Sunday, March 24, 2019

Construction Defects Fix is Not So Easy

LAW MATTERS

Hurricane Irma whirled through our area one year ago. Screen enclosures and roofs took the brunt of Irma’s wrath, but many structures suffered more severe damage.

Some contractors did less than stellar repairs. After waiting months for work to start, many homeowners found their hired contractor would either not perform or did a terrible job. In some cases, the home was in worse shape than it was after Irma left. Many of those homeowners met with their attorney and were told that Chapter 558 of Florida Statutes addresses the manner in which homeowners and contractors are to deal with construction defects. The statutes include defective materials and failure to construct or remodel real property in accordance with accepted trade standards for good and workmanlike construction. The statutes are an effort by the legislature to provide an alternative method to resolve construction disputes and reduce litigation as long as protecting the rights of property owners. To reach that goal, the statutes impose a myriad of notices and procedures that, in many cases, do little more than delay ultimate lawsuit. If the homeowner fails to comply with the statutes and heads immediately to court, the case is subject to being held in abeyance while the homeowner complies with the statutes or might even be dismissed.

The statutes are intended to help homeowners and contractors avoid expensive litigation. Because of the technical nature of the statutes, homeowners are well advised that hiring experienced attorney to work through the timing and notice requirements to avoid prejudicing the case.

The statutes require the homeowner provide notice of claim to the contractor in reasonable detail within 15 days after discovery of an alleged defect. That is a pretty short period of time. Most homeowners with construction defects have been dealing with delays and cajoling the contractor into completion and or repair. The legislature figured that out, as the statutes also say failure to serve the notice within 15 days of discovering an alleged defect does not bar later suit.

The contractor has 30 days from receipt of the homeowner’s notice to inspect the property. The homeowner must provide reasonable access for the inspection during normal working hours. The statutes even allow destructive testing if the person inspecting the property determines destructive testing is necessary, but requires the homeowner be given notice of intent to perform destructive testing and meet other statutory requirements. The contractor has 45 days from date the homeowner serves notice to serve a written response which must offer to remedy the defect at no cost to the claimant, offer to compromise and settle the claim by monetary payment, offer to settle by combining a monetary payment and some repair, state that the contractor will not remedy the defect, or offer a monetary payment including insurance proceeds to be determined by the contractor’s insurer.

If the contractor does not agree to remedy, compromise or simply fails to respond to the claimant’s notice in a timely manner, the homeowner may proceed with a lawsuit. If the contractor offers a settlement, the homeowner must accept or reject in writing within 45 days after receiving the settlement.

The statutes confirm the homeowner may make emergency repairs required to protect the health, safety and welfare of the homeowner during the process, without waiting for the notices to go back and forth. But, what about a homeowner who has had the same contractor try and try again, but each time failed to properly repair the damage?

Some say the statute does not allow other repairs by the homeowner, unless the contractor refuses to remedy. Others claim the statute does not interfere with the homeowner’s right to fix a defective work, albeit the homeowner’s claim against the original contractor may be impacted. The original contractor might claim the defect could have been cheaply repaired by the contractor and that the homeowner paid too much.

The parties are allowed to opt-out of the statutory provisions by contract. Even so, most of the construction contracts used in our area contain written notice of the statutory requirements and do not opt-out of the notice and accompanying delay under the statute.

There remains another unanswered question: must the homeowner allow the contractor to make repairs if the contractor offers to do so? Many homeowners are adamant that the contractor is not to be allowed back on site. Florida courts have not answered the question with finality and the legislature has also failed to provide clarity on this issue.

Many contractors think their liability is limited by following the statutory procedure. They think that if an owner sues them, they will be faced with breach of contract damages, which might be limited to what it would cost them to “do it right,” or, at most, what the owner ends up having to pay another contractor. But, that is not necessarily correct. The homeowner might also recover damages for loss of use or lost rental, additional expenses and other damages which are related to the contractor’s failure to perform.

It can get even worse for the contractor. Section 489.126 Fla. Stat. mandates that a contractor obtaining an initial payment of more than 10% of the contract price for restoration, repair or improvement to residential property apply for permits within 30 days and start the work within 90 days after the date all necessary permits are issued, unless the homeowner agrees in writing to a longer period. Failure to comply with that statute violates the criminal statutes and, depending upon the amount of money involved, can be prosecuted as a felony.

Section 713.345 Fla. Stat. may also be applicable. That statute makes it a felony for anyone receiving payment to improve real property to use the payment other than pay amounts due for the improvement of the real property. If the homeowner is 60 years of age or over and suffering from the infirmities of aging, the contractor’s action may also be a felony under Section 825.103 Fla. Stat. addressing exploitation of an elderly or disabled adult.

A homeowner is not in a position to pursue criminal prosecution. That action is up to the State. But, violation of the criminal statutes would expose the contractor to a lawsuit for civil theft under Section 772.11 Fla. Stat. If successful in an action for civil theft, the homeowner’s judgment would be for three times actual damages plus attorney fees and court costs. That can be strong incentive to sue.

Irma caused a lot of damage. Some contractors after Irma caused even more. Homeowners do not have to tolerate a bad contractor as Florida statutes provide a broad path for homeowners to pursue relief when a contractor fails to perform.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.

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