This e-lawyer supersedes Volume I, Issue 3, and incorporates statutory changes
As we reported to you in Volume I, Issue 3 of The Association e-Lawyer, the 2003 Florida Legislature adopted a statute requiring that construction defect claims be resolved using an 'alternative dispute resolution mechanism'. That law is codified as Chapter 558, Florida Statutes.
Chapter 558, as originally adopted, contained several 'traps' that had potentially devastating impacts on owners and Associations. For this reason, the 2004 legislature amended that law in an attempt to even the playing field.
Because we have recently received inquiries concerning this law, we are publishing this revised article.
ACCORDINGLY, PLEASE MAKE THE FOLLOWING NOTE ON YOUR COPY OF VOLUME I, ISSUE 3:
THIS ISSUE OF E-LAWYER HAS BEEN SUPERCEDED BY VOLUME IV, ISSUE 6
IMPACT OF CHAPTER 558:
At first glance, it might appear that Chapter 558 will only be of concern to those associations who want to sue the developer after transition of association control. NOT SO FAST MY FRIEND. This law is much broader than many people realize.
The following is a short summary of this law, however, you are encouraged to obtain a copy and read it carefully.
A. BROAD SCOPE OF LAW (IT SEEMS TO COVER EVERYTHING):
As a starting point, and to illustrate the scope of this law, this law requires all contracts for the 'sale, design, construction, or remodeling of a dwelling' to include the following language:
FLORIDA LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST A CONTRACTOR, SUBCONTRACTOR, SUPPLIER OR DESIGN PROFESSIONAL FOR AN ALLEGED CONSTRUCTION DEFECT IN YOUR HOME. SIXTY DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE CONTRACTOR, SUBCONTRACTOR, SUPPLIER OR DESIGN PROFESSIONAL A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONAL THE OPPORTUNITY TO INSPECT THE ALLEGED CONSTRUCTION DEFECTS AND MAKE AN OFFER TO REPAIR OR PAY FOR THE ALLEGED CONSTRUCTION DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE CONTRACTOR OR ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER FLORIDA LAW.
In order to fully understand the importance of this language, you must understand that the term 'dwelling' is defined as follows to include almost everything, even common elements and common property:
'Dwelling' means a single-family house, manufactured or modular home, duplex, triplex, quadruplex or other multifamily unit in a multifamily residential building designed for residential use in which title to each individual unit is transferred to the owner under a condominium or cooperative system and includes common areas and improvements that are owned or maintained by an association or by members of an association, and includes the systems, other components, improvements, and other structures or facilities, including, but not limited to, recreational structures or facilities, that are appurtenant to and located on the real property on which the house, duplex, triplex, quadruplex, or other multifamily unit is located, but are not necessarily a part of the structure at the time of completion of construction.
B. WHO IS COVERED BY THIS LAW (YOU ARE):
The following are covered by this law:
a) Individual Homeowners, including subsequent purchasers and tenants;
b) Chapter 718 Condominium Associations;
c) Chapter 719 Cooperative Associations;
d) Chapter 720 Homeowners’ Associations; and
e) Chapter 723 Mobile Home Park Associations
C. WHAT ARE THE PROCEDURAL STEPS (STRANGE BUT TRUE):
The following is a brief summary of the procedural steps required by this law:
1. Association’s Notice of Claim:
If an Association believes that a contractor (i.e. painting contractor) or developer (i.e. original or successor developer of the neighborhood) has not performed the job properly, it must first notify the contractor or developer and specifically identify the alleged deficiencies.
2. Contractor’s Response:
Upon receipt of the notice, the Contractor or Developer and all subcontractors, suppliers and design professionals must be given the opportunity to inspect the property, with the inspection to be coordinated with the Association, and conduct destructive testing. Within 75 days from receipt of the Notice, the Contractor or Developer must deliver a written response to the Association concerning the claim. This response must be one of the following:
a) The Contractor or Developer may offer to repair the defect;
b) The Contractor or Developer may offer to pay money to the Claimant to repair the defect;
c) The Contractor or Developer may offer to settle the claim by a combination of repairs and monetary payment;
d) The Contractor or Developer may indicate to the Association that the claim has been forwarded to an insurance carrier for processing, and an offer of to pay money to settle the claim will be forthcoming 30 days after;
e) The Contractor or Developer may dispute the claim; or
f) On the other hand, the Contractor or Developer may simply ignore the claim with no penalty. If this occurs, the Association can then immediately file suit without complying further with this law.
3. Association’s Required Response:
If the Contractor or Developer offers to repair or pay for the repair, the Association must respond to the offer within 45 days, and in one of the following ways:
a) It can accept the offer to repair or pay; or
b) It can reject the offer to repair or pay, which rejection must be conveyed in a specific fashion.
NOTE: IF THE ASSOCIATION DOES NOT RESPOND TO THE CONTRACTOR’S OFFER, THERE IS NO LONGER A 'DEEMED ACCEPTANCE' OF THE OFFER BY THE ASSOCIATION. HOWEVER, IF THE ASSOCIATION FILES SUIT WITHOUT RESPONDING, THE PRESIDING JUDGE IS REQUIRED TO ABATE THE LAWSUIT UNTIL THE ASSOCIATION RESPONDS TO THE OFFER.
4. Each claim by an Association must go through this process, so it is important that an Association carefully include each construction defect in the initial notice to the contractor. Later discovered items cannot be added to the lawsuit until the claim goes through this process.
5. During this administrative claims period, the parties to the dispute (i.e. the Association and Contractor) are able to request that relevant documents be exchanged. Thus, the Association is able to get construction related drawings and specifications pre-suit, which will help to better evaluate its claim.
D. WHAT SHOULD YOU DO:
If you suspect a construction defect, you should contact the Association’s law firm immediately. Your law firm can assist you with the retention of a professional engineer to identify the defect, the cause of the defect, and the cost to remedy the same. The law firm can then prepare and serve the notice of claim on the Contractor or Developer.
Please remember this summary is not intended to address all of the nuances or technical requirements of this law. It is intended to put you on notice of this extremely important law. In order to protect yourselves, there is only one thing that you can do. Educate, educate, educate and then educate some more.
If anyone would like a copy of this law, please let us know and we will send you a copy. Simpler, however, may be to go to www.flsenate.gov/welcome/index.cfm