The Florida Legislature recently passed House Bill 1021 which amended Florida Statute § 718.124. The July 1, 2024 amendment changes Florida’s statute of repose (“SOR”) trigger date for condominium projects. Now, the SOR trigger for existing condominium projects will be governed by Florida Statute §718.124, not Florida Statute § 95.11. Most critically, Florida Statute § 718.124 changes the trigger events for when the “clock” starts running and impacts how long the SOR runs. Notably, Florida Statute § 718.124 already governed the trigger event for the statute of limitations (“SOR”) for condominium projects.
One important overarching takeaway for contractors to carefully assess is that the change in the “trigger” event may result in the SOR concluding at a later date than originally planned – affecting time on the risk and, critically, the availability of insurance. The standard approach of using a static 10-year completed operations tail on a condominium construction insurance program may now be insufficient in certain circumstances.
I. Changes Imposed by House Bill 1021
Prior to April 13, 2023, Florida’s SOL period ran for 4 years from the date unit owners elect a majority of the board of administration (the “Board”). The SOR period ran for 10 years from the latest trigger date as set forth in Florida Statute § 95.11, which included, among other triggers, date of actual possession by the owner or issuance of a Certificate of Occupancy (“CO”).
After April 13, 2023, the SOL for condominiums did not change, but SB 360 shortened the SOR to 7 years from the earliest trigger date, which was modified to include as triggers, temporary CO, CO, issuance of Certificate of Completion (“COC”), or abandonment of incomplete construction.
Then, effective July 1, 2024, House Bill 1021 established that the SOR trigger for condominium projects would be governed by Florida Statute § 718.124. Thus, for condominium projects in progress after July 1, 2024, the 7-year SOR period does not begin to run until the date unit owners elect a majority of the Board, which is an event that typically occurs after all of the trigger events identified in Florida Statute § 95.11.
Additionally, as has been the case since before 2013, there is an additional one-year period from date of service of suit to bring counterclaims, cross-claims, and third-party claims.
II. What Does This Mean for Policyholders?
Florida Statute § 718.301 sets forth events that trigger unit owners to elect a majority of the Board of Directors (“Board”). On its face, unit owners could have more than 135 days to elect the Board from the date of the earliest trigger identified in § 718.301. For example, after an event happens that causes the unit owners to elect a majority of the Board, the unit owners can wait 75 days to call for an election and then provide 60 or more days’ notice of the election. There is nothing in the statute that prevents the notice from being significantly longer than 60 days.
In the example below, under the 2023 law, a contractor would be “on risk” for 8 years from the date of COC, until 1/1/2031 (SOR would run 1/1/2030, plus 1 year to bring counterclaims, cross claims, or third party claims).1
After July 1, 2024, however, the contractor faces exposure for almost 14 years after issuing the COC, until 9/15/2036.2 With different facts, the exposure could be longer. Thus, it is critical for Florida policyholders to negotiate language that extends the completed operations tail to conform with the applicable statute(s), rather than boilerplate language listing a fixed number of years.
Example:
It is important to note that the 2024 changes apply only to Condominium Associations or Cooperative Associations and do not change the SOL trigger or time period. Further, all other construction projects continue to be governed by the law passed by the post-April 2023 rules regarding calculating SOL and SOR triggers and deadlines.
III. Conclusion
Policyholders who are potentially liable parties on a condominium construction project are at risk of the statute of repose extending significantly beyond the originally anticipated timeframe. Generally, existing insurance programs require a completed operations tail to run for not less than 7 years from the statutory trigger. However, policyholders should consider negotiating for flexible policy language that requires the completed operations tail to conform to the relevant statute(s), which will protect them in the event of a lengthier time on risk.
The author would like to thank Ali Jamwal, Law Clerk, for research assistance with this legislative update.
1Assumes no earlier “trigger” under Fla. Stat. §95.11.
2Assumes no earlier “trigger” under Fla. Stat. §718.124.