OWNERS: UNDERSTAND AND APPRECIATE THE STATUTE OF LIMITATIONS FOR CONSTRUCTION DEFECTS

imagesCASAN61XHaving an understanding of the statute of limitations when an owner notices a construction defect with their property is essential to ensure that legal actions are timely filed. Not having this appreciation could have a devastating impact. It could result in an owner being legally barred from pursuing an action for debiltating construction defects or damages. This should never be the case.

 

The statute of limitations for construction disputes is primarily governed by Florida Statute §95.11(3)(c). This section provides that there is a four year statute of limitations for:

 

An action founded on the design, planning, or construction of an improvement to real property, with the time running from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest; except that, when the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence. In any event, the action must be commenced within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.”

 

Now, what exactly does all of this mean? To begin with, this means that the statute of limitations for construction disputes commences on the latest of: i) the owner’s possession of the property, ii) the issuance of the certificate of occupancy by the governing building department, iii) the date construction was abandoned if the project was not completed, or iv) the date the contract was terminated (which would also typically be the case if the project was not completed).

 

For a completed construction project, the dates I like to focus on are the temporary and/or permanent certificates of occupancy dates because these signify the dates the owner is entitled to occupy their property in whole or in part. These are also hard dates that can be confirmed through the building department and the closing of the building permit. The owner has four years to initiate a lawsuit from this date.

 

However, when an owner discovers a construction defect or damage to their property (i.e., water intrusion or leak, mold, cracked or spalling stucco, etc.), it is frequently a discovery that occurs many years AFTER completion and occupancy. When this occurs, the statute of limitations becomes less clear.

 

The discovery of a defect or damage after completion is referred to as latent defect because the defect or damage was not patently visible during construction (or reasonably discovered with the exercise of due diligence prior to the owner’s acceptance and occupancy of the property). In this circumstance, the statute of limitations commences on the date the latent defect was discovered. But, under the law, in no event can the cause of action be pursued more than ten years after the factors referenced above (project completion). This cap on when an action can be filed with respect to a given construction dispute is referred to as the statute of repose.

 

For example, let’s assume a project was completed on December 31, 2010. Many years later, on December 31, 2017, the owner discovers serious latent defects. This discovery starts the running of the statute of limitations. But, the owner would not have four years to sue on these latent defects because if he waited the four years until December 31, 2021, his suit would be barred by the statute of repose, which would cap suits relating to the project ten years from completion on December 31, 2020.

 

Understanding when the statute of limitations would commence and when actions would be barred under the law is important and, many times, factually complicated. Recently, the Third District Court of Appeal in Hochberg v. Thomas Carter Painting, Inc., 36 Fla. L. Weekly D1200f (3d DCA 2011), analyzed the running of the statute of limitations in a construction dispute. In this case, owners hired a contractor to build their beautiful new home. After the home was completed in 2003 and the owners moved in, they discovered mold and water intrusion damage. The owners immediately hired an engineer to analyze their discovery and the root of the defects. The expert produced a preliminary report in 2004 addressing the cause of the defects.

 

In 2008, the owners sued the subcontractors responsible for the defects for negligence and violation of Florida’s building code. Subcontractors argued that the owners filed their lawsuit outside of the statute of limitations because they discovered the defects in 2003 but waited until 2008 to file their lawsuit. The owners argued that the statute of limitations should be tolled until they discovered the exact nature of the defects or magnitude of the underlying problem and which trade subcontractors the defects could be attributed to.

 

The appellate court held that, “Florida law is clear that ‘where there is an obvious manifestation of a defect, notice will be inferred at the time of manifestation [discovery] regardless of whether the plaintiff has knowledge of the exact nature of the defect.’” Hochberg quoting Performing Arts Center Auth. v. Clark Constr. Grp., Inc., 789 So.2d 392, 394 (Fla. 4th DCA 2001). In other words, even though the owners did not understand the magnitude of the defects or what specifically was causing the water intrusion into their home, the court maintained that their initial discovery of water intrusion and related damage (i.e, mold, wet carpeting) triggered the commencement of the statute of limitations.

 

This holding is important because when an owner discovers construction defects and damage, they do not discover or appreciate the magnitude of the discovery. For instance, an owner may discover wet interior finishes, smell or discover mold, discover cracks in their exterior finishes, or a roof leak, but will not typically know the specific defects causing these problems. They also typically will not have an appreciation as to the overall significance of the problem. Owners hire expert consultants to analyze these issues to not only determine the root and significance of the problem, but the method to fix the problems. The owners in this case tried to cleverly argue that the statute of limitations for latent defects should be tolled until an owner discovers the precise nature and cause of the defects, which would often correspond with the date the owners receive an opinion from their expert consultants. However, the court focused on the actual discovery of the defects or damage by the owners, rather than when the owner learned the magnitude of the problem.

 

Owners that discover a defect or damage with their home or property should absolutely not ignore the problem. Ignoring the problem could only exacerbate the underlying problems while potentially putting the owner in a situation where he is outside of the statute of limitations or repose and can no longer pursue an action against the parties responsible for the problems. Again, this should never be the case.

 

For more information on the statute of limitations and the statute of repose, please see: http://www.floridaconstructionlegalupdates.com/watering-down-the-10-year-statute-of-repose-period-for-construction-disputes/

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.