Senate Bill 1488 (2020) — Construction defects
SB 1488
Florida Bills
Florida Senate - 2020 SB 1488 By Senator Gruters 23-00926-20 20201488__ Page 1 of 14 CODING: Words stricken are deletions; words underlined are additions. A bill to be entitled 1
An act relating to construction defects; amending s. 2 558.001, F.S.; revising legislative findings and 3 intent; amending s. 558.002, F.S.; deleting and 4 revising
definitions; amending s. 558.003, F.S.; 5 specifying that certain disclosures and documents must 6 be provided before a claimant may file an action; 7 amending s. 558.004, F.S.; deleting provisions related 8 to an action involving an association; providing 9 requirements for a notice of claim; revising the 10 timeframes within which certain persons are required 11 to serve a written response to a notice of claim; 12 requiring claimants to serve a written notice of 13 denial or failure to respond to certain parties; 14 providing requirements for the repair of alleged 15 construction defects; providing requirements for 16 payments for such repairs; prohibiting certain persons 17 from requiring advance payments for certain repairs; 18 limiting liability for certain parties under certain 19 circumstances; providing requirements for certain 20 payments held in trust; creating s. 558.0045, F.S.; 21 providing applicability; requiring parties to a 22 construction defect claim to participate in certain 23 mandatory nonbinding arbitration within a specified 24 time; requiring an arbitrator who finds in favor of a 25 claimant in a mandatory nonbinding arbitration to 26 include specified information in the award; 27 authorizing parties to agree to be bound by the 28 arbitration award; authorizing any party who does not 29
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 2 of 14 CODING: Words stricken are deletions; words underlined are additions. agree to be bound by an arbitration award to proceed 30 with a civil action; requiring a jury verdict and 31 final judgment in favor of the claimant in such civil 32 action to include specified information in the award; 33 providing construction; providing an effective date. 34 35 Be It Enacted by the Legislature of the State of Florida: 36 37
Section
Section 558.001, Florida Statutes, is amended to 38 read: 39 558.001 Legislative findings and declaration.—The 40 Legislature finds that it is beneficial to have an effective and 41 cost-efficient alternative method to resolve construction 42 disputes that would reduce the need for litigation as well as 43 protect the rights of property owners.
An effective alternative 44 dispute resolution mechanism in certain construction defect 45 matters should involve the claimant, filing a notice of claim 46 with the contractor, subcontractor, supplier, or design 47 professional that the claimant asserts is responsible for the 48 defect, and should provide the claimant, contractor, 49 subcontractor, supplier, or design professional, and the insurer 50 of the claimant, contractor, subcontractor, supplier, or design 51 professional, with an opportunity to resolve the claim through 52 meaningful arbitration of claims confidential settlement 53 negotiations without resort to extended litigation further legal 54 process.
It is the intent of the Legislature to promote 55 efficient resolution of claims and reduce litigation, and 56 nothing in this
chapter precludes resolution of claims through 57 settlement negotiations. 58
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Section 2. Subsections (2) and (3) of
section 558.002, 59 Florida Statutes, are amended to read: 60 558.002
Definitions.—As used in this chapter, the term: 61 (2) “Association” has the same meaning as in s. 718.103(2), 62 s. 719.103(2), s. 720.301(9), or s. 723.075. 63 (3) “Claimant” means a property owner, including a 64 subsequent purchaser or association, who asserts a claim for 65 damages against a contractor, subcontractor, supplier, or design 66 professional concerning a construction defect or a subsequent 67 owner who asserts a claim for indemnification for such damages. 68 The term does not include a contractor, subcontractor, supplier, 69 or design professional. 70
Section
Section 558.003, Florida Statutes, is amended to 71 read: 72 558.003 Action; compliance.—A claimant may not file an 73 action subject to this
chapter without first complying with the 74 requirements of this chapter. If a claimant files an action 75 alleging a construction defect without first complying with the 76 requirements of this chapter, including the requirements under 77 s. 558.004 to provide certain disclosures and documents, on 78 timely motion by a party to the action the court shall stay the 79 action, without prejudice, and the action may not proceed until 80 the claimant has complied with such requirements.
