In a recent case, Spring Isle Community Association, Inc. v. Pulte Home Corp., et al., Case No. 5D20-1420, the Fifth District Court of Appeal determined the trigger date for the statute of repose for construction defect claims against a subcontractor must be determined for each townhome involved in the claim individually, and, thereby, excluding a significant portion of the townhomes impacted by the alleged defects. The individualized analysis of the trigger date for the statute of repose utilized by the Fifth District in Spring Isle within a multi-home building may result in a loss of a significant portion of a community association’s claim related to construction defects. It may even result in some homes within the same building not being part of a claim although they suffer the same defects.
The statute of repose establishes a statutory cut-off for not-readily-observable construction defects (“latent defects”). The statute of repose is found in Section 95.11(3)(c), Florida Statutes, and states that an “action” founded on construction of or improvement to real property must be commenced within ten (10) years of (whichever is latest) (1) the date of actual possession by the owner; (2) the date of completion of the contract; (3) the date of abandonment of the project if not complete; or (4) the date of the issuance of a certificate of occupancy. In essence, regardless of when a latent defect is discovered the statute of repose sets an end date by which a property owner is required to bring his or her action against the party responsible for the defect.
In Spring Isle, the Court tackled the issue of calculating the commencement of the statute of repose. Spring Isle Community Association, Inc. (“Spring Isle”) commenced litigation against Pulte Home Corp. (“Pulte”) for alleged construction defects related to the exteriors and roof on March 2, 2017, on each of the 390 townhouses for which individual certificates of occupancy were issued. In response, Pulte sent notices of the claims, pursuant to Chapter 558, Florida Statutes, to the subcontractors who worked on the project on March 10, 2017. On March 24, 2017, Pulte filed a third-party complaint against its subcontractors, alleging pass-through claims.
The stucco subcontractors filed a motion for partial summary judgment against Pulte alleging that as the certificates of occupancy for 329 of the townhouses were issued before March 24, 2007, the ten-year statute of repose expired prior to Pulte’s filing of the third-party complaint on March 24, 2017, and those claims should be barred by the statute of repose. The Court analyzed the evidence presented to it regarding the correct trigger date for the commencement of the ten-year statute of repose to determine whether the statute of repose barred the claim.
First, the Court concluded actual possession by the owner was not the applicable trigger for the statute of response since the Pulte owned the townhomes for a period after their construction. The Court also examined the completion date of the contract as the triggering event; however, since the subcontractor was operating under a “master” contract, additional projects and work could be added at any time, indicating there was no readily ascertainable completion date. Finally, the Court attempted to establish a final payment date, but the final payments came before the certificate of occupancy, which meant final payment date was not the latest event and not the appropriate trigger for the statute of repose.
Since the Court eliminated the other events as the trigger for the statute of repose, the Court ruled the issuance of the certificates of occupancy were the triggers for the statute of repose. Since the certificate of occupancy for each townhome was issued individually, the trigger date for the statute of repose needed to be examined on an individual basis for each townhome involved in the litigation. In so ruling, any townhouse whose certificate of occupancy was issued ten years or more before Pulte commenced its action on March 24, 2017 against the subcontractor could not be part of the litigation, which eliminated 329 of the 390 townhomes in Spring Isle. The impact on the potential recovery in the case is substantial since the recovery has been reduced by more than 84%.
If associations and owners are approaching the ten-year mark following the development of their community and suspect there may be problems with the construction or design of their homes, it is imperative for the long-term health of the community to speak with legal counsel and qualified engineers to evaluate whether any claims may still exist.