SB 1196 lets Developers off the Hook for Shoddy Construction.

SB 1196 is a broad attempt to return to the strict doctrine of caveat emptor (let the buyer beware), even when the buyer essentially cannot become aware of the risks associated with buying a home in a homeowners’ association. It is anti-consumer legislation.

SB 1196 eliminates any notion of a home buyer’s warranty with respect to the common area improvements in a homeowners’ association. Under the doctrines of implied warranty of fitness and merchantability or habitability, a home buyer or homeowners’ association arguably has the right to recover damages from the developer for defective construction of subdivision roads, drainage facilities (including retention ponds and the underground pipes, swales, culverts, etc.), street lighting, and underground utilities.

If this bill passes and you buy a home in a homeowners’ association, you must pay to fix and replace the roads, even if they deteriorate within the first year. You should have understood that the roads (if private) were maintained by the association from your maintenance assessments, but did you expect to spend an extra 2, 5 or 10 thousand dollars within a year of buying a new home to fix the road? No, of course not.

If the retention ponds, swales and drainage system doesn’t work so it floods every single time it rains, too bad – its your problem. The developer doesn’t have any responsibility to warrant that the drainage system is adequate or will function properly. If constant flooding kills your lawn and landscaping, you have to go out and buy new sod and remove and replace trees (obtaining a permit if required) each year after the rainy season. You and your fellow neighbors will have to ultimately pay to fix, repair or improve the drainage system – that can cost millions of dollars!

The preamble to the actual text of the bill says that home buyers don’t need protection from shoddy or defective common area construction. Please read this:

“WHEREAS, the recent decision by the Fifth District Court of Appeal rendered in October of 2010, in Lakeview Reserve Homeowners et. al. v. Maronda Homes, Inc., et. al., 48 So.3d 902 32 (Fla. 5th DCA, 2010), expands the doctrine of implied warranty of fitness and merchantability or habitability for a new home to the construction of roads, drainage systems, retention ponds, and underground pipes, which the court described as essential services, supporting a new home, and
WHEREAS, the Legislature finds, as a matter of public policy, that the Maronda case goes beyond the fundamental protections that are necessary for a purchaser of a new home and that form the basis for imposing an implied warranty of fitness and merchantability or habitability for a new home, and creates uncertainty in the state’s fragile real estate and construction industry, and
WHEREAS, it is the intent of the Legislature to reject the decision by the Fifth District Court of Appeal”

I added the emphasis on certain language. See what this says? It basically says that roads, drainage systems, retention ponds and underground pipes aren’t essential, meaning they aren’t necessary for someone to live and enjoy their home. Huh? How can you live in a home without pipes that carry waste water to the sewer? How can you live in a home without a safe road to get there?

Moreover, buyers really don’t have the option of inspecting the common facilities in a way that would reveal defective conditions or poor construction. Buyers typically pay for a home inspection before they buy a house to learn whether there are conditions that impact the value of the house. The inspection may be a condition of closing. If the inspection reveals costly problems, the buyer generally has the ability to cancel the contract.

How does a buyer know whether the retention ponds have the proper slope? How does the buyer know whether the storm drains and pipes are big enough to carry a sufficient amount of water? How would a buyer know whether the sidewalks were poured properly? Typically, the association only learns about defective conditions as a result of an engineering study performed after transition.

Supporters of the bill argue that common area improvements fail or don’t perform optimally because of the association. They claim that community or homeowners associations fail to maintain the common areas properly. Well why don’t developers provide the associations with protocols for maintenance of each improvement then? What needs to be done, exactly, to ensure those common areas will serve the needs of the residents for the appropriate lifetime?

This bill has received favorable attention in Tallahassee. It passed 8 to 0 in the Community Affairs Committee. On Thursday (2/9) the Judiciary Committee voted 5 to 0 in favor of the bill, which means everyone on the Committee (other than Senator Richter who was absent) voted in favor of this anti-consumer legislation. Those Committee members are:

Chair:Senator Anitere Flores (R)Vice Chair:Senator Arthenia L. Joyner (D)

This bill is moving quickly through the legislative process. With your help our elected representatives can understand how much harm this does to present and future home buyers.