Senate settling on seven-year limit for most construction defect claims

Senators are prepared to vote to consolidate the period homeowners could have to sue over construction defects.

Currently, homeowners have four years to file a claim over a clear defect and 10 years for claims involving a hidden defect. The Senate’s proposal (SB 736) would give homeowners seven years to file claims over all defects, except when fraud is involved.

The seven-year period emerged Wednesday after bill sponsor and St. Augustine Republican Sen. Travis Hutson negotiated the new limits. Before senators amended the bill on the Senate floor on Thursday, it offered five years to file construction defects claims over single-family residences and retained an existing 10-year repose period for defects involving all other improvements.

Under the revised Senate bill, the 10-year period is saved for cases when a homeowner alleges builders fraudulently concealed the reported defect.

Senators adopted the amendment Thursday and are expected to vote on the full measure the next time they meet.

In a statement Wednesday, Hutson said construction defects can be devastating to a family’s physical safety and their financial security. Homes can be a family’s largest financial investment.

“It is important that our laws protect people’s investments in their homes and establish a clear and fair process for addressing a construction defect,” Hutson said.

Currently, the Florida Building Commission sets the definition for a material violation as part of the Florida Building Code. However, the amended Senate bill and the House bill (HB 583) from Jacksonville Republican Rep. Clay Yarborough, which awaits a hearing in its final committee, seek to define material violations in statute.

Both definitions would encompass violations within completed structures that have or may reasonably result in physical harm to a person or “significant damage” to the building’s performance. Meanwhile, the House bill still ties material violations to the Florida Building Code and considers significant damage to a building.

Cosmetic, minimal or overall inconsequential violations to the Florida Building Code wouldn’t qualify for a claim. Damage costing 25% or more of the building’s market value would qualify as significant damage.

For every serious construction defect claim, predatory actors seeking big paydays file dozens more, Hutson said.

The amendment also seeks to strengthen the claims-filing process by requiring the owner of an improvement to provide the builder with an inspection report from an expert who has investigated, documented and validated the owner’s concerns. Having more information about the repairs necessary could help resolve a construction defect dispute without going to court.

“Frivolous construction defect claims drive up the cost of insurance paid by homebuilders and their subcontractors,” Hutson said. “That hidden cost is passed on to the consumer in the form of higher housing costs.”

Speaking earlier this Session, Senate President Wilton Simpson told reporters he has heard complaints from contractors that their insurance rates have risen dramatically over recent years. Insurers won’t write policies if the system doesn’t weed out fraud.

“I do believe there’s a lot of fraud that goes on the longer you are allowed as a building owner or a homeowner to go back against the general contractor,” Simpson said.

Unlike the seven-year period established in the Senate amendment, the House bill leaves a four-year statute of limitations that begins 45 days after an improvement is completed or abandoned. Homeowners would have seven years to file for a latent, or hidden, defect from the initial 45-day period. For cases in which a homeowner has clear and convincing evidence that an engineer, architect or contractor had knowledge of a material violation, the homeowner would have 15 years after the 45-day period to sue.

“I’m glad that this year we’ve been able to bring a well-balanced product to the floor, striking the right balance to protect homeowners from fraudulent builders, while at the same time putting in place guardrails to ensure that homebuyers will be able to buy a more affordable home,” Hutson said.