Impact of Chapter 558

Chapter 558, Florida’s Construction Defect Statute, has been in place since 2003 and many contractors have received claim notices issued pursuant to this statute. While bothersome, it has provided homeowners, contractors, design professionals and others who participate in the construction process a mechanism to try to resolve any claims of alleged defects prior to suit being filed.

You should know that recent changes in this law require claimants to be more detailed in setting out the alleged defects and to also include the insurance companies of the contractors and designers in each notice. Other revisions involve the broadening of the term “completion” to now include issuance of a temporary certificate of occupancy, the need to note the location of any alleged defect, and the submission of documentary evidence in support of the claimed defect (along with the right of a party to assert any privilege that would prevent such disclosure).

All in all, these changes do a good job of reinforcing the intent behind the statute – resolution versus litigation of any defect claim.

Nuances of Florida Statute Chapter 558

Though well-intentioned as a means to resolve construction defect disputes prior to litigation, the application of Florida Statute Chapter 558’s procedures can be unwieldy in practice, with cases interpreting its provisions emanating from Florida’s courts in a piecemeal fashion. Abatement Pending a Claimant’s Compliance with Chapter 558 May Be Futile. Under Chapter 558 a claimant must serve written notice of a claim on the applicable contractor, subcontractor, supplier or design professional at least sixty (60) days before filing a construction defect action. If the claimant fails to do so and proceeds with a legal action, the case may be abated pending compliance with the Chapter’s provisions.

Non-Compliance with Chapter 558 Does Not Preclude a Plaintiff from Raising Affirmative Defenses

If an owner terminates a construction contract without a legally sufficient reason or prevents the contractor from completing the contract, the measure of the owner’s damages is generally the reasonable cost of making the work conform to the contract. Under such a circumstance, the owner can use the reasonable cost for doing so as a setoff for any sums it may owe the contractor arising from the owner’s breach of contract. This right of setoff exists even if the owner never complied with Chapter 558.

Specify the Defect and the Damages it Has Caused

Under Chapter 558 a notice of claim must describe the claim in reasonable detail sufficient to determine the general nature of each alleged construction defect and also must contain a description of the damage or loss resulting from the defect, if known. If a claimant fails to specifically describe the defect and the damages arising from that defect in its original notice of claim, and continues to fail to describe these items in its pleadings, it may be barred from presenting any evidence relating to non-noticed defects and damages.

For instance, where a plaintiff made a claim relating to missing lightweight concrete in a roof but did not indicate that it would seek recovery for additional roof defects or for the costs of replacing the roof, the plaintiff was not allowed to present evidence as to other defects on the roof and could not seek damages for the replacement of the roof.

Owner-Contractors Seeking to Make a Claim for a Construction Defect are Outside the Scope of Chapter 558

An entity that is both the property owner and the contractor for a condominium project is not a “claimant” for purposes of Chapter 558 and as such does not have to comply with Chapter 558 in the event it wishes to make a claim for construction defects.

The Rise of the 558 Notice

Contractors continue to see an increase in the number of 558 notices they’re receiving.  These are those demands made under Chapter 558 of Florida Statutes setting forth pre-suit procedures on construction defect cases.  Even though the law has been in place for some time, there are few decisions available explaining how the statute really works, especially if someone doesn’t strictly comply.

When homeowners, unhappy with the quality of work done, withheld final payment from their contractor, they were sued.  One issue before the court was whether the contractor was afforded the opportunity to repair what the homeowners found to be unacceptable.The homeowners did give the contractor the required 558 notice but then denied the contractor access to the interior of the residence so he might cure the defects.  The statute requires a claimant, in this case the homeowner, who receives a timely settlement offer to either accept or reject it within 45 days.  If suit is filed without first accepting or rejecting the offer, the court must abate the suit upon a timely motion being filed.  While the homeowners’ failure to allow the contractor access could be interpreted as a rejection of the contractor’s offer to repair, the court in this case did not take away the homeowners’ right to seek a set-off for the value of any repairs needed to remedy the contractor’s poor workmanship – a seemingly unfair result which calls into question the real effectiveness of this statute.  That said, it remains clear that contractors need to be especially careful to continue to comply with all stated deadlines and do their part in adhering to this law.