Florida Condo & HOA Legal Blog : Florida Condo Lawyer & Attorney : Becker & Poliakoff Law Firm : Condominium & HOA Law Blog

Board Certified Construction Law Attorney Aaron Pruss reminds us that manufacturing and workmanship defects are prevalent in the building industry. Such defects not only represent a large cost to Community Associations and homeowners in terms of repairs, but they can also present serious health and safety issues and reduce the value of the property.

He's identified some building products alleged to be defective, and about which lawsuits and warranty claims have been filed.  Remember - If you are unsure whether any of these products were utilized in the construction of your home or condominium, it may be necessary to consult any warranty you may have, speak with your property manager or hire an independent contractor to examine the materials.

MI WINDOWS:

A design and manufacturing defect has been alleged against MI Windows in several lawsuits. Several experts working on behalf of the property owners have concluded that the windows are poorly designed and manufactured, the result of which is water entering through the window assemblies during normal rain events. Many property owners have been forced to make costly repairs to their homes and/or replace the defective windows at great expense. As we all know, water intrusion into a home will ultimately lead to several problems including rotting, mold growth and significant damage to the underlying structure of a home.

GENTEK SIDING:

Consumers claim that Gentek steel and aluminum siding was produced with a defect that makes it inclined to chip, crack, break, peel and/or fade prematurely. Such defects can be very costly to repair and reduce the value of a property significantly.

We will include more information about claimed defective products that potentially impact community associations in the Firm's Community Update publication.

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Attention HOA and other home owners, board members and CAMs:

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Last November I posted a blog ( Homeowners' Associations: New Ruling Supports Compensation for Construction Defects)  alerting readers to an important appellate decision holding that buyers and homeowners' associations are entitled to a common law implied warranty of fitness and merchantability with respect to the roadways, drainage systems, retention ponds and underground pipes in a residential subdivision.  Florida Condominium Law provides condominium purchasers with implied warranties of fitness and merchantability with respect to the roof and structural components of buildings as well as mechanical, electrical and plumbing systems serving the common elements, but homeowners' associations do not have the same protection.

The Lakeview Reserve Homeowners v. Marondo Homes, Inc., case is now pending before the Supreme Court of Florida.  Oral arguments took place on December 6.

This case is truly important - so important that advocacy groups filed amicus briefs in support of the appellate ruling.   So important that the Florida Home Builders Association (FHBA) and National Association of Home Builders (NAHB) also filed briefs in opposition to implied warranties.

FHBA and NAHB contend that since roads and drainage areas are owned by an association, not individual homeowners, defects in these structures generally have no direct effect on home habitability.  In my opinion that doesn't really make sense.  How can you live in a home without access to the home over a safe roadway?  The roadways, underground plumbing, retention ponds and drainage facilities are essential.  In fact, the residential dwellings probably couldn't qualify for a Certificate of Occupancy without these improvements.  

CALL submitted a brief on behalf of its 4,000 +/- member communities in the State of Florida since the issue of whether a developer of a residential subdivision provides common law implied warranties for the roadways, retention ponds, underground pipes, and drainage systems throughout that subdivision is one of great importance to hundreds of thousands, if not millions, of Florida residents living in homeowners’ associations. CAI likewise submitted a brief contending that developers owe a duty to the homeowners and their homeowners’ association to turn over common area structures that are fit for use and do not impair the habitability or merchantability of the homes. 

We will report on the outcome of this appeal when the Supreme Court publishes its decision.

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If you've been a regular reader of this blog for a while, your probably already familiar with the 2010 effort to create new laws capping or limiting design professional (engineers and architects) liability for damages resulting from their negligence in connection with a project.  We addressed this issue in: Condos/HOAs Have a Lot to Lose if Design Professional Protection Bills Become Law.

We were happy to notify you that Governor Crist vetoed the bill after favorable vote from the legislature.   That information can be found in: Design Professional Liability and Property Insurance Bills Vetoed by Governor Crist.

Proponents of the bill haven't given up.  Firm shareholder and Board Certified Construction Lawyer Lee Weintraub posted information on the Florida Construction Law Authority blog a few days ago, specifically regarding the New Proposed Legislation [that] Would Immunize Design Professionals From Tort Liability.

In short, Senate Bill 288  provides that anyone who hires architects or engineers cannot sue them for negligence arising out of their defective design or other work.  Those opposed to the bill say this law would discourage engineers and architects from carrying insurance and eliminate most of the consequences of sloppy or careless design specifications - all of which increase costs to building owners, contractors, residents and tenants.