The notice 81 requirement is not intended to interfere with an owner’s ability 82 to complete a project that has not been substantially completed. 83 The notice is not required for a project that has not reached 84 the stage of completion of the building or improvement. 85
Section 4. Subsections (9) through (15) of
section 558.004, 86 Florida Statutes, are redesignated as subsections (10) through 87
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 4 of 14 CODING: Words stricken are deletions; words underlined are additions. (16), respectively, a new subsection (9) is added to that 88 section, and subsections (1) through (6) and present subsection 89 (10) of that
section are amended, to read: 90 558.004 Notice and opportunity to repair.— 91 (1)(
a) In actions brought alleging a construction defect, 92 the claimant shall, at least 60 days before filing any action, 93 or at least 120 days before filing an action involving an 94 association representing more than 20 parcels, serve written 95 notice of claim, personally signed by the claimant, on the 96 contractor, subcontractor, supplier, or design professional, as 97 applicable, which notice shall refer to this chapter. If the 98 construction defect claim arises from work performed under a 99 contract, the written notice of claim, personally signed by the 100 claimant, must be served on the person with whom the claimant 101 contracted. 102 (
b) The notice of claim must describe in reasonable detail 103 the nature of each alleged construction defect; and, if known, 104 the damage or loss resulting from the alleged defect, if known, 105 including the cost to repair the alleged defect and any other 106 monetary damages caused by the alleged defect; and the identity 107 or report of any expert who inspected the damage or loss, as 108 well as the documents relied on by such expert.
Based upon at 109 least a visual inspection by the claimant or its agents, the 110 notice of claim must identify the location of each alleged 111 construction defect sufficiently to enable the responding 112 parties to locate the alleged defect without undue burden. The 113 time requirements in this
chapter do not begin to run until the 114 claimant has satisfied the requirements in this section. The 115 claimant has no obligation to perform destructive or other 116
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 5 of 14 CODING: Words stricken are deletions; words underlined are additions. testing for purposes of this notice. 117 (
c) The claimant shall endeavor to serve the notice of 118 claim within 15 days after discovery of an alleged defect, but 119 the failure to serve notice of claim within 15 days does not bar 120 the filing of an action, subject to s. 558.003. This subsection 121 does not preclude a claimant from filing an action sooner than 122 60 days, or 120 days as applicable, after service of written 123 notice as expressly provided in subsection (6), subsection (7), 124 or subsection (8). 125 (
d) A notice of claim served under pursuant to this
chapter 126 does shall not toll any statute of repose period under
chapter 127 95. 128
(2) Within 30 days after service of the notice of claim, or 129 within 50 days after service of the notice of claim involving an 130 association representing more than 20 parcels, the person served 131 with the notice of claim under subsection (1) is entitled to 132 perform a reasonable inspection of the property or of each unit 133 subject to the claim to assess each alleged construction defect. 134 An association’s right to access property for either maintenance 135 or repair includes the authority to grant access for the 136 inspection.
