Sanjay Kurian | Construction Law Authority

SB 1196 moving forward

March 6, 2012

As noted previously, there are a couple of bills (HB 1013 and SB 1196) pending before the Florida legislature involving HOA warranties which would be devastating for HOAs with common area defects. These bills 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. In short, the bills will result in homeowners being stuck with shoddy common areas for which they have no recourse. The House version of the bill (HB 1013) has already passed the House of Representatives. The Senate version (SB 1196) had been “stuck” in the Budget Committee. If SB 1196 had remained in Budget, it would have died in committee. However, yesterday SB 1196 was removed from Budget and could be heard by the full Senate this week. Therefore, its VERY IMPORTANT that...

Myths about Common Law Implied Warranties and the effect of the anti-Maronda Legislation

February 2, 2012

Sanjay Kurian

Legislation

On Tuesday I had the pleasure of being in Tallahassee and testifying at the House Civil Justice Subcommittee meeting against HB 1013 (the House equivalent of SB 1196). The Senate Judiciary Committee meeting scheduled for that afternoon was canceled and has been rolled over to next week. Although my opinion on this legislation can be found here, here, here, here and here, I was interested in hearing the remarks of the Bill's sponsor and others in support of the bill. After hearing those comments and having subsequent discussions with individuals supporting the bill it became clear to me that there existed several myths about common law implied warranties and the need for legislative action which needed to be addressed. Myth 1: The legislature must act immediately. This push by certain legislators to pass this bill by the end of this session ignores that the Supreme Court heard oral argument on the Lakeview case in the first week of December. The issue...

SB 1196 (Anti-Maronda) heading to Senate Judiciary Committee

January 27, 2012

Sanjay Kurian

Legislation

With the legislative session in full swing it appears that some legislators are pushing SB 1196 and its companion HB 1013, and are determined to wipe out common law implied warranties relating to residential construction. SB 1196 is sponsored by Senator Michael S. "Mike" Bennett (R), and HB 1013 is sponsored by Representative Frank Artiles(R). These bills are an overreaction to the recent opinion in Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So. 3d 902 (Fla. 5th DCA 2010). As noted previously, and also here, here and here, these bills: - -Would negatively impact homeowner associations, condominiums, co-ops, timeshares and mobile home parks as the term “home” is an all-encompassing term. - -Ignores the fact that most new residential dwellings are built in planned communities - -Expose homeowners to liability to repair defective construction and design for which they have no recourse - -Homeowners who fail to pay their assessments for these repairs can have their homes foreclosed upon - -Will result in...

SB 1196 amendment

January 25, 2012

Sanjay Kurian

Legislation

As noted previously, SB 1196 (regarding common area common law implied warranties) was considered by the Community Affairs committee of the Florida Senate. The committee passed the committee substitute bill which can be read here. The next step will be consideration by the senate judiciary committee but that hearing has not yet been set. The amendment to the bill does 2 primary things. First, it removes the definition of habitability that was previously included. Given that the original definition limited habitability to situations where residents could not live free from structural defects likely to cause significant harm to the health and safety or persons, this merely removes a definition not found anywhere else in the law. Second, the amendment purports to not alter or limit causes of action which may exist in contract, tort or statute. This is completely illusory. Most, if not all, purchase contracts disclaim any and all warranties and causes of action other than statutory ones which...

Common Law Implied Warranties and SB 1196

January 19, 2012

Sanjay Kurian

Cases, Legislation

With the legislative session in full swing it appears that SB 1196 and its companion HB 1013, are being pushed to wipe out common law implied warranties relating to residential construction. These bills are reaction to the recent opinion in Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So. 3d 902 (Fla. 5th DCA 2010). As noted previously, these bills: - - would negatively impact homeowner associations, condominiums, co-ops, timeshares and mobile home parks as the term “home” is an all-encompassing term. - - Ignores the fact that most new residential dwellings are built in planned communities - - Expose homeowners to liability to repair defective construction and design for which they have no recourse - - Homeowners who fail to pay their assessments for these repairs can have their homes foreclosed upon - - Will result in homeowners being stuck with shoddy construction with no remedy SB 1196 has been noticed for public hearing before the community affairs committee on Monday January 23, 2012, at 10am,...

