Construction Defect Claims Part 1 - Breaking Down the Basics

With commercial building construction in Florida reaching $13.3 billion in the last five years and anticipated growth of 4.5% in 2019 alone, it’s safe to say that the construction industry is flourishing in the sunshine state.

But where there is growth – there is also increased risk. Particularly in an industry with so many entities in the pipeline, fiercely competing for market share. The dramatic 95% increase in construction defect claims from 2008 to 2017, provides a glimpse of just how much risk.

Anatomy of a Construction Defect Claim

With numbers like these, it’s more important than ever for contractors, owners and insurance carriers alike, to protect themselves from the potential consequences of a construction defect claim. A good place to start is understanding all of the elements of a construction defect claim, from applicable law and risk factors, to knowing what your rights are.

Construction Defect Categories

The courts have established four categories of construction defect claims:

  1. Construction Defects: Substandard workmanship during any aspect of construction including – plumbing, electrical, structural, mechanical and more, that results in damage to the building or structure.

  2. Material Defects: Defective building materials that lead to damage regardless proper design and construction.

  3. Operation and Maintenance Defects: Defects that arise from improper maintenance or operation.

  4. Defective Design: Defects in the design that cause damage or cause the building to not function as intended.

Classifying Construction Defect Claims

A construction defect is identified as either latent or patent. A patent defect is one that is obvious and easily discoverable. A latent defect is one that is hidden and not obvious or discoverable by means of a reasonable inspection.

A latent defect may be discovered years later, at which time it becomes patent. The distinction is important because it affects the statute of limitations for filing a construction defect claim.

Florida Statue Chapter 558 – Construction Defect Statute

The standards for filing a construction defect claim in Florida are detailed in Florida Statute Chapter 558. The statute outlines procedural and legal guidelines and mandates that owners provide written notice to contractors, subcontractors, developers, suppliers and design professionals, of any construction or design defects associated with a construction project.

Some key elements to be aware of:

  • The notice must be served 60 days prior to filing a claim.

  • For claims involving 20 or more units, the requirement is 120 days prior to filing.

  • Respondents have the right to inspect the property, perform testing and review any documents or discoverable items related to the defect claim. They also have the right to make emergency repairs to protect the health and safety of individuals or the general public.

  • The respondent has 45 days from receipt of the notice to respond, or in the case of 20 units or more, 75 days.

  • The response must be in writing and must include one of the following: an offer to repair the defect; settlement offer with monetary payment; a proposed settlement of repairs and payment; a denial of the claim, or a statement regarding applicable insurance.

  • All of the above must also be completed in compliance with the applicable statute of limitations below.

Statute of Limitations

Prior to July 1, 2017, the statute of limitations for a construction defect claim was four years from one of the following three occurrences - the time the owner took possession of the property, certificate of occupancy issued, contract was completed or terminated. Latent defects had an absolute limit of 10 years from the date of discovery.

Unintended Loophole

However, the previous law created an unintended loophole under the completion of contract language, that essentially provided an unlimited statute of limitations period, should the owner withhold any portion of payment.

Legislators effectively closed the loophole in 2017 and clarified completion of contract language, defining it as follows – “the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.”

When it comes to the construction industry, the risks are complex and virtually unlimited. Regardless of where your business operates in the construction food chain, protecting your reputation and financial assets requires not only an in-depth understanding of construction defect laws, but also a concerted effort by contractors, insurance carriers and owners to stay up to date with evolving legislation, emerging technologies, and changing environmental standards.

Not to mention an unsteady political climate and consumer demand.

At Rubinton Law, we understand the complexities of construction defect claims. With a diverse array of construction litigation experience, extensive resources, and industry specific expertise; we’ve got what it takes to smoothly navigate the construction defect claims process and to deliver the best outcome for our clients. Contact us today for a consultation.