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What are the Time Limits for Florida Construction Defect Lawsuits?

Florida construction defect lawsuits must be commenced within the time periods provided by law. Failing to initiate a lawsuit on time usually results in the loss of the right to bring a claim. Therefore, understanding the time periods for construction defect suits is critical for both Florida contractors and property owners.

Three concepts are key to understanding construction lawsuit timing considerations:

Statutes of Limitations
Statutes of Repose
The Difference Between Latent Defects & Patent Defects

What is the Difference Between a Statute of Limitations and Statute of Repose?

Statutes of limitations and statutes of repose both establish time periods for when a construction defect lawsuit must be filed. The reader may wonder: “Why are there two different time limitations?” This is a reasonable question, and if you are thinking this, you are not alone in your confusion.

The answer to this question boils down to the fact that statutes of limitations periods can be uncertain. For example, a 4-year statute of limitations period may not begin until a homeowner actually discovers a latent problem with their home. After discovering that problem, the homeowner then has 4 years to initiate their lawsuit.

However, statutes of limitations create a great degree of uncertainty for designers and builders. Under a statute of limitations, they could be sued 10 years down the line … 20 years … it really can depend on when the homeowner finds a latent problem. This creates a lot of anxiety, especially for folks like a retired engineer who designed a beachfront condo 40 years ago which is beginning to succumb to the elements.

In the law, we like to maintain at least a degree of certainty. Or, at least, a cohort of construction lobbyists in Tallahassee prefer this result. Therefore, Florida law also provides for a statute of repose. The statute of repose sets a maximum outer limit for commencing a construction defect lawsuit, starting from a date certain. Up until April 2023, this period was 10 years. Under Florida’s new law, it is 7 years.

To be clear, either one of these limitations periods can time-bar a lawsuit. The difference is simply that one period is a little bit shorter and no one knows when it starts, and the other is longer and everyone knows when it starts.

With that said, we can get into the specifics.

What is the Florida Statute of Limitations for Construction Defects?

Under Section 95.11(3)(b), the Florida statute of limitations for construction and design defect claims is 4 years. This period starts to tick from the date when one of the following acts occur (whichever is earlier):

The date of issuance of a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or
The date of abandonment of construction if not completed.

However, there is a catch. The law goes on to state that when a lawsuit “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 practical terms, this means that for hidden defects, the statute of limitations period does not start to tick until the homeowner finds the problem or should have noticed the problem.

Therefore, statutes of limitations really depend on whether a defect is noticeable or hidden. Which brings us to our next point:

What is the Difference Between Patent and Latent Defects in Florida?

In Florida, a “patent” defect is a defect that is readily and easily observable. A “latent” defect is essentially the opposite.

For example, a roof that was installed with improper flashing which performs for 5 years (due to copious amounts of roofing cement applied by the builder), but then starts to leak, likely represents a “latent” defect. On the other hand, a home with incorrectly installed doors which have never closed correctly probably represents a “patent” defect.

Applying this example to the statute of limitations, let’s consider a home which was completed in January 2010 with these two defects:

Incorrectly Installed Doors: This is probably a patent defect. The four year statute of limitations runs from January 2010, the date of the certificate of completion. The right to file suit is barred in January 2014.
Bad Roof Flashing: This is probably a latent defect. If the house starts to show water stains on the ceiling in January 2015, the statute of limitations will expire in January 2019.

In this scenario, the homeowner may feel comfortable waiting for the roofing issue to progress, and then filing suit in January 2018. However, this would be a fatal mistake. Although the suit would be permitted under the statute of limitations, it would be barred by the statute of repose.

This leads us to our next point …

What is the Florida Statute of Repose for Construction Defects?

In Florida, the statute of repose for construction and design defect suits is 7 years. This period is absolute, and represents the latest point this type of suit can filed, regardless of the statute of limitations.

The statute of repose period begins to tick from the earliest of the following events:

Issuance of a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or
The date of abandonment of construction if not completed.

In the hypothetical above, the home completed in January 2010 would reach the end of the repose period in January 2017. Therefore, even though roofing lawsuit would be allowed under the statute of limitations up until 2019, this period would be cut short by the 7 year statute of repose.

