Legislative Proposal Could Wipe Out Common Area Warranties

Reacting to the Fifth District Court of Appeal’s decision in Lakeview Reserve Homeowners v. Maronda Homes, 48 So. 3d 902 (Fla. 5th DCA 2010), discussed here, the legislature may consider a bill next year to prohibit implied warranties of fitness and merchantability from applying to streets, roads, sidewalks, drainage areas, utilities, or any other improvements that are not located on or under the lot on which a new home is constructed. 

Senate Bill 1196 is the legislative bill that was proposed and can be found here.  The Lakeview case was appealed to the Florida Supreme Court and the oral argument was made just last week but the legislature may be moving forward without waiting for the court to rule.

The bill is a bad deal for homeowner’s for a number of reasons. 

First, the proposed statute is not limited to Chapter 720 homeowner’s associations. As worded the limitations would negatively impact homeowner associations, condominiums, co-ops, timeshares and mobile home parks as the term “home” is an all-encompassing term.

Second, despite the concern for the fragile real estate market, the reality is that most new residential construction occurs in planned communities. These planned communities may be a single subdivision with roads, sidewalks, drainage and sewers to larger master communities with multiple subdivisions, containing hundreds or thousands of lots and homes with appurtenant roadways, underground piping, retention ponds, drainage areas and utilities. These complex arrangements are now common for the development of land and used extensively for the purpose of marketing and selling residential dwellings. These common area improvements are necessary in order to utilize the residential dwellings for their intended purpose. The roadways, retention ponds, underground pipes, and drainage of such communities are part and parcel of the sale of the individual residential dwellings. In short, these “off-site improvements” as the bill terms them, are part and parcel of the modern sale and purchase of a residential dwelling in Florida.

Third, defects and deficiencies in the “off-site improvements” can expose the homeowners to liability. Example, if the water management district determines that the property is out-of-compliance it is the owners who will incur the cost of those repairs with no recourse against the developer, design professionals or contractors who designed or built the system.

Fourth, under chapter 720, owners are required to be members of the homeowner association. There is no way to opt out of membership. If there are defects to the common areas then the association will incur those repair costs and assess the members for those costs and if those assessments are not paid the homes could be foreclosed. In short, someone could lose their home for not paying to repair a common area that, under the proposed bill, would be untethered to the home itself, if such common areas are built or designed improperly.

Fifth, As can be deduced from the above, SB 1196 is anti-consumer, anti-homeowner and will result in homeowners being stuck with shoddy common areas for which they have no recourse.