The Senate has voted to consolidate the period homeowners could sue over construction defects, an effort to cut down on frivolous claims against builders.
Currently, homeowners have four years to file a claim over a clear “patent” defect and 10 years for claims involving a hidden “latent” defect. The Senate’s proposal (SB 736), passed 26-13 Thursday over the opposition of most Democrats, would give homeowners seven years to file claims over all defects, except when fraud is involved.
The seven-year period emerged last week after bill sponsor and St. Augustine Republican Sen. Travis Hutson negotiated the new limits. Before senators amended the bill on the Senate floor later that week, 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.
“We came back and protected that homeowner by adding a fraud claim provision to this bill,” Hutson told Senators.
Senate Republicans, led by Senate President Wilton Simpson, have 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. Hutson has said he wants clear laws to protect people’s investments in their homes while minimizing frivolous claims.
“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.
The Senate’s passage puts the ball in the House’s court.
Currently, the Florida Building Commission sets the definition for a material violation as part of the Florida Building Code. 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.
Hutson said the bill clearly defines the Building Code and how it applies.
“If a builder is following the code, they have done nothing wrong and you can’t slap them with a claim,” Hutson said.
For every serious construction defect claim, predatory actors seeking big paydays file dozens more, the Senator noted last week.
Democrats — minus Orlando Sen. Linda Stewart, who voted with the majority — argue the decision to combat fraudulent and frivolous claims would deny many homeowners compensation for serious damage to their home.
Lighthouse Point Democratic Sen. Gary Farmer, who opposed the measure, told Senators about the latent defect he discovered in his North Carolina home. He only found out about the defect after water started leaking into his home.
“This bill tilts the balance of power with regard to a person’s most cherished, most expensive financial investment too far in favor of a builder and too much against an innocent homeowner who has no knowledge whatsoever of a defect until something starts to sag or crumble or water starts flowing into a house,” Farmer 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.
Speaking earlier this Session, 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.