I am very pleased to tell you that yesterday, the Florida Supreme Court ruled in favor of the Lakeview Reserve Homeowners Association, Inc. (“Association”) in a major case involving common area defects and implied warranties for home buyers in communities governed by homeowners’ associations. CALL filed an Amicus Curiae brief (“friend of the court brief”) on behalf of the Association and I am pleased that the Court’s decision was consistent with the arguments set forth in our amicus brief.
Here is some background on the case:
- Lakeview Reserve Homeowners Association, Inc. (“Association”) sued Maronda Homes, Inc. (“Maronda”) for breach of the implied warranties of merchantability, which is also referred to as the implied warranty of habitability.
- The case involved defects in the common areas including the roadways, drainage systems, retention ponds and underground pipes.
- The trial court ruled in favor of Maronda, and the Association appealed to the Fifth District Court of Appeals. The Fifth District Court of Appeals reversed the trial court’s decision and ruled in favor of the Association. Maronda then filed an appeal to the Florida Supreme Court.
- While the Florida Supreme Court case was pending, the Legislature, during the 2012 Legislative session, adopted HB 1013, creating Section 553.835, Florida Statutes, which states that there are no implied warranties for “offsite improvements.” Section 553.835 states that it applies retroactively to pending cases, as well as to future cases.
The Florida Supreme Court ruled in favor of the Association and made some important decisions including:
- Although the “offsite improvements” in question (such as the roads and drainage systems) are not physically attached to the home, they provide “essential services that directly affect the habitability of the homes.” Therefore, the implied warranties of fitness and merchantability extend to these offsite improvements.
- The implied warranty of fitness and merchantability does not extend to items of convenience or aesthetic beauty, such as landscaping, sprinkler systems, and recreational facilities.
- Section 553.835, Florida Statutes (2012) cannot constitutionally be applied retroactively to the Association’s cause of action for breach of implied warranty.
This is a great victory for the owners in Lakeview Reserve, as they will now be able to hold the developer responsible for the common area defects and the burden to fix those defects will now be on the developer, rather than on the innocent owners. It is also clear that Section 553.835 will not apply to homeowners’ associations with causes of action against developers for common area defects that accrued prior to the effective date of Section 553.835 (July 1, 2012). With regard to causes of action that accrued on or after July 1, 2012, the Court’s opinion did not specifically strike down Section 553.835 as unconstitutional. Nevertheless, the decision now opens the door for homeowners’ associations to file construction defect cases against developers for common area defects, and challenge the applicability of Section 553.835 on constitutional grounds.
If you would like to read more about this issue, here is a link to Becker & Poliakoff Attorney Sanjay Kurian’s blog post regarding the Supreme Court’s opinion:
Very truly yours,
Yeline Goin, Executive Director
Community Association Leadership Lobby (CALL)