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NOTICE AND OPPORTUNITY TO CURE – INSPECTION AND RESPONSE TO CONSTRUCTION DEFECT NOTICEBruce E. Loren, Esq. and Kyle W. Ohlenschlaeger, Esq. | Aug 24 2017

Section 558 of the Florida Statutes contains the notice and opportunity to cure provision related to alleged defective construction. The statute requires that a claimant, typically the owner, provide contractors notice of alleged construction defects on both commercial and residential projects prior to initiating a lawsuit. This notice is commonly referred to as a 558 Notice. After notice is delivered, the contractor and its subcontractors (collectively “Contractors”) are given an opportunity to inspect the property and the alleged defects. In addition, the Contractors are supposed to provide a written response to the notice within a certain timeframe. The response may include an offer to fix the alleged defects, a monetary settlement offer, or a combination of the two. This article discusses the benefits of pre-litigation inspection and practical considerations when providing a written response.

Pre-Litigation Inspection

One of the primary benefits of the 558 Notice requirements is a pre-litigation opportunity to inspect the property and the alleged defects. It almost always makes sense for Contractors to take advantage of this opportunity, regardless of whether the Contractor believes there are any defects in the construction. This early inspection allows the Contractor to begin setting up its defense to the upcoming lawsuit and to document the condition of the property and alleged defects before the owner makes any repairs.

For some allegations, it makes sense to perform testing at the inspection. For instance, if the owner is claiming that the windows are defective, then the inspection should usually include a water test. If the alleged damages are significant, the Contractor should consider hiring an independent expert to perform these tests. Doing so has multiple advantages. First, the owner will give more weight to testing performed by an independent party, making pre-suit settlement more likely. Second, the independent party will also be the Contractor’s expert witness if a lawsuit is filed. An expert outside of the Contractor’s organization, who evaluated and tested the alleged defects first-hand, will be viewed more favorably at trial than an expert who was only able to review the results of the testing later.

When the alleged defects only require a visual inspection, rather than testing, it is generally sufficient for the Contractor to inspect the property itself. There are a few important considerations the Contractor should keep in mind during the inspection. First, and most importantly, there is no requirement or reason for the Contractor to explain itself at the inspection. Contractors can get into trouble trying to explain away the alleged defect during the inspection. It is better practice to perform the inspection and develop your position later with a carefully worded response.

Second, remember again that this may be your last chance to review the alleged defect before it is repaired. As a result, the Contractor should take as many pictures as possible that support the Contractor’s likely position that no defects exist. In addition, many defect lawsuits are centered not on whether a defect exists, but rather what is needed to repair the defect. For instance, an owner may allege that defective doors in the property need to be replaced, where the Contractor believes that the doors simply need to be readjusted. Having pictures of the doors and the hardware will allow the Contractor to explain the proper repairs during the subsequent lawsuit.

In sum, if the Contractor conducts its own visual inspection of the property, the Contractor should keep its impressions to him or herself, take time to fully understand what it is the owner believes is defective, and document the alleged defect as much as possible.

Responding to the 558 Notice.

When it comes to the Contractor’s response to the 558 Notice, the first question is whether to respond at all. The Florida Statutes include deadlines in which the Contractor “must” give a written response. However, the statute does not provide for any meaningful consequences against a Contractor that fails to respond. In effect, failing to respond essentially acts the same as a written response that denies that any defect exists. (Note: there are potential consequences for failing to provide certain construction and other records if they are requested within the 558 Notice, but a discussion of the requirements to provide these records is outside the scope of this newsletter). Regardless, we generally recommend providing some response to the 558 Notice unless a Contractor has a good reason not to. For instance, sometimes a subcontractor will be asked by the general contractor not to respond or to let the general contractor handle the response itself. Depending on the relationship with the general contractor, it may make sense for the subcontractor to agree not to provide a response to avoid losing future business opportunities.

After the Contractor has decided to respond, the next question is whether to make an offer to resolve the dispute. A Contractor may make an offer to repair the alleged defect, make a monetary settlement offer, or some combination of the two. In rare cases, where both the owner and Contractor agree that a defect exists and what needs to be done to repair, an offer to do the repairs for free is usually the Contractor’s best option. Otherwise, the Contractor will incur the costs of litigation over the defect and may be liable for another contractor’s inflated costs to perform the repair. A more difficult situation arises where the Contractor doesn’t believe any defect exists. If the Contractor can determine a low-cost option that will satisfy the owner, it may make sense to offer to “repair” the alleged defect to avoid the time and expense of a lawsuit. When making such an offer, Contractors should concisely state: (1) what was seen at the inspection; (2) why the Contractor does not believe there is a defect related to its work; (3) why the Contractor believes the owner is not happy; (4) why that is not a defect; (5) the solution the Contractor has come up with; and (6) because the Contractor takes pride in its relationships with its customers, the Contractor will perform the proposed solution at no cost to the owner despite its contention that no defect exists.

When a Contractor denies the existence of any defects and does not intend to offer to repair or settle the case, the response should be short and to the point. Simply state that the Contractor has inspected the property, that the Contractor determined that no defect exists, that the Contractor’s work on the property meets all plans, designs, applicable codes and industry standards, and that the Contractor declines to make any offer to repair or settle the case at this time. We almost always include an additional statement that “if the owner (or its representative) believes that the Contractor has overlooked anything during its inspection and in this response, the owner should contact the Contractor so it can re-evaluate its position.” The owner is under no obligation to provide this additional information but will sometimes do so, and the response can be helpful in preparing the Contractor’s defense if the owner does follow through with the threat of litigation.

A final point about the response. The owner is under no obligation to accept a Contractor’s offer to repair. The owner can simply reject the offer and move forward with litigation against the Contractor. The owner may do so because they believe the defect requires more substantial repairs than the Contractor has offered or simply because they do not like the Contractor. Contractors often come to us upset when an offer has been rejected because the Contractor believes that it has a right to cure the defect, but the Florida Statutes and 558 Notice requirements do not contain such a right. For this reason, it has been our experience that the 558 Notice requirements rarely result in a pre-suit settlement. However, as explained above, the scheme still benefits Contractors by giving an opportunity to inspect and document the property prior to litigation.

Bruce E. Loren and Kyle W. Ohlenschlaeger of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law, employment law, and complex commercial litigation. Mr. Ohlenschlaeger focuses his practice on construction law and a wide range of commercial litigation disputes. Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar, exemplifying the Bar’s recognition of this expertise. The firm’s construction clients include owners/developers, general contractors, specialty contractors in every trade, suppliers and professional architects and engineers. Mr. Loren and Mr. Ohlenschlaeger can be reached at bloren@lorenkeanlaw.com or kohlenschlaeger@lorenkeanlaw.com or 561-615-5701.