Florida Enacts Contractor Notice Bill
August 11, 2003
Fred J. Lotterhos- Jacksonville
Under a new law effective May 27, 2003, owners of dwellings
in Florida must give contractors notice and an opportunity to cure construction
defects before filing suit.[1] The new statute also requires contracts for the
sale, design, construction or remodeling of residential property to contain
special language. The law only applies to residential dwellings, and to certain
kinds of defects. It establishes a rigid timeframe that both parties must follow
to preserve their rights. In theory, the law should reduce litigation by
requiring the parties to try to resolve their differences before heading to
court. In practice, it may not be that simple.
The new law applies only to dwellings. “Dwellings” include
single-family homes, multi-family buildings, and condominiums, including common
areas, but not commercial structures. “Claimants” required to give notice of
defects under the law include original purchasers, subsequent purchasers,
renters and associations, but not contractors. “Contractors” entitled to receive
notice of defects include general contractors, subcontractors, design
professionals, developers, and anyone else “legally engaged in the business of
designing, developing, constructing, manufacturing, selling, or remodeling
dwellings.” By specifying that contractors be “legally engaged” in business, the
legislature apparently intended not to require claimants to give notice to
unlicensed contractors.
The law covers defects in new construction and remodeling,
but apparently not repairs. Moreover, only certain kinds of defects are covered.
The claimant need only give notice of defects involving defective materials,
violation of applicable building codes, design malpractice, or failure to employ
workmanlike construction methods. The legislative staff report makes clear that
defects not meeting the statutory definition are not subject to the notice
provisions of the law. An example of a defect not subject to the notice
provisions of the act might be an erroneous, but workmanlike installation of
galvanized downspouts when aluminum was specified. Finally, the law applies only
to claims for damage or loss to the dwelling or to personal property, but not to
personal injuries.
In a case that meets all of these statutory definitions,
here is how the law works. The claimant must give any contractor believed
responsible at least 60 days’ written notice of the claimed defects before
filing suit against the contractor. The notice must be either hand delivered or
sent by certified mail and must specify the defect or defects in reasonable
detail. Serving the notice tolls the running of the statute of limitations. The
law encourages the claimant to “endeavor to serve the notice of claim within 15
days” after discovering the defect, but a failure to do so does not bar the
claimant’s right to sue. If the claimant sues before giving any notice, however,
or without complying with the other terms of the law, the contractor can have
the suit abated (i.e., suspended) until the claimant fully complies with the
law.
Once the contractor receives notice of a claimed defect,
the contractor has five business days to conduct an inspection of the dwelling,
although inspection is not mandatory. The inspection may include destructive
testing by agreement with the claimant. Within 10 business days after receiving
notice, the contractor must forward the notice to any subcontractor, supplier,
or design professional who the contractor believes is responsible for the
defects. These parties then have five business days to conduct their own
inspection of the dwelling. In addition, within the same five business days,
these parties must provide the contractor with a written report describing the
results of their inspection and stating whether they accept responsibility for
the defects and what they will do to repair them.
Within 25 days after receiving the claimant’s notice of
defects, each contractor receiving notice must serve a written response on the
claimant. The response must either:
(a) offer to remedy the defect at no cost to the owner,
including a detailed report on the contractor’s inspection and findings, the
work to be performed, and the timetable for completion of the work;
(b) offer to settle the claim for a monetary payment to be
paid within 30 days of the claimant’s acceptance of the offer; or
(c) state that the contractor disputes the claim and will
neither remedy the defect nor settle the claim.
If the contractor disputes the claim, the claimant may sue
without further notice. On the other hand, if the contractor’s response offers
to repair the defects or settle the claim, the response must include a statement
advising the claimant that the contractor’s offer will be deemed accepted if not
rejected in writing within 15 days (or 45 days for an association). In order to
properly reject the contractor’s offer, the claimant must serve the contractor
with written notice of rejection that includes the contractor’s offer with the
word “rejected” printed on the offer. After rejecting the offer, the claimant
may sue without further notice.
If the claimant accepts the contractor’s offer to repair
the defects or settle the claim, and the contractor complies with the terms of
the offer, then the claimant is barred from suing on the claim. On the other
hand, if the contractor does not meet the terms of its offer, either by not
paying the settlement money or by not making the repairs promised within the
agreed time or in the agreed manner, then the claimant may sue without further
notice. The failure of any party to comply with the law is admissible in any
subsequent suit.
