In construction defect disputes, owners must comply with certain procedures before filing a lawsuit against a contractor. These procedures are contained within Florida Statutes Chapter 558. This newsletter describes the mechanics of Chapter 558 and how a contractor should navigate through it.
Chapter 558 applies to “construction defects” resulting from work performed by a contractor, subcontractor, supplier, or design professional (e.g., architect, landscape architect, engineer, surveyor, geologist, registered interior designer). A defect may arise from defective materials, a code violation, or work that falls below certain professional standards.
When an owner believes it has encountered a construction defect, it initiates the Chapter 558 process by serving a letter (notice of claim in legal terms) upon the contractor. This notice will normally describe and locate each defect and any damage or loss associated with it. Once the notice has been served, the parties have 60 days (unless the dispute involves a large condominium complex) to resolve the dispute. During this timeframe, a contractor has 30 days to inspect the defects and 10 days to serve copies of the notice upon all subcontractors that it believes to be responsible for the defects. The contractor also has 45 days to serve a written response upon the owner that either denies the allegations or offers to remedy the defects through repair and/or payment. If the parties fail to reach an agreement on how to remedy the defects before the 60-day period expires, the owner may file a lawsuit.
A contractor will not be penalized for failing to participate in the Chapter 558 process or respond to the notice of claim, but it is in its best interests to do so. After being served with the notice of claim, the contractor should immediately (no later than 10 days) forward a copy of the notice to all of its subcontractors whose defective work is referenced in the notice. This brings additional parties to the negotiation table, which increases the likelihood of settling the claim and avoiding a lawsuit. The contractor should hire an expert, as well, to investigate the claims. It is imperative for the contractor and its expert to attend an inspection and create a detailed record of their observations because it may be their only opportunity to view the alleged defects. In addition, the contractor should request documents from the owner that support its claim (e.g., photographs, reports). This document request is allowed under Chapter 558 and provides a valuable opportunity to assess the claim and make a settlement decision before the owner resorts to litigation.
If successful, the Chapter 558 process can save all parties significant time and money. By avoiding the drama of litigation, Chapter 558 also helps preserve a contractor’s relationships with owners and subcontractors. We encourage you to contact an attorney if you have been served with a notice of claim or have any questions about how the Chapter 558 process works.Bruce E. Loren and Michael Billings are based in Palm Beach Gardens and Ft. Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law and employment law. Bruce Loren focuses his practice on construction litigation and has been Certified by the Florida Bar in Construction Law since 2006. The firm represents contractors and owners in a wide range of disputes, including payment bond claims, lien disputes, construction defects, and project delays. They can be reached at [email protected] or [email protected] or 561-615-5701.
Partner, Loren & Kean Law