Subrogation & Recovery Alert
Statutes of limitations and statutes of repose limit the length of time within which a cause of action may be brought. Unlike a statute of limitations, which begins to run after a loss occurs, a statute of repose for a construction defect begins to run upon completion of the construction project. Florida’s statute of repose for construction defects is 10 years. There has been ambiguity, however, when the statute actually begins to run.
Florida Statute s. 95.11(3)(c) contains the following language regarding the statute of repose:
In any event, the action must be commenced within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.
The ambiguity arises as to when the construction contract is “complete.” Florida courts have held that the contract is not complete until all parties fulfill their respective conditions under the contract; as such, final payment must be made before the contract is complete. Under this plain reading, the 10-year statute of repose for construction defects does not begin to run until the final payment under the construction contract is made, regardless of when the actual construction of the building is complete. Cypress Fairway Condo. v. Bergeron Constr. Co., Inc., 164 So. 3d 706, 708 (Fla. 5th DCA 2015).
In the most recent session, the Florida Legislature proposed adding the following language to the end of Florida Statute s. 95.11(3)(c): “[C]ompletion 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 addition is obviously intended to expressly overrule the case law created in Cypress Fairway. Governor Scott approved the bill containing the added language, meaning it became law effective July 1, 2017. The change will ultimately eliminate the potential to extend the statute of repose period in situations where the final payment under the construction contract is made substantially after the actual completion of the construction project. This is a major victory for the construction lobby and should be considered by insurance adjusters when evaluating a potential subrogation claim based on a construction defect.