Recent changes to Construction Defect Statute (Florida Statute 558)

This past legislative session, several substantive changes were made to the pre-suit requirements for construction defect lawsuits. As many of you are aware, Florida Statute 558 establishes a series of steps that need to be taken prior to a construction defect lawsuit being filed. The intent of the statute is to try to resolve construction defect disputes, without the need for costly litigation. One of the steps required by the statute is for the claimant (often times a condominium or homeowners’ association) to send written notice of the defects, to all the parties the claimant believes are responsible for the construction defects. The claimant normally hires an engineering firm to conduct an inspection of the property. The engineering firm then prepares a report that identifies all of the construction defects found within the property. The engineering report is normally attached to the notice sent to the alleged responsible parties. The alleged responsible parties then have an opportunity to inspect, repair and/or respond to the claims. If the claimant and the alleged responsible parties cannot resolve their differences, they can then proceed to litigation.

The prior version of the statute required the claimant to describe each alleged construction defect and the damage resulting from the defect. However, it did not require the claimant to describe the exact location of each specific defect. The new version of the statute requires the claimant to identify the location for each specific defect, in addition to the prior requirements. This new requirement will make the 558 process more expensive for the claimant because it will require a more thorough engineering analysis of the subject property. However, this additional information may make it easier for the parties to resolve their differences, without the need for costly litigation.

Another one of the changes to Florida Statute 558 is the requirement to allow the insurer of the contractor, subcontractor, supplier or design professional to participate in the 558 process. Allowing the insurers to get involved early on in the process may also make it easier for the parties to resolve their differences, without the need for costly litigation.

 Please note the above changes will take place on October 1, 2015. Should you have any questions regarding the above, feel free to contact me.

New decision extends the expiration date of the Statute of Repose with regards to construction defect lawsuits…

Cypress Fairway Condominium, etc, et al v. Bergeron Construction Co, Inc., etc, et al, Case No. 5D13-4102 (Fla. 5th DCA 2015). In this case, the 5th District Court of Appeals was asked to interpret the Florida Statute of Repose to determine if the statute commenced to run when construction was completed or, the date on which final payment was made. In this case, a condominium association brought suit against several parties for construction defects. One of the defendants moved to dismiss the case on the grounds that the 10 year statute of repose had already expired. Pursuant to Florida Statute 95.11(3)(c), an action founded on the design, planning, or construction of an improvement to real property must be commenced within ten years after the latest of four specified events. At issue in this case was the meaning of the fourth option—the date of "completion . . . of the contract." The defendant argued the contract was completed on January 31, 2001, the date on which the Final Application for Payment was made. Accordingly, it contends that the statute of repose period commenced to run on that date. Contrarily, the Association contended the contract was not completed and that the statute of repose period did not commence to run until February 2, 2001, when final payment was made. This three-day difference is critical here because the claims against Defendant were not filed until February 2, 2011; hence, the claims were timely if the repose period commenced on February 2, 2001, or later, but were untimely if the repose period commenced at an earlier date. Ultimately, the 5th DCA concluded the Statute of Repose commenced to run on the date on which final payment was made under the terms of the contract.

The bank took too long to foreclose....

A recent court ruling may have major implications for condominium and homeowners’ associations throughout South Florida. In Deutsche Bank vs. Harry Beauvais, the Third District Court of Appeals held that the lender’s acceleration of the debt triggered the commencement of the (5) year statute of limitations. Because the lender failed to file their foreclosure action within the (5) year period, they were barred from filing their lawsuit. The facts in this case were as follows. The borrower failed to make the mortgage payment due on September 1, 2006. The lender elected to accelerate payment of the balance. The lender filed its foreclosure action in January 2007. In December 2010, the trial court dismissed the lender’s foreclosure case without prejudice because the lender failed to appear at a case management conference. The Aqua Master Association filed its own separate foreclosure action and took title to the property in 2011. In December 2012, the lender filed a second foreclosure action against the borrower. As stated above, the Third District Court of Appeals ruled that the lender was barred from foreclosing on its mortgage because the (5) year statute of limitation had already expired. The Court also ruled that the mortgage would continue to remain attached to the property until the expiration of the mortgage. This decision is a major victory for associations that have taken title to units and the bank’s (5) year window to file its foreclosure case has already expired. If you are a condominium or homeowners’ association that has a similar situation, please contact us.