Florida condo owners along with home owners’ associations (HOAs) and community associations and the like better get ready: the legislation that we have been monitoring regarding common area implied warranties for Florida builders and developers just got signed into law by Florida Governor Rick Scott.
Read our earlier post giving details on the Senate version of the legislation here; the House version, HB1013, is the one that was signed into law by Governor Scott on April 27, 2012. The new law is effective July 1, 2012, and will apply to all warranty issues: those that come before and after the effective date of this new legislation.
This new law was written and passed after a Florida appellate court (the 5th District Court of Appeals) ruled in 2010 that Florida home builders and real estate developers might have to bear the financial responsibility for things like bad sewers, screwed up roads, warping sidewalks, etc. in the neighborhoods and condo projects that they built.
That case is available online in case you’d like to read it: Lakeview Reserve HomeOwners v. Maronda Homes, Inc. From that opinion:
The Developer developed a residential subdivision in Orange County, Florida, and incorporated the Association to serve as the homeowners association of that subdivision. In developing the subdivision, the Developer performed certain site work, including construction of the stormwater drainage system and private roadways. During construction of the subdivision, the Developer retained control of and managed the subdivision. Ultimately, the Developer transferred all control of the subdivision to the individual lot owners and the Association.
The Association filed a complaint against the Developer for breach of the implied warranties of fitness and merchantability based on latent defects in the subdivision’s common areas. Specifically, it claimed that the roadways, retention ponds, underground pipes, and drainage systems throughout the subdivision were defectively constructed. The Developer filed a motion for summary judgment, arguing that the common law implied warranties of fitness and merchantability do not extend to the construction and design of private roadways, drainage systems, retention ponds and underground pipes, or any other common areas in a subdivision, because these structures do not immediately support the residences. The trial court agreed and entered summary judgment against the Association….
[We] hold that there is a common law warranty of habitability applicable in the case at bar…..
A review of the history of the application of implied warranties for habitability is instructive. For centuries, caveat emptor, “let the buyer beware,” was generally the rule of law. This served well at a time when parties were thought to usually be on equal footing and neither had a significant advantage in discerning potential defects to goods sold in the marketplace. This theory was particularly persistent in land sales, where a buyer could, and wisely should, inspect the land to ensure it was suitable for the buyer’s intended use. The notion of caveat emptor initially carried over into the construction and sale of homes and commercial buildings. Buyers could still inspect the land, and early building construction and land development was relatively simple….
Larry Tolchinsky’s Tip:
With this new law, that court opinion has no power any longer. Which is great news if you are a Florida real estate developer. It’s not good news if you are a condo owner, a Florida home owner, or a Florida HOA or Condo Board. Why?
Florida Condo Associations and HOAs are severely cash-strapped. All the Foreclosure Fraud hijinks has resulted in lots of folk not paying their dues and fees, and there’s not much in the association finances to cover things like sewage problems.
Which means that we’re going to see even less repairs and maybe, some people getting hurt because things didn’t get fixed due to lack of money. No matter that the ones responsible for the cause of these harms — faulty design, flawed building — are doing business still.
This new law gives them a Free Pass on legal liability from poor and substandard workmanship in the common areas of communities and condo projects.
If you have questions or comments, please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org or (954) 458-8655.