect?

A “construction defect” is defined by Florida Statute 558 as any deficiency arising from the construction of a property from the installation of defective material; the work performed results in building code violations; and/or the property’s design is flawed or deviates from the industry standards.

What happens after a contractor receives a Ch. 558 Notice?

Continue Reading FAQ: Construction Defects and Florida Statute 558

Real Estate Contracts Are you aware that the standard Florida Association of Realtors/Florida Bar Contract, often referred to as the “FAR/BAR Contract” has changed? Below is an overview of the revisions to the FAR/BAR Contract for Sale and Purchase, “AS IS” and other residential forms which were discussed earlier this year and have now become effective as of November 1, 2021.

Major Updates to the Standard Form

Section 8(b) – Loan Approval Period

Two tasks are to be completed during this period now. The first is that the buyer must obtain approval for financing as described in the section. This is consistent with the prior version of the contract. However, the new requirement is that the buyer’s lender must receive a satisfactory appraisal before the approval period expires.

Continue Reading Overview of Changes to “FAR/BAR” Contracts Effective November 1, 2021