Statute of Repose Trumps Warranty Period Says Arbitrator

June 1, 2016

Florida Statute of Repose Trumps Warranty PeriodA Florida builder recently arbitrated an interesting defense to a homeowner’s claim under the builder’s long term warranty.

At the time the builder issued its express warranty to the home buyer, Florida had a 15-year statute of repose for construction defect (CD) claims. Thus the warranty period under the builder’s warranty was stated to be 15 years from the date that the home closed escrow. But during the warranty’s 15-year term, the Florida legislature amended is statute of repose for CD claims, reducing it from 15 years to 10 years.

Sometime after 10 years, but before his 15-year warranty term had run, the homeowner claimed a construction defect under the builder’s express warranty. The builder denied the claim, arguing that the revised statute of repose took precedence over the warranty’s 15-year term and that the owner’s claim was barred because it came more than 10 years after the warranty’s commencement date.

In his decision, the arbitrator noted that courts in Florida, including the state supreme court, have consistently ruled that a statute of repose can eliminate an underlying legal right and can preclude a right of action after a specified period of time. He further observed that the explicit wording of the revised statute made it clear that the legislature intended the reduced 10-year period to apply not only to future home sales but to existing homes as well. While the revised statute allowed claimants in their 10th year of home ownership an additional 1-year grace period in which to file a CD claim, the owner’s claim in this case also came too late for this grace period to apply.

While it must be noted that this was an arbitration decision and thus it is not necessarily controlling in future Florida CD arbitrations, the arbitrator’s analysis in this case suggests that contract (i.e., warranty) claims may very well yield to legislative action occurring during the warranty period in some situations. It is something PWSC will be monitoring going forward.