The 2004 amendments to Florida's construction defect statute: some solutions and more confusion.

• Author: Lesser, Steven B.

Florida's construction defect statute, F.S. [section] 558.001 et seq., which became effective on May 27, 2003, has caused considerable confusion among construction practitioners relating to its procedure and enforcement. (1) This statute dramatically altered the landscape for litigating construction defect claims by requiring homeowners to provide contractors and other allegedly responsible parties with prior written notice and an opportunity to cure the alleged defects prior to filing a lawsuit. (2) Never before had claimants in the construction setting been required to give contractors pre-suit notice and an opportunity to cure as a precondition to filing a defects lawsuit.

In practice, however, the statute has proved vexing to both contractors and claimants. This stems from the fact that the timelines for compliance with the statutory provisions have proved to be a bit unrealistic. For example, upon receiving the initial written notice of the alleged defects, the contractor was given only five business days to inspect the alleged defects regardless of whether they existed in a single-family home or a high-rise building containing 300 residential units. (3) This was not nearly enough time, especially as it pertains to large-scale construction projects, where inspecting multiple units could take many weeks, if not months. Further, the statute provided that a claimant's failure to respond to the contractor's written proposal to rectify a defect (whether through repair or by payment of money) within 45 days resulted in the offer being deemed "accepted," thereby releasing the contractor from any further liability. (4) These were just a few of the many areas of concern associated with the original statute. (5)

During the 2004 legislative session, legislators rectified many shortcomings associated with the original statute, but some new provisions will likely generate their own share of controversy and confusion. These provisions, effective July 1, 2004, impose several new requirements, such as 1) mandating that the parties exchange expert reports and other discoverable evidence, 2) allowing a contractor to inspect all affected units in multifamily buildings, and 3) permitting destructive testing on the affected unit. (6) Failure to comply with these pre-suit requirements may limit a claimant's damages or result in court-imposed sanctions in the event of subsequent litigation. Additionally, the statutory time period for filing litigation, conducting inspections, offering to perform work, paying money, and/or disputing the claim have been extended. (7) As illustrated in the charts at the end of this article, the applicable time frames differ depending upon whether the residential building exceeds 20 units. (8) For ease of reference, however, this article addresses the effect that the controversial new amendments will have on a claimant community association representing in excess of 20 residential parcel owners.

Summary of New Procedure

Under the revised statutory scheme, the aggrieved claimant must provide the contractor and other allegedly responsible parties with 120-day prior written notification of the alleged construction defect(s), describing them in "reasonable detail." (9) Within 50 days after receiving a notice of a claim, the contractor has the right to inspect the dwelling and all affected units. (10) During the 30-day period after receiving notice of the alleged defect, the contractor must forward a copy of the notice to any other person that the contractor believes is responsible for the alleged defect." These secondary recipients may also inspect the dwelling within the same time period provided to the contractor. (12)

The new statute also extends the time frame for providing a written response to the claimant. Previously, the contractor had to provide a written response to the claimant within 25 days after receiving written notice of the alleged defect. Now, the contractor has 75 days to furnish the claimant with a written response. (13) This response must contain either: a) a written offer to repair the alleged defect at no cost to the claimant; (b) a written offer to compromise the claim by monetary payment; or c) a written statement that the contractor disputes the claim. (14) The contractor's response may also include a combination of the alternatives set forth above whenever multiple defects are alleged. (15)

If the contractor offers to pay for or repair the defect, the claimant has 45 days to accept or reject the offer. (16) If the claimant accepts the offer, and repair or payment is made, the claimant is thereafter barred from pursuing relief through litigation. (17) In either case, however, if the claimant accepts or rejects the offer it must be done by written notice in the form and manner set out in the statute. (18) A claimant that fails to comply with these specific requirements will be barred from litigating the dispute (and any previously commenced action will be "abated") until he or she has successfully complied with the statute's pre-suit dispute resolution procedures. (19) This represents a significant improvement from the original version of the statute, which had penalized a non-complying claimant by deeming his inaction an "acceptance" of the contractor's offer. (20) Although the "deemed accepted" language has been eliminated in the amended statute, a claimant is still required to accept or reject the proposal before initiating a lawsuit.

Mutual Exchange of Evidence

What is sure to be one of the most controversial and hotly contested aspects of the amended statute is the new requirement that each party produce, upon written request by the other parties, all "discoverable evidence," including any expert reports. Because "discoverable" evidence is broadly defined under Florida law, (21) the requirement that the parties produce (in advance of any lawsuit or arbitration proceeding) all discoverable evidence will undoubtedly prompt claimants to hire legal counsel to assemble and make a determination as to which materials should be provided to the requesting party. This evaluation is critical since the failure to produce these materials could later result in court-imposed sanctions against the claimant for pre-suit discovery violations. (22) In light of these pre-suit disclosure requirements, it is recommended that counsel for the...