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FLA. SUPREME COURT TO DECIDE WHETHER IMPLIED WARRANTIES APPLY TO SITE IMPROVEMENTS IN HOMEOWNER'S ASSOCIATIONS

The Florida Supreme Court on April 20th agreed to hear the case of Maronda Homes, Inc. v. Lakeview Reserve Homeowners Association, Inc., an appeal from an October, 2010 decision of the Fifth District Court of Appeal.  In the decision under appeal (48 So.3d 902), the Fifth District determined that Lakeview Reserve could pursue the project developer, Maronda Homes, under an implied warranty theory for defects and deficiencies in the roads, drainage systems, retention ponds and underground piping of the subdivision.  At issue was the interpretation of the Supreme Court's decision in Conklin v. Hurley, 428 So.2d 654 (1983) in which the Supreme Court determined that implied warranties extended only to the construction of a residence and "improvements immediately supporting the residence" such as water wells and septic tanks.  The Fourth District Court of Appeal, in 1985, interpreted Conklin as precluding recovery by a homeowner's association under an implied warranty theory for defects in subdivision roads and drainage improvements.  Port Seawall Harbor and Tennis Club Owners Ass'n., Inc. v. First Federal Savings and Loan Association of Martin County, 463 So.2d 530.

Acknowledging its disagreement with the Fourth District, the Fifth District determined that when the Supreme Court used the phrase "improvements immediately supporting the residence," it did not intend the definition to be literal.  Consequently, the Fifth District developed a  new test for which improvements qualify as "supportive of the residence."  The new test is whether the improvement is providing a service essential to the habitability of the home.  The Fifth District reasoned that when the Supreme Court utilized water wells and septic tanks as examples, it did not intend these "services" to be the sole ones that would qualify.  The conclusion reached by the Fifth District Court on the applicability of implied warranties to the roads, drainage systems, retention ponds and underground piping of the Lakeview Reserve subdivision:  Since the services provided by these improvements are essential to the habitability of the homes, they do "support the residences" and thus carry implied warranties under Conklin.

The Florida Supreme Court will now decide whether the Fourth District (no implied warranties for site improvements)  or the Fifth District (implied warranties for site improvements) is the law in the State of Florida for homeowner's associations.  The other issue to be decided by the Supreme Court is whether the Association itself has standing to pursue the claim or whether a class action on behalf of the homeowners is necessary.  The Fifth District ruled that the Association had standing to bring the action.

Note to owners of new condominiums: statutory warranties under Florida Statute 718.203 extend to the owners from the developer and contractors for site improvements, so the Maronda decision should not affect condominium warranties.

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