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Homeowners'
association brought action for breach of warranty against bank which had
foreclosed development project and then finished project. The Circuit Court, (1)theory of implied warranty did not extend to defective work complained of, and (2)
even if theory of implied warranty was available, it did not apply to bank which
was mere lender at time project began and detective work was performed. Affirmed. First purchasers of residential real estate had no cause of action for violation of implied warranties, where defective work complained of involved roads and drainages in subdivision and did not pertain to of action for violation of implied warranties, where defective work complained of involved roads and drainages in subdivision and did not pertain to construction of homes or other improvements immediately supporting residences.
Even
if implied warranty was relevant theory of liability, it could not be applied to
bank which had foreclosed mortgage and finished development, where bank was
simply mortgage lender when project began, developer built roads and drainage
complained of and bank had nothing to do with their construction, and
improvements were unattended and not maintained for several years until
development began to grow. Lender
who forecloses mortgage on construction project and becomes developer of that
project is liable to purchaser of unit for performance of express
representations made to purchaser by lender, patent construction defects in
entire project, and breach of any applicable warranties resulting from defects
in portions of project completed by lender. Michael
Jeffries of Neill, William
D. Anderson, Jr., of Anderson, Dungey & McFarland, P.A.; and Martha C.
Warner, Stuart, for appellee. DOWNEY
, Judge.
This is an appeal from a final judgment for appellee, First Federal Savings and Loan Association of Martin County entered upon appellee's renewed motion for directed verdict. Appellant,
The Port Sewall Harbor and Tennis Club Owners Association, Inc., (Association)
is a home owners' association representing the owners of residential property in
a subdivision known as Port Sewall Harbor & Tennis Club. In 1972 and 1973
the developer of the subdivision encumbered the property with a mortgage for
$1,100,000.00 to First Federal. When the bulk of the subdivision improvements
had been made the developer fell upon hard times and First Federal foreclosed
its mortgage. Thereafter,
First Federal completed the development and attempted to sell the lots. The
Association brought this suit against First Federal in two counts to recover for
(a) defects in the construction of certain roads and drainage areas and (b)
breach of express warranty. There was no proof adduced in support of the latter
count and the court charged the jury that the issue for its determination on the
claim of the Association against First Federal was
whether First Federal breached an implied warranty
of fitness and merchantability in favor of the
Association. First Federal moved for a directed
verdict at the end of the Association's case and at the close of all of the
evidence contending (a) no implied warranty
existed for the defective work complained
about, and (b) First Federal could not be held
liable for the defective work in question because
that work had been completed before First Federal
foreclosed the developer's mortgage. The The
sole question presented on this appeal is: does the holding in the Conklin case
prevent a party from recovering against a developer who fails to construct the
common elements in accordance with the
plans and specifications filed with the governmental regulatory agencies? For
clarification it might be well to note that this case does not involve
condominium property so we are not concerned with Chapter 718 of the Florida
Statutes nor are some of the condominium cases entirely relevant. Furthermore,
the issues pleaded and presented to the jury did not include a cause of action
for negligence. The Association's theories were express and implied warranty,
but no proof was adduced at trial of any express warranty. The Association did
furnish evidence at trial of the cost to repair the roads and drainage areas and
the cost of building a wooden foot-bridge shown in the plans but not furnished
by the developer. In our judgment the trial court reached the correct conclusion in granting the directed verdict and entering judgment for First Federal.
A
lender who forecloses a mortgage on a construction project and becomes the
developer of that project is liable to a purchaser of a unit of the project for
(a) performance of express representations made to the purchaser by the lender,
(b) patent construction defects in the entire project, and (c) breach of any
applicable warranties resulting from defects in the portions of the project
completed by the lender. Chotka v. Fidelco Growth Investors, 383 So.2d
1169 (Fla. 2d DCA 1980). Were this not the case no lender could buy in the property at public sale without potential catastrophic exposure to liability.
Accordingly,
we hold appellant has failed to demonstrate any reversible error. AFFIRMED. ANSTEAD,
C.J., and RODGERS, EDWARD, Associate
Judge, concur. [1]
The foot bridge in question and the defective work complained of involved
roads and drainage in the subdivision and did not pertain to the construction of
homes or other improvements immediately supporting the residences. That is the
extent of the application of implied warranties to first purchasers of
residential real estate in his conclusion that Conklin precluded liability for the defects complained of on the theory of implied warranty. Furthermore, the trial judge acted correctly because even if implied warranty was a relevant theory of liability it could not be applied to the peculiar facts of this case.
[2][3] First
Federal was simply a mortgage lender when this project began in 1972-73. The
developer built the roads and drainage complained of; First Federal had nothing
to do with their construction. These improvements were unattended and not
maintained for several years before the development began to grow. Thus,
when First Federal took over the property and sought to dispose of the lots it
did not become liable for every delict or breach of contract committed by the
original developer. |
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