Do you agree?  If not, please tell your local senator or representative.

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Court Holds that Homeowners' Associations Can Recover Damages for Breach of Common Law Implied Warranties from the Builder or Developer.

Florida's Fifth District Court of Appeal recently issued a significant ruling finding home buyers and homeowners' associations are entitled to a common law implied warranty of fitness and merchantability with respect to the roadways, drainage systems, retention ponds and underground pipes in a residential subdivision. The Court considered the marketing materials indicating that homes were available for immediate occupancy, essentially "move-in" condition.

The decision, Lakeview Reserve Homeowners v. Marondo Homes, Inc., No. 5D09-1146 (Fla. 5th DCA), was filed on October 29, 2010.  Since it conflicts with case law from another Florida district, the question whether to extend the home buyer's warranty to improvements that are necessary to live in the home, even if those improvements do not physically support the structure of the home itself, was certified for consideration by the Supreme Court of Florida.  

There is a tremendous amount of work that takes place in a subdivision before construction of the homes or recreational facilities and placement of landscaping.  The infrastructure in large communities can cost millions of dollars.  The Developer usually funds that work*, hoping for an even big return by selling the individual houses.  

Correcting defects in the infrastructure can likewise cost millions of dollars.  How many of us are familiar with portions of neighborhoods that flood every time it rains?  How many people that you know had sewage back up into their homes repeatedly, only to discover later that the underground drainage pipe wasn't connected properly?  If the municipality owns and services the underground infrastructure, it will correct problems, but that is not the case for many homeowners' associations. 

The Court found that certain types of improvements were necessary to live in a home - drainage systems, underground pipes, etc.  It further said since a home buyer:

• cannot really inspect this portion of the property before purchase,
• does not have the ability to correct the work during the construction phase, and
• would not typically recognize problems with these portions of the property even if they were allowed on to the site during this early construction phase

they "must rely on the expertise of the builder/developer for proper construction of these complex structures".   Consequently, according to this case, If the builder/developer represents that everything is ready for immediate occupancy, it must warrant that the improvements necessary for occupancy are fit for their particular purpose.  Clearly a significant ruling.

The Court declined to extend this notion of implied warranty to subdivision features it did not consider essential, such as a clubhouse or recreational facilities.  That doesn't mean, however, that homeowners' associations cannot seek to recover damages from builders or developers for defects in these areas.   Defect litigation and alternative dispute resolution pursuant to Chapter 558 (the Construction Defects statute) are viable courses of action to resolve complaints about the inadequacy of construction, violation of building codes and the like.  For more information about construction defects generally, please visit our companion blog, Florida Construction Law Authority.

* I say 'usually' because there are various different methods of financing infrastructure.  If your community is located within a Community Development District (CDD) or Special Taxing District (STD), these costs may be passed on to the home owners.   

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Although there are many positive developments for Associations in this legislative session, noted below, there is at least one piece of legislation that will adversely impact associations, and all consumers.

Architects, engineers, surveyors and other design professionals may be anxiously awaiting  Senate Bill 1964 and House Bill 701  to pass.

If these provisions become law it will limit liability for design professionals, as of July 1, by:

• cutting off liability, in tort, of design professionals that fail to properly carry out their professional duties.

• overruling Florida Supreme court cases and Appellate decisions from all over the state which protected consumers and the general public with necessary redress in tort for economic damages cause by design professionals.

• permitting design professionals to escape liability for their own negligent conduct, if insurance exists, and

• elevating design professionals above other professionals, such as lawyers, doctors, and accountants, who cannot limit their liability by contract.

Associations are constantly fixing their roofs, roads, performing balcony concrete restoration, seawalls, fire alarm electrical engineering renovation, elevator modernization and structural repairs. All of these renovations are designed by engineers, architects etc, and are required to meet building codes including life safety codes. Associations hire design professionals to issue drawings and specifications to accomplish these goals.   Design professionals are also retained to monitor construction activities and approve applications for payment on these projects. Shouldn't they bear responsibility for damages that result from mistakes, omissions, lack of attention to detail or otherwise?

An error in design judgment can be devastating to unit owners and homeowners. Improperly designed elevator repairs, concrete repairs, shoring of buildings, electrical renovations, fire protection system renovations or repairs all could result in economic loss to Associations and ultimately unit owners and homeowners.

Should design professionals be allowed to practice without accountability for their negligent acts at the expense of Florida’s consumers? It is simply unfair.

