Signed into law by Governor Ron DeSantis on April 13, 2023, Senate Bill 360 (“SB 360”) modified the time limit property owners have to file suit against construction professionals and contractors for construction defects under Florida Statute Section 95.11(3)(c)’s (2018) statute of limitations and statute of repose. The legislative changes now clearly identify triggering events for when the statute of repose clock begins to run, creating an explicit rule and limiting the courts’ ability to render varying interpretations through a case-by-case analysis.
Statute of Limitations and Statute of Repose
Generally, under the statute of limitations, a party seeking to bring a suit arising from design, planning, or construction of an improvement must do so within four years of from “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 of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest[.]” § 95.11(3)(c), Fla. Stat. (2018) (emphasis added). This time period is tolled where latent defects exist, causing the four-year statute of limitations to begin to run only once the property owner discovers the defect or when the defect should have been discovered with the exercise of due diligence. While the four-year statute of limitations period may be tolled where latent defects exist, the statute of repose affixes an absolute deadline of ten years for a property owner to bring a construction claim against construction professionals or contractors. § 95.11(3)(c), Fla. Stat. (2018). The purpose of the statute of repose is to protect potential defendants from stale claims, while preventing the potential loss of evidence regarding claims arising far in the future.
Triggering Events Prior to 2023
Prior to the enactment of SB 360, Florida courts were tasked with the job of defining, identifying, and interpreting what the legislature envisioned the triggering events under Florida Statute Section 95.11(3)(c) (2018) to be. Florida courts struggled to render cohesive and uniform interpretations of the statute, leading to ambiguous and varying interpretations among Florida courts. Florida courts use of case-by-case factual investigations to define triggering events not only created ambiguity, but also created instances where courts allowed owners to pursue lawsuits for construction defects outside the ten-year statute of repose limit. Prior to a 2017 legislative modification, Florida courts varied on what it meant for a contract to be completed. Some courts interpreted the date of completion of the contract as the date on which final payment was received, resulting in the owner’s ability to infinitely extend both the statute of limitations and the statute of repose by simply delaying payment. The Florida Legislature responded to this inconsistency by defining “completion of the contract” to mean “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.” § 95.11(3)(c), Fla. Stat. (2018).
Changes Under SB 360
Under the new law, the Florida Legislature removed the need for Florida courts to render case specific interpretations by significantly reducing the statute of repose period from ten years to seven years and explicitly defining the triggering event which will start the statute of limitations and statue of repose clock. The revised statute now defines the triggering event as “the date the authority having jurisdiction issues a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or the date of abandonment of construction if not completed, whichever date is earliest.” § 95.11(3)(b), Fla. Stat. (2023) (emphasis added). The new law also removed the previous commencement dates of actual possession by the owner, and date of completion or termination of contract between the professional engineer, registered architect, or licensed contractor and his or her employer. Further, the new law also provides that “if the improvement to real property consists of the design, planning, or construction of multiple buildings, each building must be considered its own improvement for purposes of determining” the applicable limitations periods within the bill. § 95.11(3)(b), Fla. Stat. (2023).
Practical Implications for the Construction Industry
The legislative changes under SB 360 create benefits and protections to potential defendants, construction professionals, and contractors, reducing the likelihood that property owners will bring stale claims while limiting potential defendants’ exposure to liability. Additionally, the shortened time period further benefits potential defendants by also limiting the period in which they must obtain general liability insurance coverage for claims arising from current or completed work. A reduction in both the potential amount of construction defect claims and the shortened period of required insurance coverage may benefit developers and contractors by reducing the costs associated with construction. While the reduction in the statute of repose period offers contractors and other construction professionals greater protections, the new law places a greater onus on property owners to act with additional diligence to discover any latent construction defects.
The legislative changes have already gone into effect, and such changes apply to actions and claims for construction defects commenced on or after April 13, 2023. However, actions or claims that would not have been barred by the previous version of the statute will be granted a grace period, with owners given until July 1, 2024 to commence their claims.