Overview of Florida’s Ch. 558 Process for Developers
Construction problems, such as design defects, poor workmanship, code violations and the like could arise after any construction project, and may signal the beginning of a construction defects claim.
Chapter 558, Fla. Stats. is Florida’s pre-suit notice and right to cure procedure, which applies before property owners assert a claim for damages against a developer, contractor, subcontractor, supplier, or design professional for construction and design defects or deficiencies. Chapter 558 requires a series of notices, inspections, and opportunities to cure construction defects before an owner/claimant may sue for defects. Developers should be mindful that Chapter 558 includes in its definition of a “contractor” any person legally engaged in the business of developing real property.
As of October 1, 2009 the Chapter 558 pre-suit notice provisions automatically apply to all new construction contracts, unless the procedure is expressly waived. Once a developer has received a written notice of claim for construction defects, the developer should contact its attorney to determine its next course of action. Once it has been determined that Chapter 558 applies to the claim, the developer is encouraged to provide all potentially responsible parties, such as the design professionals, contractors and subcontractors, with a written “secondary notice of claim” of any alleged defects before the expiration of the time limits imposed by Chapter 558, Fla. Stats.
After receiving the owner’s Notice of Claim, the developer may schedule and attend an inspection with the owner, and/or its attorney, engineer or design consultant, to observe the conditions that comprise the owner’s Chapter 558 construction or design defect claims. Destructive testing of the premises is also allowed via developer’s written request and mutual agreement with the owner. If testing is desired, the developer must describe who will be performing it, the anticipated damage, and the time needed to perform the test. The developer should also identify who will perform any restoration necessitated by the testing and who will cover the cost of those repairs.
The developer should also send a written response to the owner within specific statutory timeframes, either disputing the claim, or providing the owner with: (i) repairs of the alleged defects, (ii) a monetary settlement, which may include insurance proceeds, or (iii) some combination of repairs and money, along with a timetable for making payments and/or repairs. If the developer fails to provide a timely response to the owner’s claim, the owner is free to deem the lack of response a rejection of its claim, and may commence litigation. Moreover, before it can file suit, the owner must respond to the developer’s offer within the specified statutory timeframes.
Similarly, the recipients of the developer’s secondary notice of claim are also required to respond to the developer, accepting or disputing the alleged claims within specific statutory timeframes.
The developer and owner are free to extend the statutory timeframes or even waive the statutory requirements altogether by written agreement. For this reason, developers are advised to document any time extensions or waivers which have been provided by the owner. This becomes especially important where an owner files suit before fully complying with the Chapter 558 notice procedure. Depending on the circumstances, the developer may have a basis to stay the owner’s construction defect litigation until such compliance is achieved.