This past summer, the Florida Supreme Court issued an opinion which directly impacts the relationship between homebuyers, homeowners associations, residential developers and builders. The opinion seeks to empower homeowners associations and places the burden to discover and prevent defects on developers and builders rather than innocent homebuyers.
Lakeview Reserve Homeowner's Association sued Maronda Homes (the developer) for breach of the implied warranties of merchantability, fitness and habitability (these warranties serve to guarantee the home is reasonably fit for the general purpose for which it was sold) after discovering a number of construction defects within the subdivision's roadways, drainage system, retention ponds and underground pipes.
The Florida Supreme Court made two very important determinations:
First, the Court held that the implied warranties of fitness, habitability and merchantability apply not only to the individual home itself, but extend to the common area infrastructure improvements that provide essential services for the habitability of the homes (it doesn't matter whether they are actually attached to the home itself). Services which merely provide convenience or aesthetic beauty are non-essential services and thus, are not covered by the implied warranties.
- Examples of essential services: roads used for entering and exiting the subdivision, drainage systems to divert flooding, retention ponds to correct water flow damages, and underground pipes (storm water and sanitary pipes) which are necessary for living accommodations.
- Examples of non-essential services: landscaping, sprinkler systems, recreational facilities, and security systems.
Second, the Court held that homeowners associations have the right to sue for breach of the implied warranties of fitness, habitability and merchantability on behalf of the individual homeowners.
Due to the continuous growth of new developments in Florida, as well as the vast number of relatively new developments already in existence, the Florida Supreme Court's decision will no doubt have a significant impact on the residential construction market. The Court's opinion is a big win for homebuyers and homeowners associations, as they can now hold the developers and builders responsible for common area defects and the burden of fixing those defects will fall on the shoulders of the developer and builders rather than innocent homebuyers. Developers and builders will need to be extra-vigilant during the construction process, as they now bear increased responsibility to provide high quality workmanship and to prevent the occurrence of construction defects.