Florida Legislature Enacts Major Changes to the Statute of Repose for Construction Defect Claims

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By Bilzin Sumberg

Published May 21, 2023

 

On April 13, 2023, governor Ron DeSantis signed Senate Bill 360 (“SB 360”) into law, which drastically reduces the time limit for property owners to file suit against builders and construction professionals for construction defects and imposes a more stringent standard for bringing a claim under the Florida Building Code. The statute now clearly identifies the triggering event for when the clock begins ticking on the statute of repose, rather than leaving it to courts to identify (and disagree upon) it. We examine here the history of Florida’s construction statute of repose, and how this new, bright-line law will affect Florida’s construction and real estate industries.

Statutes of Limitation and Repose

In Florida, plaintiffs must bring construction defect claims within the time limits prescribed by the statute of limitations and statute of repose, which are both governed by 95.11(3)(c), Fla. Stat. While there may typically be exceptions to the statutes of limitations, the statute of repose is the absolute last date on which a property owner can sue a builder or construction professional. Failure to file suit before the running of the statute of repose constitutes a waiver of such claims.

Changes to Time Limits and Triggering Events

Without question, SB 360’s most impactful change is the reduction of the statute of repose from 10 years to seven. By substantially shortening the statute of repose, SB 360 reinforces the Florida Legislature’s intent of eliminating stale construction defect claims.

Florida’s four-year statute of limitations for construction defect claims remains the same under the new bill, with the important exception that the date from which the clock begins to run is the earlier, as opposed to the later, of the triggering events

Before the legislature enacted SB 360, the statute of limitations and statute of repose began running on the later of: (i) the date of actual possession by the owner; (ii) the date of the issuance of a certificate of occupancy (CO); (iii) the date of abandonment of construction if not completed; or (iv) the date of completion or termination of the contract. Despite the Florida Legislature’s intent of providing finality and certainty to potential defendants, the previous version of by 95.11(3)(c) did anything but. Certain of the statutes’ triggering events invited creative pleading capitalizing on the ambiguities as to when the “completion or termination” of the contract occurred. For example, in Cypress Fairway Condo. v. Bergeron Constr. Co., Inc., 2015 WL 2129473 (Fla. 5th DCA, May 8, 2015), the court grappled with whether a contract was “completed” on the date that the contractor submitted its final application for payment, or the date that the owner actually made that final payment. Although the contested period was only three days, the difference in those days was jurisdictional for the plaintiff. There, the court determined that a contract is “complete” when final payment is made. This ambiguity was not limited to the date of “completion or termination.” Sabal Chase Homeowners Association, Inc. v. Walt Disney World Co., 726 So.2d 796 (Fla. 3d DCA 1999) involved a community of multiple townhomes and condominiums. Under the then-applicable 15-year statute of repose, the court determined that the statute of repose ran according to the date on which the last certificate of occupancy was issued in the community. In Harrell v. Ryland Group, 277 So.3d 292 (Fla. 1st DCA 2019), the statute of repose ran, not according to the date of the issuance of the certificate of occupancy, but rather, the date on which the homeowners took possession of the home as reflected on a warranty deed. And, just recently, after SB 360 passed, the Second District Court of Appeal issued its opinion in Westpark Pres. Homeowners Ass’n v. Pulte Home Corp., No. 2D21-2084 (Fla. 2d DCA May 10, 2023), in which the court found that the statute of repose ran on the date of the issuance of the last certificate of occupancy for a development, and not on the date on which individual homeowners took possession of their homes from the developer by warranty deed.

The new iteration of 95.11(3)(c) eliminates the case-by-case factual investigation of potential dates. Under the revised version of 95.11(3)(c), the statutes begin to run on the earlier of (i) the date of issuance of a temporary certificate of occupancy (TCO), a CO, or a certificate of completion (CC); or (ii) the date of abandonment if construction is not completed. This change provides a tangible point in time from which to measure the limitations or repose period where a CC, TCO, or CC is issued. Accordingly, owners, design professionals, and contractors, alike will know exactly when the time for filing suit will expire.

Ostensibly, the bill benefits potential defendants by reducing the time of their exposure to liability. Florida law requires insurance carriers to offer coverage to contractors for liability arising out of current or completed operations for a period sufficient to protect against liability arising out of an action brought within the time limits provided in 95.11(3)(c). 627.441(2), Fla. Stat. (2022). Put otherwise, the longer the statute of repose, the longer the period that a contractor, and its insurance carrier, remain “on the hook.” Contractors, in turn, pass these increased costs on to developers and property owners.

While opponents of the bill argued that SB 360 would leave property owners more vulnerable to contractors who performed shoddy work, given the inextricable link between the costs of commercial general liability policies and the length of the period of repose, enacting SB 360 could result in a “win-win” for builders and developers by combatting rising construction and insurance costs.

New Requirement for Materiality for 553 Claim

Finally, SB 360 enacts a heightened standard for claims brought pursuant to Chapter 553, Fla. Stat., otherwise known as the Florida Building Code. Florida law now limits recovery to only “material violations” of the Florida Building Code, defined as a “violation that exists within a completed building, structure, or facility which may reasonably result, or has resulted, in physical harm to a person or significant damage to the performance of a building or its systems.” 553.84, Fla. Stat. (2023). This requirement of “materiality” appears to curtail owners’ ability to sue builders and other construction professionals. What constitutes “significant damage” will likely produce the next wave of Florida construction defects jurisprudence.


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