When a person buys a new home, the contract for sale and purchase with the developer typically contains construction warranties for the major structural components of the home. If the home is located in a subdivision, the developer also usually constructs and installs essential subdivision infrastructure to make the home habitable, such as roads for ingress and egress, sewer lines for disposing of waste, electrical conduit for electricity, and drainage to remove rainwater. The issue arose whether there are any implied warranties of fitness and merchantability for subdivision infrastructure improvements installed by the developer, even though the contract for sale between the developer and purchaser only contains warranties for the home itself, and if so, can a homeowners association bring suit against the developer on behalf of the homeowners for breach of the implied warranties for defective subdivision improvements. Two Florida District Courts of Appeal came to opposite conclusions and the Florida Supreme Court had to resolve the conflict.
In Maronda Homes Inc. of Florida v. Lakeview Reserve Homeowner’s Association, 38 Fla.L.Weekly S859(Fla. November 21, 2013), the Florida Supreme Court sided with the Fifth District Court of Appeal and held that a homeowner’s association can bring an action for breach of implied warranty of fitness and merchantability against the developer for defects in subdivision infrastructure which directly impact the homes and provide services essential to the habitability of the residences. In Moranda, there was inadequate drainage which caused flooding of retention ponds and negatively impacted the habitability of the homes by creating child safety issues, mosquito infestation, and other “dangerous conditions.” Based upon the association’s allegations, the Court ruled it did state a valid cause of action for breach of implied warranty of fitness and merchantability.
But the Court had to consider one final issue. During the pendency of the case, in 2012, the Florida Legislature adopted Florida Statute Sec. 553.85 (the “Act”), effective July 1, 2012. The Act essentially states that there is no implied warranty of fitness or merchantability for subdivision infrastructure improvements when there is no damage to the home itself (or under or on the lot), and the improvement does not immediately and directly support the habitability of the home. The Act states that “it applies retroactively . . .to all cases accruing before, pending on, or filed after” July 1, 2012. If the Act applied retroactively to the Maronda case, the association’s cause of action could be barred by the Act. The Florida Supreme Court concluded that even though the Legislature intended the Act to be applied retroactively, it could not be applied retroactively because of the constitutional prohibition against the impairment of vested contract rights.
Thus, what the Florida Supreme Court giveth to a homeowner who purchases a new construction home, the Florida Legislature taketh away (at least to the extent of any cause of action accruing on or after July 1, 2012).