Common Law Implied Warranties and Strict Liability

January 4, 2012

Sanjay Kurian

Cases, Legislation

As the new year begins, and the legislative session draws near, the issue of common law implied warranties and the recent opinion in Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So. 3d 902 (Fla. 5th DCA 2010), remain on the legislative agenda. Concerns are being raised as to whether Maronda creates a cause of action for “strict liability” against developers with regard to construction defect claims for improvements to subdivision common areas. For the reasons below it is my opinion that it does not and that my prior analysis as to why SB 1196 is a bad bill for homeowners remains accurate. Under the existing case law, an implied warranty of fitness and merchantability: - extends to the purchase of new homes, Gable v. Silver, 258 So. 2d 11 (Fla. 4th DCA 1972); - means that a home will be constructed in accordance with the specifications contained in the building plans filed with and approved by...

Legislative Proposal Could Wipe Out Common Area Warranties

December 14, 2011

Sanjay Kurian

Legislation

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...

Construction Contracting for the Owner – Essential Terms of construction contracts

June 30, 2011

Sanjay Kurian

Contracts

I wanted to address key terms for any contruction contract. Although some of these may seem mind numbingly obvious, I have seen contracts over the years that failed to address very critical points. 1. Scope of Work - What are you trying to get done? For more detail go here. 2. Contract Price - What is the price and how do we determine that? It depends on the type of contract. Does the price include permitting, bonding or additional insurance? 3. Start Date and End Date - When do you want the work to start? When should it be completed? 4. Insurance - How much and who has to carry it? 5. Indeminfication - Who has to hold who harmless? 6. Dispute Resolution - Are you agreeing to arbitration or litigation in the case of a dispute? Which disputes are subject to these provisions? What jurisdiction will these disputes be resolved in? Does the prevailing party get their legal fees back?...

Construction Contracting for the Owner – Types of contracts

June 26, 2011

Sanjay Kurian

Contracts

There are several types of contracts which are used in between owners and contractors. The primary ones are lump sum contracts, unit price contracts, time and materials, construction manager and design-build.

Lump Sum:

A lump sum contract is the most basic agreement between a contractor and owner. The contractor agrees to provide specified services for a specific price. The owner agrees to pay the price upon completion of the work or according to an agreed payment schedule. T lump sum includes the costs of labor and materials and the contractor’s overhead and profit. The benefits of a lump sum contract for the owner are primarily that the costs are known at the outset of the project and the contractor has the risk if additional materials or time is needed.

Unit Price:

In a unit price contract a fixed price is established for each unit of work. A common example for condominium associations is a unit price for cubic feet of concrete repair on a balcony renovation project. This is useful as the price is set for the that unit of work. Like a lump sum contract, the contractor is paid an agreed upon price, regardless of the actual cost to do the work. Unlike a lump sum contract the agreed upon price is usually for a small component of the work and not the entire project so the final cost may not be known at outset since the contract quantities at bid time are only estimates. Any contract for cost plus should require the contractor to keep careful records so as to be able to show quantities.

Time and Materials:

In a time and materials contract the contractor charges an hourly rate for labor, and there can be a certain percentage added to the materials and labor for profit. The perceived benefit for the owner is that they are not paying for any fluff that a contractor may build into the lump sum, and contractors are ensured that they will a fair profit. However, this contract shifts the price risks completely from the contractor to the owner. In the absence of checks and balances for the types of materials used and the actual time spent, including a guaranteed maximum price the owner could be giving the contractor a blank check.

Potential Settlement of a Chinese Drywall Case

June 14, 2011

Sanjay Kurian

News

Per today's Tampa Tribune Online: "A Miami-based supplier of tainted Chinese drywall agreed in a court filing today to a $55 million settlement of claims that the corrosive product damaged homes, all or nearly all of them in Florida. The proposed settlement, which requires approval from U.S. District Judge Eldon Fallon in New Orleans, would resolve claims by thousands of plaintiffs against Banner Supply Co., several related companies and Banner's insurers." The full article can be found here. As noted in the article, the deal still has to be approved by the court and until that happens all of this is tentative. However, this may be a good step in these cases being resolved and homeowners being able to recoup some of their damages. Obviously this is not the end of this legal chase as the parties making payment will be seeking to recover from the suppliers of the chinese drywall. Although settlement of this one case...