The claimant shall provide the person served with 137 notice under subsection (1) and such person’s contractors or 138 agents reasonable access to the property during normal working 139 hours to inspect the property to determine the nature and cause 140 of each alleged construction defect and the nature and extent of 141 any repairs or replacements necessary to remedy each defect. The 142 person served with notice under subsection (1) shall reasonably 143 coordinate the timing and manner of any and all inspections with 144 the claimant and any additional parties who are served a copy of 145
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 6 of 14 CODING: Words stricken are deletions; words underlined are additions. the notice of claim under subsection (3) to minimize the number 146 of inspections. The inspection may include destructive testing 147 by mutual agreement under the following reasonable terms and 148 conditions: 149 (
a) If the person served with notice under subsection (1) 150 determines that destructive testing is necessary to determine 151 the nature and cause of the alleged defects, such person shall 152 notify the claimant in writing. 153 (
b) The notice shall describe the destructive testing to be 154 performed, the person selected to do the testing, the estimated 155 anticipated damage and repairs to or restoration of the property 156 resulting from the testing, the estimated amount of time 157 necessary for the testing and to complete the repairs or 158 restoration, and the financial responsibility offered for 159 covering the costs of repairs or restoration. 160 (
c) If the claimant promptly objects to the person selected 161 to perform the destructive testing, the person served with 162 notice under subsection (1) shall provide the claimant with a 163 list of three qualified persons from which the claimant may 164 select one such person to perform the testing. The person 165 selected to perform the testing shall operate as an agent or 166 subcontractor of the person served with notice under subsection 167 (1) and shall communicate with, submit any reports to, and be 168 solely responsible to the person served with notice. 169 (
d) The testing must shall be done at a mutually agreeable 170 time. 171 (
e) The claimant or a representative of the claimant may be 172 present to observe the destructive testing. 173 (
f) The destructive testing may shall not render the 174
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 7 of 14 CODING: Words stricken are deletions; words underlined are additions. property uninhabitable. 175 (
g) There are shall be no construction lien rights under 176
part I of
chapter 713 for the destructive testing caused by a 177 person served with notice under subsection (1) or for restoring 178 the area destructively tested to the condition existing before 179 prior to testing, except to the extent the owner contracts for 180 the destructive testing or restoration. 181 182 If the claimant refuses to agree and thereafter permit 183 reasonable destructive testing, the claimant has shall have no 184 claim for damages which could have been avoided or mitigated had 185 destructive testing been allowed when requested and had a 186 feasible remedy been promptly implemented. 187
(3) Within 10 days after service of the notice of claim, or 188 within 30 days after service of the notice of claim involving an 189 association representing more than 20 parcels, the person served 190 with notice under subsection (1) must may serve a copy of the 191 notice of claim to each contractor, subcontractor, supplier, or 192 design professional whom it reasonably believes is responsible 193 for each defect specified in the notice of claim and shall note 194 the specific defect for which it believes the particular 195 contractor, subcontractor, supplier, or design professional is 196 responsible.
The notice described in this subsection must 197 describe in detail the nature of each alleged construction 198 defect; the damage or loss resulting from the alleged defect, if 199 known, including the cost to repair the alleged defect and any 200 other monetary damages caused by the alleged defect; and the 201 identity or report of any expert who inspected the damage or 202 loss, as well as the documents relied on by such expert. Such 203
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 8 of 14 CODING: Words stricken are deletions; words underlined are additions. notice may not be construed as an admission of any kind. Each 204 such contractor, subcontractor, supplier, and design 205 professional may inspect the property as provided in subsection 206 (2). 207
(4) Within 45 15 days after service of a copy of the notice 208 of claim under pursuant to subsection (3), or within 30 days 209 after service of the copy of the notice of claim involving an 210 association representing more than 20 parcels, the contractor, 211 subcontractor, supplier, or design professional must serve a 212 written response to the person who served a copy of the notice 213 of claim. The written response must include a report, if any, of 214 the scope of any inspection of the property and the findings and 215 results of the inspection.
