Chapter 558 Offers Opportunity to Resolve

CHAPTER 558 OFFERS OPPORTUNITY TO RESOLVE
DISPUTES OVER CONSTRUCTION DEFECTS
BEFORE LEGAL ACTION IS COMMENCED

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The Florida Legislature has found that an alternative method to resolve construction disputes would be helpful to reduce the need for litigation and to protect the rights of property owners. As such, Chapter 558, Florida Statutes, was created to provide contractors, subcontractors, suppliers, or design professionals with an opportunity to resolve a claim for construction defects prior to resorting to further legal process.

Chapter 558, Florida Statutes, provides certain requirements before a party seeking damages resulting from construction defects can file an "Action" to recover for those damages. The term Action includes a civil action (i.e. a lawsuit filed in a court of law) and an arbitration proceeding. If an Action is brought without first complying with the requirements of this chapter, the Court must stay the action. The action cannot proceed until the requirements of Chapter 558 have been met.

Before bringing an action for Construction Defects on a project that is completed, the Claimant, which includes a Property Owner or a Condominium/Homeowner's Association, must serve a written Notice of Claim on the party allegedly liable for the construction defects. The Notice of Claim must be served on the Contractor, Subcontractor, Supplier, or Design Professional, as applicable, at least 60 days before filing an action. If the claim involves an association representing more than 20 parcels, the Notice of Claim must be served at least 120 days before filing the Action.

The statute defines "Construction Defects" as a deficiency in, or arising out of, the design, specifications, surveying, planning, supervision, observation of construction, or construction, repair, alteration, or remodeling of real property resulting from: (a) defective materials, products, or components used in the construction; (b) a violation of the applicable codes in effect at the time of construction; (c) a failure of the design of real property to meet the applicable professional standards of care at the time of governmental approval; or (d) a failure to construct or remodel real property in accordance with accepted trade standards for good and workmanlike construction at the time of construction.

The Notice of Claim must describe each alleged Construction Defect in reasonable detail, sufficient for the recipient of the Notice of Claim to determine the general nature of each alleged defect. The person receiving the Notice of Claim is entitled to reasonable access to the property to perform a reasonable inspection of the property in order to determine the nature and cause of each alleged construction defect and to determine the extent of any repairs or replacements necessary to remedy each defect. The inspection may include destructive testing by mutual agreement. This inspection may occur within 30 days after service of the Notice of Claim, or within 50 days after service, if the matter involves an Association representing more than 20 parcels.

The person receiving the Notice of Claim may, within 10 days after service of the Notice of Claim, or within 30 days after service, if the matter involves an Association representing more than 20 parcels, serve a copy of the Notice of Claim to each Contractor, Subcontractor, Supplier, or Design Professional whom it believes is responsible for each defect specified in the Notice of Claim.

The person receiving the Notice of Claim must serve a written response to the Claimant within 45 days after service of the Notice of Claim, or within 75 days if the matter involves an Association representing more than 20 parcels. The written response must provide either: (a) A written offer to remedy the alleged construction defect at no cost to the claimant; (b) A written offer to settle the claim by monetary payment; (c) A written offer to settle the claim by a combination of repairs and monetary payment; (d) A written statement that the person disputes the claim and will not remedy the defect or settle the claim; or (e) A written statement that a monetary payment, including insurance proceeds, if any, will be determined by the person's insurer within 30 days after notification to the insurer, which the Claimant may accept or reject.

It is important to note that, as with any settlement discussions, any settlement offer made pursuant to this statute is not admissible in any legal action brought subsequently.

When a Contractor, Subcontractor, Supplier, or Design Professional receives a Notice of Claim pursuant to Chapter 558, Florida Statutes, it presents a good opportunity to try to resolve a claim before a lawsuit is filed. Often times, contractors and their subcontractors may be willing to perform some remedial work, or give a credit, in order to save the time and expense of litigation (not to mention, it also builds customer goodwill).