Florida’s consumers should call their representatives immediately to prevent these bills from becoming law.

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 Chapter 558, Florida Statutes, the construction defect and notice statute, was changed by the legislature in the most recent term. The changes made by the legislature are as follows:

* The term "completion of a building or improvement" is now defined to include the issuance of a Certificate of Occupancy or equivalent, or substantial completion. "service" was not previously defined.’s efforts to complete a project.

* Service of the Notice of Claim is to be by certified mail, hand delivery or courier with evidence of delivery.

* If the statutory notice is not provided then the court shall stay, not abate, the action.

* The notice requirement shall not interfere with the owner

* Notice is not required for a project that has not been completed.

* The trigger for the dates of completion under the statute are service rather than receipt of the notice.

* No construction lien rights shall accrue for destructive testing unless the owner contracts for the work.

* The timeframe within which information shall be exchanged is now to be within 30 days and includes specifications, as-built plans, photographs and expert reports.

* Chapter 558 shall apply to all contracts for improvements entered into after October 1, 2009.

The above changes are effective as of October 1, 2009. As always, if you are entering into a contract for construction work, or have claims relating to prior construction work, it is important to know your rights and remedies under the notice statute.

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One of the most important issues for any legal claim is the statute of limitations, and claims for construction defects are no different. The statute of limitations is the time frame within which a lawsuit must be filed in order to have any recovery against the party or parties responsible for the damage. This is especially important where the defect is one resulting in building leaks.

Assume that you hire a roofing contractor who replaces your roof. The day after making final payment you discover water damage on the ceiling. You determine the new roof is leaking. You have 4 years from that date within which to file suit. The reason is that a claim for construction defects must be brought within four years of the time that a defect was discovered, as in our hypothetical, or should have been discovered through the exercise of reasonable diligence. The Statute of Limitations would begin to run from the date of the first leak. This puts the onus on an owner to not ignore the problem, but conduct reasonable investigation and file suit if necessary. The liability of the contractor is not endless, but is limited by the statute of repose, which cuts off any and all claims for construction defects ten years from the completion of the contract. For example if the leak was discovered 7 years after completion of the contract, then you would only have 3 years left to file suit.

An important point is that the limitations period continues to run, even if the contractor attempts to repair the roof. I have seen numerous cases over the years where people had the contractor attempting to repair the building to no avail, and then found themselves outside the limitations period. Unfortunately, there is no tolling of the limitations period. If the contractor spends years trying to fix the roof, and suit was not filed within 4 years, then you have lost your legal rights. Every owner should be vigilant and take necessary steps to protect their rights.

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Today’s Fort Myers News-Press has an article about a new bill proposed by state Representative Gary Aubuchon.  The proposed bill will further regulate what steps owners must take to pursue claims for construction defects.

Florida already has Chapter 558 which is, per its own terms, an “alternative method to resolve construction disputes that would reduce the need for litigation as well as protect the rights of property owners.” Chapter 558, governs all properties which may be the subject of a construction defect claim: single family homes, condominium units, condominium associations and commercial properties. Over the last several years there have been changes to the statute. Representative Aubuchon’s bill appears to have more changes in store for Chapter 558.

As of this post I have not seen a copy of the bill, but based upon the article the bill provides:

            1. Requirements for the exchange of specific material for the claimed defects

            2. Deadline for the exchange of information, and attendant penalties

            3. Changes language about testing for defects

            4. Authorizes parties to agree to mediation

Section 558.004(15) creates a right for parties to demand “discoverable evidence relating to the construction defects” but failed to specify a time frame within which such materials should be provided. The section also references that penalties can be imposed by a court without specifying what the penalties are. However, any penalties for the failure to provide documents, or “discoverable evidence,” impede on the court’s rule-making authority. The courts determine the scope of discovery, as well as what is, and is not, evidence. There are significant issues of constitutionality raised here.

The language about testing for defects will be very important. As the law stands now, a contractor can already request to destructively test an allegedly defective building component subject to the statute’s restrictions.  What more or less will be required under the proposal?

Finally, parties in a civil dispute (whether in suit or not) have always had the opportunity to agree to mediation. You do not need a statute to agree to it.. Although it is unclear if such mediation would be made mandatory prior to filing suit. If so,  this would just be one more impediment to owners being able to pursue their claims and a further hoop to jump through for owners. It would take away from owners the right to gauge for themselves if mediation would be beneficial.

Stay tuned for further updates.

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