The Florida Legislature recently passed legislation that is very favorable for developers. More specifically, the legislation appears to eliminate future exposure of developers to claims for common law implied warranties of fitness and merchantability related to subdivision improvements of roads, drainage systems, retention ponds and underground pipes surrounding homes.
In mid-March 2012, the Florida House of Representatives passed House Bill 1093, a companion to Senate Bill 1196. Both bills sought to vacate the Fifth District Court of Appeal’s holding in Lakeview Reserve Homeowners v. Maronda Homes, 48 So. 3d 902 (Fla. 5th DCA 2010), which provides that a homeowner’s association has a claim for breach of the common law implied warranties of fitness and merchantability, also known as the warranty of habitability, against a developer for defects in systems that the court found were “essential services” to a home, such as roads, drainage systems, retention ponds, and underground pipes surrounding the home. Notably, it was argued that the Fifth District was the only court in the nation to expand these common law implied warranties to include “essential services.” While the case is presently pending before the Florida Supreme Court, this case may be rendered moot if Governor Rick Scott signs the bill into law. If enacted, the Lakeviewholding will be eliminated from Florida law and common law implied warranties will not apply to “essential services” by statute.
This bill will have the effect of ending future exposure of developers to claims for subdivision improvements. According to legislative staff analyses, there is a potential that the bill may apply retroactively, but this matter will need to be tested in the courts. Carriers who insure developers will benefit if this bill is enacted because they will be able to more clearly identify what potential defects may create liability for common law implied warranties.