Issues with the 558 Process
Following the tragic collapse of Champlain Towers South, there has been much talk about Florida Statutes Chapter 558, which deals with the process condo/unit owners must follow to file claims for development defects.
What is Chapter 558?
To provide an alternative method to resolve construction disputes and protect the rights of condo association owners, Florida created Chapter 558. The law also allows contractors, subcontractors, suppliers, or design professionals the opportunity to resolve a claim for construction defects before resorting to further legal processes.
How it Works
Chapter 558 is often referred to as a “pre-suit” because it outlines a process that condo owners must follow before they can file a lawsuit to recover damages for defects in construction work. Although it is referred to as a “pre-suit,” it is a civil legal “action” and includes a lawsuit filed in a court of law along with an arbitration proceeding. However, nothing can move forward until the requirements under Chapter 558 have been met.
However, the 558 process doesn’t work well for construction defects. It was designed to settle claims quickly, but it merely delays the filing of claims or lawsuits. If a condominium association does receive money under Chapter 558, it is usually a discount off the amount it will cost to fix the defects. It can also take years to settle and receive anything. There is no regulatory action against contractions or developers if they decide not to repair the damages.
Therefore, condo owners and associations are often reluctant to collect reserves or spend the money to fix the problems themselves, which of course can lead to devastating results as it did with the Surfside, Florida beachside community. This is especially true with concrete and stucco cracking, pool decking, and garage waterproofing, etc. In addition, the long wait periods for recertification and little to no enforcement of these laws caused the devastating situation with Surfside.
Who to Turn To?
David Haber, who specializes in real estate and condominium law in Miami, is working with legislators to modify the existing rules and draft new laws regarding recertification and reserves. In his opinion, the current law makes it too easy for owners to waive the collection of reserves meant for lifesaving defect repairs. In addition, he feels strongly that building codes need to be updated to require waterproofing that lasts 20 years or more, particularly with waterfront properties. Investigators deemed the issue with the Champlain Towers South to be a result of faulty waterproofing.
One rule in favor of imposing responsibility is the “business judgment rule, which says that a board member can be liable if their actions rise to the level of willful, wanton, or intentional misconduct, so that’s the standard for which they can have some liability.” However, board members are volunteers and less likely to make rulings unfavorable to condo unit owners.
Haber Law specializes in construction, real estate, and community association law. If you or someone you know has an issue with a construction defect or Chapter 558, contact Haber Law for help.
About the Author: David B. Haber, founder of Haber Law, has over 30 years of experience representing clients in the areas of construction law, complex commercial disputes, real estate and business law, and community association representation.