The firm’s latest Miami Herald column was authored by shareholder Nicholas D. Siegfried and appears in today’s edition of the newspaper. The article, which is titled “Real Estate Counselor: Legislature Shortens Timeframe for Construction Default Lawsuits,” focuses on the impact of the new Florida law that shortens the periods known as the Statute of Limitations and Statute of Repose by which property owners and community associations must file lawsuits concerning construction and design defects. His article reads:
. . . The law impacts both new commercial and residential development and restoration projects. In response, owners, community associations and their consultants must be vigilant during and after construction to identify and assert claims for defects in the shortened time frame.
Owners must consider an analysis of both the Statute of Repose and the Statute of Limitations to determine whether a claim is timely. The main distinction is that the Statute of Repose provides an outside date by which an owner must file a lawsuit, whereas the Statute of Limitations sets forth the time limit to file a lawsuit within the Statute of Repose period.
Previously, the triggering event for the Statute of Repose was 10 years after the date of actual possession by the owner or the date of the issuance of a certificate of occupancy, whichever date was latest. Now, the law requires any claim for construction and design defects to commence within seven years after the issuance of a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, whichever date is earliest.
Similarly, the triggering event for the four-year Statute of Limitations concerning known deficiencies commenced on the date of actual possession by the owner or the issuance of the certificate of occupancy, whichever date was latest. Now, the law requires any claim for construction and design defects to commence within four years after the issuance of a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, whichever date is earliest.
Fortunately, the legislature did not modify the latent defect exception, which provides that the four-year period to commence a lawsuit runs from the time the defect is discovered or should have been discovered with the exercise of due diligence. So long as a lawsuit is filed within four years of identifying the latent defect and within the new seven-year statute of repose period, the action will be timely.
One of the most significant changes is the removal of the “actual possession by the owner” trigger for the commencement of both the statutes of limitations and repose. By replacing it with the issuance of a temporary certificate of occupancy, often issued well before owners close and take possession of new properties, community associations and other property owners will need to ensure they quickly and thoroughly inspect their properties for construction defects.
Before an owner even takes possession, the running of the time to assert a claim for construction defects has already commenced. Fortunately, as to condominium associations only, the statute of limitations for construction defect lawsuits concerning new condominiums, commonly referred to as 558 claims, doesn’t begin to run until the developer turns over control of the association to the unit owners.
However, even with this additional protection for condominium associations, Florida law allows developers, in certain circumstances, to maintain association control for up to seven years, thereby effectively eliminating any rights of their successor unit owner-controlled associations to assert claims for construction defects due to the new seven-year statute of repose period. Previously, the 10-year statute of repose would have provided at least a three-year window during which the unit owner-controlled association could conduct thorough investigations for any latent/hidden defects to prepare and file any necessary legal actions.
Our firm handles many construction defects claims on behalf of new condominiums, and their associations typically discover significant defects years after the temporary certificate of occupancy is issued. The repair costs for construction defects can be millions of dollars, the risk for which should be borne by the responsible development, construction and design professionals, and not the new owners.
To avoid assuming the risks of construction defects, community associations at turnover must obtain the temporary certificate of occupancy, certificate of occupancy, or certificate of completion issued for every building on their property. They should further work with highly qualified experts to guide them through the transition period and conduct all the necessary inspections. Any defect lawsuit should be filed with the foreknowledge and confirmation by experienced construction attorneys that it will not be time-barred under the newly amended statutes. . .
Nicholas concludes by noting that with all the focus on building safety and inspections, it was surprising to see the state’s lawmakers enact these changes and pass on the risk and liability for construction defects to property owners. He writes that the new law is now in effect for all future actions, but any claims now time-barred due to the new law will be considered timely so long as they are filed by July 1, 2024.
Our firm salutes Nicholas for sharing his insights into the ramifications of this new law for Florida community associations and property owners with the readers of the Miami Herald.