It is time for a very favorable case for an owner that experiences latent defects. In construction defect cases, there is a ten-year statute of repose to sue for latent defects. Specifically, under Florida Statute s. 95.11(3)(c), the “action must be commenced within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest. Stated differently, the latent defect lawsuit must be commenced no later than 10 years from the latest of one of the specified conditions or else the lawsuit is forever barred.
The question is when does the ten-year repose period really begin to run; what condition specifically triggers the running of the period. The Fifth District Court of Appeal in Cypress Fairway Condominium v. Bergeron Construction Co. Inc., 40 Fla. L. Weekly D1097b (Fla. 5th DCA 2015) concluded that the statute of repose in a construction defect case began to run on the completion of the contract which was the date the owner made final payment under the contract. Naturally, the completion of the contract would be the latest condition and completion does not occur until the owner fulfills its obligation by making final payment.
What does this mean? This means that the repose period does NOT commence when construction is actually completed or when the certificate of occupancy is issued. Rather, it commences when the owner tenders final payment to its contractor (after it accepts the construction and punchlist work).
The ramifications of this type of opinion are unknown and potentially scary. What if the owner withholds payment and does not make final payment for months if not years after the contractor completed construction and the owner has received a certificate of occupancy. Maybe there is a dispute as to punchlist or warranty items that results in the owner not making final payment. Does the owner get the benefit of withholding money or delaying making final payment? Perhaps.
There have been recent cases that have been fairly generous to owners with respect to the statute of repose in construction defect cases. Thus, if you are an owner and discover latent defects, consult with counsel because all may not be lost regarding a potential defect lawsuit. And, if you are a contractor, do not automatically dismiss a construction defect lawsuit as being outside of the statute of repose and be sure to consult with counsel to best protect your interests.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.