Understanding Construction Warranties
The Florida Supreme Court recently decided Maronda Homes v. Lakeview Reserve, a construction case based on breach of implied warranties of fitness and habitability. Lakeview Reserve Homeowners Association sued over defects in common areas, roadways, drainage systems, underground pipes, and retention ponds. At issue was whether the roads and drainage systems, “offsite improvements”, were so integral to the building so as to affect its habitability. Although the improvements were not attached to the building units, the Court found they provide “essential services” that directly impact the homes’ habitability. So long as they are not merely for convenience or aesthetics (such as landscaping), defects in offsite improvements can make a building uninhabitable.
This case was a win for homeowners associations, but it may leave some Florida contractors worried as warranty claims are common but often misunderstood.
Generally, a construction warranty is the seller’s or builder’s promise that what was built was built right, and is fit for its intended purpose. Construction warranties can be express or implied. Express warranties are contained in the contract and typically promise that the work is free from defects and conforms to contract documents. Implied warranties are either warranties implied by law or from the actions of the parties. Common implied warranties include:
WARRANTY OF HABITABILITY
The seller or builder of a home promises that the structure is suitable for living. Some examples of conditions that can make a home “uninhabitable” include defective septic systems and faulty foundations.
WARRANTY TO CONSTRUCT IN GOOD, WORKMANLIKE MANNER
The contractor or builder agrees to perform work according to appropriate professional standards. The warranty applies to the quality of services provided, but does not apply to the quality of the materials themselves.
Know that in Florida there are distinct warranties which apply to condominiums and homeowners’ associations. And like all things legal, one always needs to be careful in applying any one definition to a particular set of circumstances.