SIRS Deadline Approaches

By Sundeep Jay, RS, PRA / Published August 2024

Many condominiums are now rushing to complete their SIRS report. The deadline for completing the SIRS report for residential condominium buildings that are three stories in height or taller is December 31, 2024. Though many condominiums might not have this completed by the end of this year, I recommend at least preparing for the information that will be required by your reserve study provider to help expedite the completion of this report.

     First, you should provide a copy of any engineering inspection reports completed on your building in the last one to five years. Other items of importance that should be provided to your reserve analyst are contracts for roof replacements, painting, fire system updates, electrical updates, and plumbing updates. If your association is planning on future projects, such as roofing or painting, then these proposals should also be made available for the preparation of your reserve study. Whether you store your capital expenditure items electronically and/or in a hard file, these items should be forwarded to your reserve provider prior to their on-site visit of your association. This way they can analyze these documents and contracts for a better understanding of your property before arriving at your condominium/co-op.

     The SIRS report takes approximately 10 to 30 business days to complete. The more information available for your building(s), the quicker the reserve provider can complete your report(s). Most reserve companies are booking up fast and are limited in time with the current workload that has been created by the new reserve study laws put out by the State of Florida. There is a better chance of getting an appointment if your association is prepared with the required documentation.

     Many clients have expressed their concerns over the figures that are being produced by the SIRS and non-SIRS items on these reserve studies. If you are using the pooled method, then your existing funds are now being split between two reports. Since many of the reports are producing deficit funding amounts, the splitting of the existing funds will create a larger deficit funding amount on your reserve studies. Even if you are using the straight-line method and previously your association did not include items such as plumbing, electrical, and/or doors/windows, this will also create larger deficit funding numbers for these categories, depending upon the remaining life for these specific assets. It is important to acknowledge that the State of Florida did not only instigate these new laws due to the building collapse in Surfside but also because the buildings in Florida are starting to age. Aging buildings will require updates. These updates will require reserve funding. It is only fair that individuals currently living in these buildings pay their fair share of these costs. Otherwise new buyers will have to pay for these costs to help maintain and update the building structure and safety components.

     Though it may be acceptable not to update a building’s electrical and or plumbing systems in your own personal home, this is not the case where condominiums are involved. The board has a fiduciary responsibility to maintain and update the building on a periodic basis. Some items may have a life of 10 years while other component items may have a useful life of 45 to 60 years. Just because an elevator may be functioning in its 35th year does not mean that the elevator is acceptable and should not be modernized. If the first set of owners had an elevator that functioned properly for the first 20 years, the owners after this period should receive something similar. I have talked to unit owners who are scared to use their elevator and only send their groceries up the elevator while they walk up the three stories to their unit. Most times, items are not updated due to the fact that monies are not available in their reserve funds, and board members do not want to have a special assessment.

     Electrical systems are another example where funding will be required by condominium buildings as their building ages. As stated above, even though the electrical system is working and passing inspections, that does not necessarily mean that the electrical and disconnect panels do not have to be replaced. This is one of the component items that is prone to fire and can lead to death. Most electrical systems are warrantied for 15 years but may work well up to another 25 to 45 years. It is important to take a serious look at your electrical system and make changes accordingly to avoid fires that could potentially lead to the deaths of unit owners. These are the concerns our legislatures have, and they know that if monies are available, these changes will occur—otherwise, projects will be neglected and or overlooked.

     To further reiterate the above information, reserve funding is an integral part of an association’s budget. The new condominium laws will help provide the proper funds to board members to make the correct decisions on important projects that would have typically been overlooked in the past.

Sundeep Jay

Senior Reserve Specialist and Professional Reserve Analyst, J.R. Frazer Inc.

     Sundeep Jay is certified as a senior reserve specialist and professional reserve analyst. He has been completing reserve studies and condominium/HOA property & flood valuation reports for a little more than eight years with J.R. Frazer Inc. He graduated with a degree in accounting and computer science from the University of Central Florida. During his career he assisted in building more than 70 to 80 residential homes as a real estate broker while also operating his own mortgage company as well as managing three franchise hotels. For more information, call 561-488-3012, email JRFrazerENT@aol.com, or visit www.JRfrazer.com.