Summary

Florida’s statute of limitations and statute of repose provide two different time limits for when a construction defect suit can be filed. The statute of limitations is shorter, and this period can be uncertain when the claim involves a latent defect. On the other hand, the statute of repose disregards whether a defect is latent or patent, overrides the statute of limitations, and provides an absolute limit for when suit can be filed.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

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5 Key, but Overlooked, Terms for Florida Leases

Renting residential property is a lucrative investment, but comes with its share of challenges. Using a thorough residential lease agreement may seem tedious, but is key to protecting landlords’ interests and ensuring a smooth tenant relationship. This blog post discusses five critical, but often overlooked, terms for Florida residential leases.

Subletting and Unauthorized Occupants:
Landlords face the risk of tenants subletting the property or moving in unauthorized occupants, potentially causing property damage or disturbances. Therefore, including a clear provision in the lease that prohibits subletting and habitation by unauthorized individuals is vital. This not only helps maintain control over the property but also sets the groundwork for consequences such as lease termination or additional charges for violations.
Home Business and Unauthorized Uses:
To protect the property from misuse and potential damages, landlords should explicitly outline unauthorized uses of the premises. Prohibiting certain business activities or storing hazardous materials within the rented property ensures that the space is used solely for residential purposes, and may help prevent damage. By including this provision, landlords minimize risks and create a secure living environment, preserving the property’s condition for its tenant and neighbors.
Renters Insurance Requirement:
Safeguarding the landlord’s interests means more than protecting the structure; it also includes protecting the tenant’s belongings from loss and damage. Requiring proof of renters’ insurance as a term in the lease helps prevent claims against the landlord for damages to belongings. In the event of loss or damage to personal property, tenants will likely have a valid claim they can submit to their insurer; whereas, otherwise, they might look to the landlord for compensation.
Indemnification Term:
Third-party injuries on the property can lead to legal and financial consequences for landlords. Indemnification provision in the lease ordinarily state that the tenant will indemnify the landlord if they invite a third party on the property who is injured due to the tenant’s negligence. While these terms are not “bulletproof,” and will not absolve the landlord for its own negligence, they do provide an additional barrier to lawsuits in many circumstances.
Default Provision and Remedies:
A well-defined “default” provision provides landlords with a tool to address breaches of the lease promptly and effectively. Outlining the consequences, including eviction, in case of a tenant’s default ensures that landlords can take swift action to protect their interests. Default provisions create a transparent process for resolving disputes and specify that certain conduct may result in immediate grounds for eviction.

Florida landlords who want to draft a lease agreement that protects their interest should take a proactive approach to preparing their lease agreement. Spelling out conduct that represents a violation of the lease in advance, and the consequences of doing so, furthers this interest. Additionally, enforcing renters’ insurance and indemnification obligations provides additional protection in the event of catastrophes.

How to Transfer a Lien to a Bond in Florida

Florida construction liens provide contractors with a powerful tool in order to obtain delinquent payments from their customers. Recording a lien puts property owners in a precarious position, with several significant consequences:

The lien creates a threat of foreclosure;
The lien may cause a default under the owner’s mortgage/note;
The lien can prevent a sale of the property by clouding its title; and
The lien may result in an award of attorneys fees if a case is pursued.

However, Florida law also provides a powerful tool for owners who need to quickly remove construction liens from their property. This is informally referred to as “bonding off a lien”.

When bonding off a lien, the owner substitutes a cash deposit or bond as a security in exchange for the real property. For this process, the paper asset is used to secure the contractors right to payment, while the property escapes from the cloud on its title.

Section 713.24 of the Florida Statutes provides the mechanism for bonding off a lien. This section states that any person with an interest in the property can transfer the lien by depositing cash or filing a bond with the county clerk’s office. Whether using cash or a bond, the amount must be equal to:

the amount claimed in the lien,
plus interest thereon at the legal rate for 3 years,
plus $5,000 or 25 percent of the amount demanded in the claim of lien, whichever is greater (to apply on any attorney fees and court costs that may be taxed in any proceeding to enforce said lien).

In practical terms, property owners who wish to bond off a lien should usually visit the Civil Division of the County Clerk’s office, at the courthouse, in person. An appointment is sometimes necessary, so make sure to call ahead and confirm the time of your visit. When scheduling your visit, inform the clerk that you will be seeking a “Clerk’s Certificate of Transfer of Lien”. Orange County provides instruction online, but you should still consult with your local Clerk’s office.

