DISTINGUISHING WARRANTY EXPIRATION FROM STATUTE OF LIMITATIONS' EXPIRATION FOR FLORIDA CONDOMINIUM AND HOMEOWNER ASSOCIATION CONSTRUCTION DEFECT CLAIMS

Posted on May 16, 2011 by Alan E. Tannenbaum

A warranty period in the context of condominium and homeowner association construction warranties is the finite period of time that the quality of a particular building component is guaranteed by a developer, general contractor, etc.  A statute of limitations in the context of a warranty claim is the period of time during which a claim on the warranty must be filed in court to preserve the warranty claim.  These time periods are often confused.   Hopefully, this post will help clarify the matter.

Florida Condominium Warranties

 a.  Warranty Expiration

For new condominiums, per Florida Statute 718.203, statutory warranties extend from the developer, contractor, sub-contractors, material suppliers and manufacturers to original and subsequent purchasers for the stated periods of time in the statute.  For conversions, per Florida Statute 718.618, assuming lack of adequate reserve funding, warranties extend solely from the developer to original and subsequent purchasers for the stated period of time in the statute.  Express warranties (warranties created by contract) extend for the period of time stated in the contract. Common law implied warranties  (warranties created by court decision), to the extent they are not disclaimed, extend from the developer to original purchasers for up to ten years.  Most developers effectively disclaim implied warranties in their contracts.  In order for a defect to be covered under a statutory or express warranty, it must be discovered during the warranty period.

b.  Statute of Limitations Expiration

Ordinarily, the statute of limitations for pursuing a warranty claim in court would be four years from date of discovery.  However, Florida Statute 718.124 provides that no cause of action on behalf of a condominium association accrues until transition of the Association to unit owner control (turnover).  Consequently, the statute of limitations for a condominium association pursuing a warranty claim is four years from discovery or four years from transition, whichever is latest, but in no case more than 10 years from issuance of the certificate of occupancy.  Express warranty claims can be pursued only by original purchasers and must be pursued within four years of date of discovery but in no case more than 10 years from the issuance of the certificate of occupancy.  A claim is preserved by filing suit, although placing a party on notice of a claim pursuant to Chapter 558, Florida Statutes has the effect of extending statutes of limitation for a finite period as defined in the statute.  A Chapter 558 notice, however, does not extend the limitations period for a building whose certificate of occupancy issuance is approaching its ten-year anniversary.

Florida Homeowner Association Warranties

a.  Warranty Expiration

There are no statutory warranties applicable to homeowner associations.  There is also no equivalent of Florida Statute 718.124 applicable to homeowner associations.  Thus, only common law and express warranties apply to homeowner associations.   Express warranties extend for the period of time stated in the contract. Common law implied warranties, to the extent they are not disclaimed, extend from the developer to original purchasers for up to ten years from the date of issuance of the certificate of occupancy.  Most developers effectively disclaim implied warranties in their contracts.  In order for a defect to be covered under an express warranty, it must be discovered during the warranty period.

b.  Statute of Limitations Expiration

The statute of limitations for pursuing a warranty claim in court is four years from date of discovery, but in no case more than ten years after the issuance of the certificate of occupancy.  A claim is preserved by filing suit, although placing a party on notice of a claim pursuant to Chapter 558, Florida Statutes has the effect of extending statutes of limitation for a finite period as defined in the statute,   A Chapter 558 notice, however, does not extend the limitations period for a building whose certificate of occupancy issuance is approaching its ten-year anniversary.

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Is there a "best suited" law firm for Developer Turnover Transition to Homeowners?

Posted on August 20, 2009 by LexBlog

HIRING TWO LAW FIRMS

 

Every condominium association should have a general counsel under retainer to advise on day-to-day operations and ongoing legal issues.  During the transition period, general counsel can be of great assistance to a new Board in getting acclimated to the varied requirements:

 

‚    Documents

‚    State Statutes

‚    State Administrative Rules & Regulations

‚    Common Law (court-created law) Governing Condominium Operations

 

The transition period is also the time for the construction quality of the building and improvements to be evaluated and for Association financial operation during the period of developer control to be scrutinized.  The type of law firm best suited to assist in the evaluation and to negotiate a resolution of possible claims is a trial firm experienced in negotiating and litigating condominium construction and accounting claims.

 

Our focus is on the evaluation and negotiation of turnover claims.  Certain law firms you may consider will offer services on both accounts (general counsel and turnover claims).  Although the concept of a “one-stop shop” may be initially appealing, the Board should closely scrutinize whether the firm being considered is as strong on the turnover claims side as it is on the general counsel side.

 

FIRM BACKGROUND

 

Our firm has extensive experience (over 30 years) representing community associations in negotiations with developers and other responsible parties to resolve construction warranty and financial issues arising at turnover. 

 

Several of our clients outcomes:

 

‚         the negotiated resolution of tens of millions of dollars of warranty

            and accounting claims

‚         one of the largest jury awards ($3.35 million) for a plaintiff

            condominium association for a construction defects

 

OUR APPROACH

 

The first step would be for the Board to secure reports from engineering and accounting firms on the quality of construction and the condition of association finances during the period of developer control, respectively. 

 

We can assist the Board in locating appropriate experts for this purpose and outlining the specific inquiries which should be made.

 

Once the results are in, Chapter 558, Florida Statutes, mandates a pre-suit notice and inspection procedure as a prerequisite for construction defect claimants pursuing their rights in court.  Although most condominium association boards desire that their warranty claims be resolved without the need to resort to the court system, it is prudent to follow these procedures for no other reason than it keeps potential court resolution as a top-of-mind concern to the developer and other parties participating in negotiations. 

 

Notice letters should go out to all parties potentially responsible for the defects, so an identification of the parties involved in the design and construction of the building is the first step in the process.  In the notice letters, we will ask per the statute for file documents to be produced and invite the recipients to participate in a joint inspection at the site. 

 

The recipients are required under the statute to submit proposals to resolve the claims, or in the alternative to reject the claims.  Presuming offers are made, this would be the impetus for initiating negotiations hopefully leading to a settlement, which settlement could involve repairs or cash or a combination of the two.

 

Obviously, in order to evaluate offers and determine an appropriate posture in the negotiations, we would be working hand in hand with the Association’s experts.

 

 

FEE STRUCTURE

 

Our firm charges a flat fee to assist the Board in selecting appropriate experts, assisting in defining the matters to be addressed in the expert reports, evaluating the expert reports, preparing a detailed claims analysis and meeting with the Board to discuss the findings.  We work on an hourly basis during the notice process.  For settlement negotiations or litigation, we offer hybrid arrangements involving reduced hourly rates and partial contingency fees. 

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