Dealing with Construction Defects at Champlain South Tower Condominium

by | Jul 2, 2021 | Contracts, Defective Work

Dealing with Construction DefectsAs the nightmare of the Surfside building collapse sinks in, folks are beginning to explore who may be responsible for repairing and replacing the extensive damage.

The answer, as with many legal questions, is, “it depends.” Historically, the condominium purchaser would look to the common law warranty of fitness and merchantability for relief, specifically alleging as grounds that the unit does not meet building and zoning codes or that the construction was not completed in a workmanlike fashion, that the plans and specifications were not fit for their intended use or simply that the premises are unfit and uninhabitable. However, the statutory implied warranty of fitness and merchantability, which runs from the developer, contractor and subcontractors to the purchaser of the unit, remains one of the most powerful legal tools.

Implied Warranties

In Florida, the  warranty of fitness as to the work performed and supplied by the contractor, subcontractors and suppliers only runs for a period of three years from the completion of construction.  The warranty  of fitness and merchantability for the unit’s intended purposes running from the developer on the other hand extends for three years after completion of each condominium building or for one year after control of the condominium association has been transferred to unit  owners other than the developer, whichever occurs last.  This period cannot exceed five years in any event, and clearly the age of the Champlain South Tower will likely preclude these sort of warranties.

Express Warranties

It should be noted that many developers may attempt to obtain an advantage by providing specific warranties, thus creating a selling point and greater incentive for their prospects.  Under such circumstances, the developer may extend or broaden the scope of its common law and statutory warranties.  These express warranties are binding on the developer and create a clear route for unit purchasers seeking to capitalize on the developer’s greater exposure to liability when construction elements go awry.

Negligence

In addition to the common law and statutory warranties, there are other alternative causes of action available to condominium unit purchasers who find themselves struggling with property defects.  One is negligence.  Under this theory, even remote purchasers have standing to sue the original contractor for any failure to meet the standard of reasonable care to safeguard those who may foreseeably be placed in peril.  Although a greater degree of  proof is required to prevail in a negligence action in contrast to a breach of warranty claim, negligence claims have distinct advantages for the unit purchaser.  In such actions, the statute of limitations is usually longer and more flexible, allowing more time for discovery of any defect.  Additionally, an action in negligence may attach to design professionals such as architects and engineers, against whom a warranty action would not customarily stand, given their lack of privity of contract with the purchaser.  But the design professional will be held to a duty of reasonable care as to design.

Interestingly, while an action in negligence usually cannot be maintained against a contractor after the contractor has completed its work, turned the unit over to the owner, and the unit has been accepted by the owner, courts have recognized an exception where the defect is latent and cannot be discovered by a reasonably careful inspection.  The statute of limitations for such latent defects does not begin to run until the defect is discovered.  This has the practical effect of extending the life of a defect clause (where the warranty claim may have lapsed) by allowing a negligence action to pick up where warranty is no longer available.  However, actions for latent defects generally must be commenced within ten years after the date of actual possession by the owner, or the potential claim expires.  A word of caution, however – the statute of limitations for such negligence involving latent defects begins to run when the defect is discovered or should have been discovered with reasonable diligence.  This can shorten the life of a negligence claim considerably.

Fraudulent or Negligent Misrepresentation

Additionally, the developer can be held liable for construction defects based on breach of contract or misrepresentation.  When the contractor fails to deliver something promised within the contract, it is in breach.  When it misrepresents what it can actually deliver, it is guilty of falsification.  Misrepresentation is broader than breach of contract in that it can be either intentional or negligent in character and can take the form of negligent misrepresentation, active concealment or an intentional omission of material facts.

When no one is prepared to immediately accept fault for a given construction defect, the unit owner inevitably turns to litigation.  The unit owner or the owners collectively may not limit their action to the developer, choosing rather to include all involved contractors,  subcontractors and suppliers.  The rationale in suing all potentially at fault parties is to circumvent the risk that the statute of limitations may prevent future suits against any one of these parties during the pendency of the suit against the developer.  These usual suspects are often joined by various other co-defendants as the circumstances may dictate.  Successor developers, the corporate parent of a developer corporation, officers of a developer corporation, design professionals, inspectors, and the individual sellers of pre-owned units may unhappily find themselves in these construction defect lawsuits.

Defenses

Once claims are made, they are predictably countered by allegations that the condominium association or unit owner failed to perform routine maintenance or that the contractor actually adhered to applicable building codes and standards in effect at the time of construction. Contractors and developers will argue that the building is in substantial compliance with all contractual requirements and that any deviation from plans and specifications  are de minimis and do not affect the value of the unit.  Claimants can expect to be accused of failing to mitigate their damages, or, in a negligence action, that they are comparatively negligent in failing to inspect and/or maintain the premises.

Determining fault is neither clear cut nor easy especially in this situation, so all parties involved in the development, construction, sale and purchase of each condominium unit at Champlain South Tower should anticipate the worst.

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