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