The 8 Due Diligence Items: Items 1-4

1. SIRS Completion Status. Has the association completed its Structural Integrity Reserve Study? Request a copy. If it has not been completed (deadline was December 31, 2024), ask why. Non-completion may indicate: inadequate funds to commission the study, disputes among board members, or intentional delay. A building that hasn't completed its SIRS is a significant red flag. 2. Reserve Balance vs SIRS Requirement. The SIRS tells you what reserve funding is required; the annual budget and financial statements tell you what the association actually has. Calculate the gap: • Required reserves (from SIRS): $X • Current reserve balance: $Y • Underfunding gap: $X minus $Y • Gap per unit: total gap ÷ number of units If the per-unit gap is $20,000, that is your exposure to special assessment if the association levies one immediately. Some associations are phasing catch-up over 5-10 years through increased dues; others are levying immediate special assessments. 3. Pending or Anticipated Special Assessments. Review meeting minutes for the past 2 years. Look for any mentions of special assessments, reserve catch-up plans, emergency repairs, or significant repair projects. A vote to levy a special assessment that was taken the week before your offer could already be binding on any buyer. 4. Milestone Inspection Status and Findings. Has the building had its required milestone inspection? If so, request the Phase 1 report. If Phase 2 was required, request that report. What specific conditions were identified? Were they addressed? Is a follow-up inspection scheduled?

Items 5-8: Insurance, Lender, and Financial Health

5. Association Insurance Coverage. Florida condo insurance has become a crisis (covered in depth in a separate guide). Verify: • Property/building insurance: does coverage equal replacement cost value? • Liability insurance: $1M+ per occurrence minimum • Directors and Officers (D&O) insurance: covers board members from liability • Fidelity/crime insurance: covers theft by association employees or board members • Flood insurance: is the building in a flood zone requiring NFIP coverage? 6. Lender Eligibility. Post-HB 1021, Fannie Mae and Freddie Mac significantly tightened condo approval criteria. An ineligible condo cannot be financed with conforming loans; buyers must use jumbo financing or pay cash. Verify lender eligibility before going under contract — not after. 7. HOA Delinquency Rate. The percentage of unit owners delinquent on HOA dues. Fannie/Freddie require delinquency rate below 15%. Higher rates suggest financial stress in the association and may indicate difficulty funding reserves through normal dues. 8. Active Litigation Involving the Association. Litigation can affect insurance, lender eligibility, and association financial stability. Request a copy of the association's pending litigation disclosure.

How to Request the Documents

Florida law gives buyers the right to review specific condo documents before closing. Request from the seller (or directly from the association if the seller authorizes): • The most recent Structural Integrity Reserve Study (SIRS) • The association's most recent 2 years of financial statements and budget • Board meeting minutes for the past 2 years • The most recent milestone inspection report (if applicable by age) • Current insurance certificates (all policies) • The declaration, bylaws, and rules and regulations • Pending litigation disclosure • Any pending or anticipated special assessments Many sellers must provide these documents as a condition of sale under Florida law. Review them with a Florida real estate attorney for complex situations. At minimum, calculate the reserve gap yourself before signing any contract.

“I will not help a buyer close on a Florida condo without a complete review of the SIRS, the reserve balance, and the insurance certificates. These three documents tell you almost everything you need to know about the financial health of the association. A beautiful unit in a financially troubled association is not a good purchase at any price. A less impressive unit in a well-managed association with full reserves and a solid insurance program is the one that holds value and doesn't surprise you with a $60,000 assessment two years after you move in.”

— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®

• FL Condo Assessment Guide (Hub)
• HB 1021 Reform: What It Requires
• Reserve Studies Explained
• Milestone Inspections
• Special Assessment Risk for Buyers
• FL Condo Insurance Crisis
• Lender Eligibility for FL Condos

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