Florida Legislature Considering Eliminating All Construction Liens/Payment Bonds

The Florida Legislature is considering eliminating all construction liens for those without a direct contract with the Owner. Also proposed is eliminating payment bonds. This is nuts. Suppliers and Subcontractors price their labor services and materials based on the knowledge that their extension of credit is secured by their lien rights. If that protection is eliminated, prices will climb. For example, would a bank lend $300k at 3.65% if they had no lien on your house for collateral? Rep. Rodriguez from Miami has filed House Bill 897, companion Senate Bill SB 1422, was filed by Sen. Flores from Miami.

Please let your representatives know your thoughts.

Discussing Construction or Design Defects in HOA or Condo Meeting Minutes—Just Don’t Do it.

In almost every construction defect case, defense counsel will explore whether or not the Statute of Limitations for suit has passed. The operative statutory provision is § 95.11(3)(c), Fla. Stat. The defense will invariably argue that the plaintiff knew or reasonably should have known about the existence of a cause of action more than four years prior to the commencement of litigation. The focus of inquiry regarding at what point a plaintiff knows or should have known about the existence of a cause of action should depend on all the facts and circumstances, not just the existence of a few isolated leaks recorded in the Board’s Minutes by the condominium’s management company. However, one way for a court or arbitrator to clear a crowded calendar is to accept, at face value, Minutes describing isolated leaks as having triggered the running of the Statute of Limitations.

Typically, all the management company representative, who prepares the Minutes, is trying to do is “be transparent.” No management company wants his or her Association Board to be accused of being less than transparent about what’s really going on. That is a misplaced concern when compared to the risks of triggering the running of the Statute of Limitations. Board Minutes containing entries of a few isolated leaks are precisely what defense counsel will use to establish that more than four years have passed between the date of those Minutes and the date of commencement of litigation. When plaintiff’s counsel argues that there are factual disputes on every significant issue bearing on the accrual of the Statute of Limitations, all the defense does is publish to the Court or Arbitrator, the Association’s own Minutes. Those Board Minutes are clear, concise, and are almost always thoughtlessly approved, without any consideration of the fact that the Association may have just shot itself in both feet and possibly lost the right to bring a construction design or defect claim.

The management company representative, who drafts the Minutes, may actually know nothing about the number of leaks, their location, cause, or cure. A lack of real knowledge may likely be considered just background noise by a busy Arbitrator or Judge. The Board’s nicely typed Minutes, noting the issue was summarily “discussed and approved by the Board, is unfortunately more impressive than the actual facts. Why is that? Regrettably what actually happened is far more complicated than the simple and clear record set forth in the Minutes. A thorough deposition of the management representative’s actual lack of real knowledge of leaks may have less persuasive value than a poorly drafted set of condo meeting Minutes. The fact that the actual number of leaks, their location, cause, or cure are all unknown may well get lost in the vast hordes of documents in a multi party suit. Such Minutes become powerful defense evidence of plaintiff’s “knowledge” about the existence of a cause of action. Even more devastating for the Plaintiff occurs when the Minutes, refer to the Board’s discussion with engineers and attorneys. The well-intended plaintiff’s attorney and the engineer who does only plaintiffs work visit the project. While both, may have only been looking for work, the fact that they are discussed in the Minutes is portrayed as knowledge of the existence of a cause of action. The engineer and potential counsel may actually know nothing of substance. A five-minute walk around by the “expert” who naturally exaggerates the potential problem, but offers only to do expensive destructive testing, should never be discussed in HOA/ Condo meeting Minutes.

Let us remind ourselves, what drives lengthy Minutes is a fear about a “lack of transparency.”  Owners sometimes think that Board members are snobby and overly secretive. When new Board members join, their first instinct may be to include as much information in the Minutes as possible, so that there is complete “transparency”. Owners don’t have to know exactly what transpired at the Board meeting. They could have attended or simply asked questions. Super detailed Minutes sound like a noble goal.  Just don’t do it. Such excessive discussion in the Board’s meeting Minutes is very risky, and can unwittingly expose the Association to the loss of a cause of action.

To provide an example, let’s say someone notes in the Minutes: “There are areas on the roof door entrance threshold that permit blowing rain to enter in. This could present a water intrusion problem. Let’s get a lawyer and an engineer to look into it.” When the Board is confronted with a huge proposed contract for destructive investigation and a 40% Plaintiff’s contingent fee, the proposals are rejected because the problem has been largely resolved. Nevertheless, a defense may have been unwittingly set up. A defensive summary judgment requires only that the poorly drafted Minutes note an expert engineer’s concerns along with a tendered contingent attorney’s fee agreement.