The written response must include one 216 or more of the offers or statements specified in paragraphs 217 (5)(a)-(e), as chosen by the responding contractor, 218 subcontractor, supplier, or design professional, with all of the 219 information required for that offer or statement. 220
(5) Within 45 days after service of the notice of claim, or 221 within 75 days after service of a copy of the notice of claim 222 involving an association representing more than 20 parcels, the 223 person who was served the notice under subsection (1) must serve 224 a written response to the claimant. The response shall be served 225 to the attention of the person who signed the notice of claim, 226 unless otherwise designated in the notice of claim. The written 227 response must provide: 228 (
a) A written offer to remedy the alleged construction 229 defect at no cost to the claimant, a detailed description of the 230 proposed repairs necessary to remedy the defect, and a timetable 231 for the completion of such repairs; 232
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b) A written offer to compromise and settle the claim by 233 monetary payment, that will not obligate the person’s insurer, 234 and a timetable for making payment; 235 (
c) A written offer to compromise and settle the claim by a 236 combination of repairs and monetary payment, that will not 237 obligate the person’s insurer, that includes a detailed 238 description of the proposed repairs and a timetable for the 239 completion of such repairs and making payment; 240 (
d) A written statement that the person disputes the claim 241 and will not remedy the defect or compromise and settle the 242 claim; or 243 (
e) A written statement that a monetary payment, including 244 insurance proceeds, if any, will be determined by the person’s 245 insurer within 30 days after notification to the insurer by 246 means of serving the claim, which service shall occur at the 247 same time the claimant is notified of this settlement option, 248 which the claimant may accept or reject.
A written statement 249 under this paragraph may also include an offer under paragraph 250 (c), but such offer shall be contingent upon the claimant also 251 accepting the determination of the insurer whether to make any 252 monetary payment in addition thereto. If the insurer for the 253 person served with the claim makes no response within the 30 254 days following service, then the claimant shall be deemed to 255 have met all conditions precedent to commencing an action. 256
(6) If the person served with a notice of claim under 257 pursuant to subsection (1) disputes the claim and will neither 258 remedy the defect nor compromise and settle the claim, or does 259 not respond to the claimant’s notice of claim within the time 260 provided in subsection (5), the claimant shall serve a written 261
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 10 of 14 CODING: Words stricken are deletions; words underlined are additions. notice of such denial or failure to respond to all parties and 262 may, without further notice, proceed with an action against that 263 person for the claim described in the notice of claim. Nothing 264 in this
chapter shall be construed to preclude a partial 265 settlement or compromise of the claim as agreed to by the 266 parties and, in that event, the claimant may, without further 267 notice, proceed with an action on the unresolved portions of the 268 claim. 269 (9)(
a) A contractor, subcontractor, supplier, or design 270 professional who serves a written response to a claimant under 271 subsection (5) which includes a written offer to repair is 272 required to make payment on a judgment, order, decision, 273 verdict, finding, or settlement only after the claimant enters 274 into a contract for the performance of repairs. Such contract 275 may be for an amount that is less than the judgment, order, 276 decision, verdict, finding, or settlement.
If the contract for 277 the performance of repairs is less than the judgment, order, 278 decision, verdict, finding, or settlement, such judgment, order, 279 decision, verdict, finding, or settlement is reduced to full 280 contract price, and after the contracted work is completed, the 281 judgment, order, decision, verdict, finding, or settlement is 282 satisfied. A contractor, subcontractor, supplier, or design 283 professional may not be required to pay more than the amount of 284 the judgment, order, decision, verdict, finding, or settlement. 285 (
b) A claimant must enter into a contract for the 286 performance of repairs within 90 days after the judgment, order, 287 decision, verdict, finding, or settlement. 288 (
c) After the claimant enters into a contract for the 289 performance of repairs, the contractor, subcontractor, supplier, 290
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 11 of 14 CODING: Words stricken are deletions; words underlined are additions. or design professional shall pay: 291 1. The full contract price as determined under paragraph 292 (
