About a year ago, Rembaum’s Association Roundup reported that the 5th District Court of Appeals (“5th DCA”), in Lakeview Reserve v. Maronda, recognized that the rights of homeowners’ association members included the implied warranty of habitability for off-site homeowners’ association improvements built by the developer such as roadways, drainage systems, retention ponds, underground pipes, etc. The sole issue in the case was whether the homeowners’ association could maintain its claim against the homeowners’ association’s developer for breach of the common law implied warranties of fitness and merchantability, also referred to as the “implied warranty of habitability.”
Lakeview Reserve alleged that its developer, Maronda Homes, defectively designed and constructed the subdivision’s infrastructure, roadways, retention ponds, underground pipes, and drainage systems, breaching the implied warranties of fitness and merchantability for the residential home development and causing damage to the entire residential subdivision. Lakeview Reserve asserted that the defects were latent, as they were not readily discoverable by home purchasers who lacked specialized knowledge and were undiscoverable by home buyers upon the exercise of reasonable diligence at the time of purchase. Lakeview Reserve also alleged that it sustained serious damages due to the defects because one of its obligations as the homeowners’ association was to correct and repair the subdivision’s structural defects which impacted the homes in the development. Initially, the trial court agreed with the developer. On appeal, the 5th DCA reversed. This meant that the homeowners’ association could sue the developer for a breach of the implied warranty of habitability. Then, the Florida Legislature gutted the 5th DCA’s decision by passing new legislation, section 553.835(4), Florida Statutes, effective July 1, 2012.
Section 553.835(4), Florida Statutes, provides that “there is no cause of action in law or equity to a purchaser of a home or to a homeowners’ association based upon the doctrine or theory of implied warranty of fitness and merchantability or habitability for damages to offsite improvements.” The statute defines the term “offsite improvements” as “the street, road, driveway, sidewalk, drainage, utilities, or any other improvement or structure that is not located on or under the lot on which a new home is constructed… and also includes the street, road, driveway, sidewalk, drainage, utilities, or any other improvement or structure that is located on or under the lot but that does not immediately and directly support the fitness and merchantability or habitability of the home itself.” The law also provides that it applies to all cases accruing before, pending on, or filed after that date.
The Florida Supreme Court recently examined the retroactivity aspect of the new law, and, on July 11, 2013, held, in Maronda v. Lakeview Reserve, case No. SC10-2292, that, “for the retroactive application of a law to be constitutionally permissible, the Legislature must express a clear intent that the law apply retroactively, and the law must be procedural or remedial in nature. Remedial statutes operate to further a remedy or confirm rights that already exist, and a procedural law provides the means and methods for the application and enforcement of existing duties and rights. In contrast, a substantive law prescribes legal duties and rights and, once those rights and duties are vested, due process prevents the Legislature from retroactively abolishing or curtailing them.”
The Florida Supreme Court found that section 553.835, Florida Statutes, is substantive and is not remedial in nature because it does not simply clarify an existing right, but rather, prescribes legal duties and rights. Therefore, the new law could not be constitutionally applied retroactively to Lakeview Reserve or to any causes of action that accrued before the law’s effective date. As to homeowners’ associations created after the effective date of section 553.835, Florida Statutes, unless the legislature amends or abolishes the law, there is likely little chance of successfully bringing a claim for breach of the implied warranty of habitability.
In rendering its decision, the Florida Supreme Court clearly expressed its unhappiness with the Legislature’s “side-stepping” the 5th DCA’s earlier decision, as evidenced by the Court’s comment when it declared, “the Legislature does not sit as a supervising appellate court over our district courts of appeal.”