What should be done? Leaks should become an action item for the Property Manager to address, but details do not need to be in the Minutes.  If someone were to do an actual destructive investigation years later, the old, forgotten Minutes will be used to prove that there was a serious defect that the Board neglected to address on a timely basis. The Minutes should simply be a summary of the actions taken by the Board at the meeting, nothing more or less. If, during the first few years after construction, the project experienced some isolated leaks and water intrusion issues; why note this issue in the Minutes?

If those early isolated leaks were identified and repaired, but later new and more serious water intrusion appears, the Statute of Limitations may have already been triggered by referring to the isolated leaks. If the Association thereafter hires a real engineer to prepare a comprehensive report detailing a host of latent construction defects, none of which had nothing to do with the earlier leaks; rest assured it will be argued that the HOA or Association failed to timely sue based on the forgotten, but damning, Board meeting Minutes. When the Statute of Limitations begins to run should not be at the first sign of a leak, however, minor or isolated and no matter the cause.

Some Courts and arbitrators believe, erroneously I maintain, that the Statute of Limitations begins to run at the first sign of a leak. The Statute of Limitations should begin to run when the Association became aware that it had a cause of action. The determination of when the Association knew or should have known they had a cause of action should be a factual question that should be properly resolved by an Arbitrator or jury. For that reason alone, Board meeting Minutes should be kept short and sweet. Board Minutes should never address isolated leaks which were repaired. Why? Tubs and shower pans leak, windows may be left open, window panes do break etc. Defense counsel will argue that each of these referenced leaks was part of a systemic defect in the roofing and stucco system. The fact that the Association’s engineer never identified them until years later, cannot make those thoughtlessly prepared Board Minutes go away.

Since many of the persons who read this post were or are actively involved in similar matters, please share your thoughts with me. Justice is what we should be after, not intentionally doing injustice to the owners who have not nothing to cause their loss of their biggest life savings.

AVVO QUESTIONS & ANSWERS – Is a contractor with an Air Conditioning License allowed to perform General Contracting Work?

(2017) RNF8060-Weiss christopher - smallQuestion:  I entered an email agreement with a company who subsequently, in my opinion, have failed to perform even close to the agreed estimates (huge overruns in time and cost plus substandard work). I checked with the Florida DPBR and their licence is for Air Conditioning: they did no AC work but a bathroom refurb. I want to know if, one, their licence allows them to do this work (demolition, electrical, plumbing, construction, tiling) and two, if, due to the current contentiousness of the relationship, they can file a mechanics lien on my property (an owner-occupied home)? Additionally, although the city requires it, no permit was pulled nor inspection performed for the full house re-piping they undertook.  Many thanks in advance for any answers you may offer.

Christopher’s Answer:  Read this: Class A air-conditioning contractor” means a contractor whose services are unlimited in the execution of contracts requiring the experience, knowledge, and skill to install, maintain, repair, fabricate, alter, extend, or design, if not prohibited by law, central air-conditioning, refrigeration, heating, and ventilating systems, including duct work in connection with a complete system if such duct work is performed by the contractor as necessary to complete an air-distribution system, boiler and unfired pressure vessel systems, and all appurtenances, apparatus, or equipment used in connection therewith, and any duct cleaning and equipment sanitizing that requires at least a partial disassembling of the system; to install, maintain, repair, fabricate, alter, extend, or design, if not prohibited by law, piping, insulation of pipes, vessels and ducts, pressure and process piping, and pneumatic control piping; to replace, disconnect, or reconnect power wiring on the load side of the dedicated existing electrical disconnect switch; to install, disconnect, and reconnect low voltage heating, ventilating, and air-conditioning control wiring; and to install a condensate drain from an air-conditioning unit to an existing safe waste or other approved disposal other than a direct connection to a sanitary system. The scope of work for such contractor also includes any excavation work incidental thereto, but does not include any work such as liquefied petroleum or natural gas fuel lines within buildings, except for disconnecting or reconnecting changeouts of liquefied petroleum or natural gas appliances within buildings; potable water lines or connections thereto; sanitary sewer lines; swimming pool piping and filters; or electrical power wiring. A Class A air-conditioning contractor may test and evaluate central air-conditioning, refrigeration, heating, and ventilating systems, including duct work; however, a mandatory licensing requirement is not established for the performance of these specific services.
(g) “Class B air-conditioning contractor” means a contractor whose services are limited to 25 tons of cooling and 500,000 Btu of heating in any one system in the execution of contracts requiring the experience, knowledge, and skill to install, maintain, repair, fabricate, alter, extend, or design, if not prohibited by law, central air-conditioning, refrigeration, heating, and ventilating systems, including duct work in connection with a complete system only to the extent such duct work is performed by the contractor as necessary to complete an air-distribution system being installed under this classification, and any duct cleaning and equipment sanitizing that requires at least a partial disassembling of the system; to install, maintain, repair, fabricate, alter, extend, or design, if not prohibited by law, piping and insulation of pipes, vessels, and ducts; to replace, disconnect, or reconnect power wiring on the load side of the dedicated existing electrical disconnect switch; to install, disconnect, and reconnect low voltage heating, ventilating, and air-conditioning control wiring; and to install a condensate drain from an air-conditioning unit to an existing safe waste or other approved disposal other than a direct connection to a sanitary system. The scope of work for such contractor also includes any excavation work incidental thereto, but does not include any work such as liquefied petroleum or natural gas fuel lines within buildings, except for disconnecting or reconnecting changeouts of liquefied petroleum or natural gas appliances within buildings; potable water lines or connections thereto; sanitary sewer lines; swimming pool piping and filters; or electrical power wiring. A Class B air-conditioning contractor may test and evaluate central air-conditioning, refrigeration, heating, and ventilating systems, including duct work; however, a mandatory licensing requirement is not established for the performance of these.