Property owners wishing to bond off the lien with “cash” will bring two cashier’s checks. One check is used to pay the amount of the security, as calculated using the formula above. The second is used to pay the registry fees associated with recording the Clerk’s Certificate of Transfer of Lien. You should confirm these amounts with the Clerk’s office by telephone in advance of your visit.

It is also recommended to bring two copies of the lien for the visit, identification, and evidence of your interest in the property (ex: a deed or lease). During your visit with the clerk’s office, pay the fees, work with the clerk to complete the Certificate of Transfer, and verify that the clerk will record the Certificate in the public records on your behalf.

Owners wishing to transfer the lien to a bond (instead of cash) will need to obtain a Lien-Transfer Bond before making their visit, and take a copy of the bond to the Clerk during their visit. Various sureties are available who are willing to underwrite lien transfer bonds in exchange for a premium payment.

Upon filing the Certificate of Transfer, the real property is released from the lien, and the lien is transferred to the security. However, an interested lienor can still file a complaint in chancery or motion in a pending action to require additional security, which might result in the court requiring a larger deposit or bond amount.

New Notice of Commencement, New Notice to Owner

In Florida, when an owner terminates a Notice of Commencement (NOC) and records a new NOC, subcontractors and suppliers are obliged to serve a new Notice to Owner (“NTO”), even if they are continuing work under the same contract and have previously served a NTO.

Understanding the Notice to Owner (NTO):

The NTO is a document in Florida’s construction industry, serving as a formal notice from subcontractors and suppliers to the owner. It is sent when these entities are working under the direct contract but did not directly contract with the owner. By serving the NTO, subcontractors protect their lien rights and establish a legal foundation for potential future claims.

Significance of the Notice of Commencement (NOC):

The NOC, on the other hand, is a document recorded by the owner to comply with Florida’s lien law. It provides information about the project, including the owner’s name, description of the property, and the general contractor. It helps protect contractors’ lien rights, by allowing these claims to relate back to the date of the NOC.

New Financing, New NOC

Owners may choose to terminate an original NOC and record a new NOC during a construction project for various reasons, with obtaining new financing being a common one. Financial dynamics of a project can change, leading owners to secure additional funds or revise existing financial arrangements. Consequently, the old NOC is terminated and a new NOC is recorded to reflect these changes and ensure legal compliance.

Obligation to Serve New NTOs with Updated NOCs:

When an owner terminates an NOC and records a new NOC, this effectively “restarts” the job in the eyes of Florida’s lien law. Therefore, subcontractors and suppliers who are not in privity with the owner must serve a new NTO, regardless of whether they have already served one, and are merely continuing work under their existing arrangements. Failing to serve a new NTO within the required time frame could jeopardize their lien rights with drastic consequences.

Takeaways

Subcontractors should stay vigilant and informed throughout the project’s duration. Regularly reviewing notices and recordings relating to the property is essential. This information is available through the public records online, and should be checked monthly, at a minimum, as construction progresses. Failing to stay informed about these developments and respond accordingly could jeopardize your lien rights.

A Supplier’s Supplier is Not a Lienor in Florida

One common question in Florida construction is whether a supplier to a supplier can claim a lien. This situation comes up in scenarios like the following:

Hypothetical: A manufacturer sells its materials to a distributor. The distributor then sells the materials to a general contractor, who uses them to improve an owner’s property. The property owner goes out of business during the project. The contractor is unable to pay the distributor, and the distributor is unable to pay the manufacturer. All three businesses want to claim a lien on the property.

Manufacturer –> Distributor –> Contractor –> Owner

In this scenario, the distributor and contractor will be able to enforce their lien rights on the property, but the manufacturer will not.

This result seems unfair; however, it is based on the clear language of Florida Statute Chapter 713, which is intended to protect owners from remote claims of parties they are not aware of.

Specifically, Florida Statute 713.01 states that “Lienor” means the following persons:

(a) A contractor;

(b) A subcontractor;

(d) A laborer;

(e) A materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or

f) A professional lienor under s. 713.03;

…. “No other person may have a lien under this part.”

A supplier to a supplier is a “materialman” who does not contract with the owner, contractor, subcontractor, or sub-subcontractor. Therefore, they do not fit within the definition of a lienor, and cannot claim a lien.