a) to the party performing such repairs. If the contractor, 293 subcontractor, supplier, or design professional pays the full 294 contract price before the repair work is completed, the party 295 performing such repairs must hold such payment in trust pending 296 the claimant’s written approval for the release of funds; or 297 2. A percentage of the full contract price necessary to 298 begin such repairs. Thereafter, the contractor, subcontractor, 299 supplier, or design professional shall make payments to the 300 party performing the repairs as the work is performed and the 301 expenses are incurred. 302 (
d) The contractor, subcontractor, supplier, or design 303 professional may not require the claimant to make an advance 304 payment for the repair work. 305 (
e) A contractor, subcontractor, supplier, or design 306 professional making payments to a party performing repairs under 307 this subsection is not liable for the repair work that is 308 performed or for making proper payments under
chapter 713. 309 (
f) If payments are held in trust under subparagraph (c)1., 310 the party performing the repairs may not release the last 10 311 percent of the payment until he or she executes a signed 312 affidavit attesting that the contracted work is completed and 313 was performed without set-off or reduction and serves such 314 affidavit on the claimant and the contractor, subcontractor, 315 supplier, or design professional in accordance with s. 713.18. 316 (11)
(10) A claimant’s service of the written notice of 317 claim under subsection (1) tolls the applicable statute of 318 limitations relating to any person covered by this
chapter and 319
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 12 of 14 CODING: Words stricken are deletions; words underlined are additions. any bond surety until the later of: 320 (
a) Ninety days, or 120 days, as applicable, after service 321 of the notice of claim pursuant to subsection (1); or 322 (
b) Thirty days after the end of the repair period or 323 payment period stated in the offer, if the claimant has accepted 324 the offer. By stipulation of the parties, the period may be 325 extended and the statute of limitations is tolled during the 326 extension. 327
Section
Section 558.0045, Florida Statutes, is created 328 to read: 329 558.0045 Construction defect litigation; special 330 requirements.— 331
(1) Notwithstanding s. 558.005, this
section applies to all 332 actions involving construction defects, including civil suits 333 and arbitrations. 334
(2) In any action involving construction defects, the 335 parties shall participate in mandatory nonbinding arbitration, 336 conducted in accordance with
chapter 682. Mandatory nonbinding 337 arbitration shall occur after all parties have been joined in 338 the action, but no later than 180 days after the civil suit is 339 filed. However, if a party is joined in the action after 180 340 days, such party must still participate in mandatory nonbinding 341 arbitration as set forth in this section. 342
(3) If the arbitrator finds in favor of a claimant, the 343 arbitrator shall include in the award a detailed description of 344 the nature of the defect and the monetary amount awarded against 345 each party separately, including all of the following: 346 (
a) The monetary amount of the award attributable to 347 repairing or replacing the party’s defective work. 348
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b) The monetary amount of the award attributable to 349 repairing or replacing other nondefective property damaged by 350 the party’s defective work. 351 (
c) The monetary amount of the award attributable to other 352 damages being awarded against the party. 353
(4) Any party to the arbitration proceeding may agree in 354 writing, either before or up to 30 days after the arbitration 355 award is entered, to be bound by the arbitration award. Any 356 party who does not agree to be bound by the arbitration award 357 may proceed with a civil action on the unresolved portions of 358 the claim. 359
(5) For any party who does not agree to be bound by the 360 arbitration award and who proceeds to trial in the action, the 361 jury verdict and final judgment shall include a detailed 362 description of the nature of the defect and the monetary amount 363 awarded against each party separately, including all of the 364 following: 365 (
a) The monetary amount of the award attributable to 366 repairing or replacing the party’s defective work. 367 (
b) The monetary amount of the award attributable to 368 repairing or replacing other nondefective property damaged by 369 the party’s defective work. 370 (
c) The monetary amount of the award attributable to other 371 damages being awarded against the party. 372
(6) This
section does not preclude a partial settlement or 373 compromise of the claim as agreed to by the parties, either 374 before or after the arbitration. 375
(7) This
section does not affect the rights and duties of 376 insureds and insurance carriers under their policies. However, 377
Florida Senate - 2020 SB 1488 23-00926-20 20201488__ Page 14 of 14 CODING: Words stricken are deletions; words underlined are additions. any defense, with or without a reservation of rights, provided 378 by a carrier to a party asserting additional insured status or 379 indemnitee status in proceedings under this
chapter and in any 380 subsequent civil proceeding shall only be as to the scope of 381 work of the named insured of the carrier. Such defense shall not 382 extend to defending the additional insured or indemnitee with 383 regard to the work of other construction parties or trades. 384