The procedures of the act supercede any contrary provisions
of an arbitration clause in the contract between the parties. Moreover, the
notice requirements must now be conspicuously included in or with any contract
for the sale, construction, or remodeling of a dwelling.
In theory, these procedures should lead to mutually
beneficial out-of-court resolutions of dwelling defect claims. In practice,
however, the law is likely to create problems for both claimants and
contractors.
In the first place, the law only gives contractors and
subcontractors five business days after receiving notice to conduct an
inspection of the dwelling. That is simply not enough time. A busy contractor
may not be able to schedule a meaningful inspection that quickly. If the
contractor cannot inspect the dwelling, the contractor is not likely to be in a
position to agree to make repairs, much less specify the details and timetable
for the repairs. Nor is the contractor likely to agree to a monetary settlement
without an inspection. As a result, a contractor who cannot make an inspection
within five days will simply deny the claim. Then the parties are off to court.
Presumably, the parties could agree to extend the inspection time, but doing so
without the advice of counsel could result in a waiver of rights.
Similarly, the law places the strict requirement on the
claimant to properly reject the contractor’s offer to repair the defect or
settle the claim within 15 days, or the offer is deemed accepted. Even though
the contractor’s offer must advise the claimant of this burden, many
unsophisticated claimants will likely miss the required deadline or fail to
serve a statutorily adequate rejection, and thereby lose their right to sue.
Furthermore, for all but the simplest of defects, the claimant may not be able,
in 15 days, to obtain the independent advice needed to evaluate the adequacy of
the contractor’s offer. If the contractor’s offer is inadequate, and the
claimant either accepts the offer or fails to timely and properly reject it, the
claimant has no other recourse and will have to settle for whatever the
contractor offered.
Another problem for contractors is that, in order to make
an offer to repair the defect, the contractor must provide the claimant with a
written report setting forth the details of the contractor’s inspection and
findings. This kind of information would ordinarily be protected from disclosure
as work product. Even though the law provides that a contractor’s offer is not
admissible as an admission of liability, it apparently leaves the claimant free
to introduce the offer’s description of the contractor’s inspection and findings
as an admission of the existence of the claimed defects (even if liability for
those defects is not admitted). If the claimant finds the contractor’s offer the
least bit lacking, the claimant will be tempted to reject it and sue, then
introduce the contractor’s own report as proof of the defects.
Chapter 558.005 also requires that upon entering into a
contract for the sale, design, construction, or remodeling of a dwelling, the
construction professional shall provide notice to the owner of the dwelling of
the construction professional’s right to offer to repair construction defects or
pay to settle alleged construction defects before a claimant may file suit
against a construction professional. Such notice must be conspicuous, may be
included as part of the contract, and must be in substantially the following
form:
FLORIDA LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW
BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST A CONTRACTOR,
SUBCONTRACTOR, SUPPLIER, OR DESIGN PROFESSIONAL FOR AN ALLEGED CONSTRUCTION
DEFECT IN YOUR HOME. SIXTY DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER
TO THE CONTRACTOR, SUBCONTRACTOR, SUPPLIER, OR DESIGN PROFESSIONAL A WRITTEN
NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR
CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS THE
OPPORTUNITY TO INSPECT THE ALLEGED CONSTRUCTION DEFECTS AND MAKE AN OFFER TO
REPAIR OR PAY FOR THE ALLEGED CONSTRUCTION DEFECTS. YOU ARE NOT OBLIGATED TO
ACCEPT ANY OFFER MADE BY THE CONTRACTOR OR ANY SUBCONTRACTORS, SUPPLIERS, OR
DESIGN PROFESSIONALS. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER FLORIDA
LAW.
These and perhaps other terms of the new law will likely
generate some controversy in the courts. Moreover, all parties will almost
certainly need legal counsel to assist them in navigating these new waters, a
fact that cuts against the bill’s purpose of avoiding legal entanglement. On the
whole, however, this new act will have the salutary effect of protecting
contractors from the expense of litigation and the risk of excessive damage
awards where the contractor is willing to satisfy the owner through a monetary
payment or by repairing defects at no cost to the owner.
For more information, e-mail Fred J. Lotterhos III at
fred.lotterhos@hklaw.com or call toll free 1-888-688-8500.
_____________________
1. The new law has been assigned to Chapter 558.001-558.007
of the Florida Statutes. Text of the bill, designated CS/CS/SB 1286, may be
viewed at www.flsenate.gov.