Comment to Christopher’s Answer:

Wow! Thank you very much, Mr. Weiss. That is as comprehensive an answer as I could ever want. I really appreciate your time and effort.

Christopher Weiss Attorney at Law, P.A. Selected as one of the Top 19 Litigation Attorneys serving Orlando

(2017) RNF8060-Weiss christopher - small

Honored to be recognized as one of the Top 19 Best Orlando Litigation Attorneys by Expertise.com, a research company that makes it selection based on Reputation, Credibility, Experience, Engagement, and Professionalism.  Click here to read article.

Two new laws affecting the Florida Construction Industry include Public Projects and Amendments to the Statute of Repose

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There are two new bills that you should be aware of. The first bill is House Bill 599 which deals with Public Works Projects. The hyperlink to the bill, which was signed into law by the governor is found below:

https://www.flsenate.gov/Session/Bill/2017/599/BillText/er/PDF

The theory is that the amendment will provide a more competitive bid process for public construction projects where state dollars represent 50% or more of the funding. Prior to this bill, local governments could establish arbitrary pre-bid mandates on contractor’s telling them who they must hire, where they must train and what benefit packages they must offer if they want to bid the job with that entity. For many small businesses, these mandates made it unaffordable to bid on many public projects. The premise is, increasing competition will benefit Florida taxpayers.

The second piece of legislation of consequence is House Bill 377 which deals with limitations on lawsuits other than for the recovery of real property. A hyperlink to the legislation is found below:

https://www.flsenate.gov/Session/Bill/2017/377/BillText/er/PDF

What this bill hopes to accomplish is to clarify when and how Florida’s 10-year statute of repose begins to run on a completed project. The statute of repose defines the period in which an owner can sue for alleged construction defects. In a number of recent cases, a final payment was not made for construction costs. By making final payment late, the repose period was effectively extended beyond the 10 years envisioned by the Florida legislature.

The pertinent language now states:

Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made. This act applies to causes of action that accrue on or after July 1, 2017.

If you have any questions please feel free to give me a call.

Christopher Weiss Attorney at Law, P.A.
Board Certified Construction Attorney
17 N. Summerlin Avenue, Ste. 200
Orlando, FL 32801
(407) 928-6737
chris@cweisslaw.com

 

AVVO: Q & A – Can my home be liened by a window installer if no work has been performed, permit, financing and materials not delivered?

Christopher J. Weiss

Christopher J. Weiss

QUESTION:  I gave a deposit for window install and now don’t have the money to complete. I have not signed for the permit or the notice of commencement or the financing documents and no materials have been received or work performed. Can the window company put a lien on my house?

ANSWER:  In Florida, specially fabricated materials are lienable without incorporation. The issue is are they truly specially manufactured, designed, or fabricated for a particular project and are not materials that can be universally used on all projects. Specially fabricated materials have been described as those materials “not generally suited for nor readily adaptable to use in a like improvement.” Odolite Industries, Inc. v. Millman Const. Co., Inc., 501 So.2d 655, 656 (Fla. 3d DCA 1987) (quotation omitted). For instance, the Florida Supreme Court in Stunkel v. Gazebo Landscaping Design, Inc., 660 So.2d 623, 625 n.2 (Fla. 1995), noted that trees the owner specifically selected for a project were not specially fabricated because they could be used on other projects; whereas, in Lehigh Structural Steel Co. v. Joseph Langer, Inc., 43 So.2d 335, 338 (Fla. 1949), the Court noted that structural steel fabricated for a specific building was specially fabricated materials. (Notably, furnishing specially fabricated materials does not include “design work, submittals, or the like preliminary to actual fabrication of the materials.” Fla. Stat. s. 713.01(13).)

I suggest you engage a board certified construction attorney to advise you. Best regards.

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