Implied Warranty of Building in Accordance With Permitted Plans and Specifications
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In Florida, contractors have an implied duty to build in accordance with the plans and specifications filed with the local building authority—the permit set. If a contractor deviates from the permit set of plan and specs, the contractor may be liable to any party damaged by the deviation. This implied warranty recognizes “that residential warranties reward the legitimate, quality developers and deter shoddy work and poor craftsmanship by those seeking only quick profit at the expense of quality and at the expense of and loss to Florida citizens.” See Maronda Homes, Inc. of Florida v. Lakeview Reserve Homeowners Ass’n, Inc., 127 So. 3d 1258, 1269 (Fla. 2013). Good contractors will not skimp on providing the quality of design shown on the permitted plans and specs.
This implied duty exists regardless of the contractor’s intent to create it. Furthermore, the implied warranty extends to parties outside of the construction contract (e.g. subsequent purchasers). Even if its contract says otherwise, a contractor has a duty to such parties to make sure it builds the design as shown on the permit set. This doesn’t necessarily mean the design cannot change after permitting; but it does mean the design changes should be submitted to the building department to update the permit set held in public records.
Types of Projects Where Implied Warranty Applies
This implied warranty applies primarily to residential projects. Of special concern are projects where the homeowner is not a party to the construction contract with the contractor. This liability arises often in the context of condominium defects cases. Implied warranties are important in condo cases because neither the association nor unit purchasers are a party to the construction contract between the developer and contractor. Since the condo purchasers aren’t parties to the construction contract, they don’t have the protection of rights set forth in the construction contract to fall back on. Further, since they are not overseeing construction, condo purchasers don’t have the opportunity ensure the contractor is building the approved design.
Breaching the Implied Warranty
The implied duty to build in accordance with the permit set arises from the implied warranties of fitness and merchantability. In Florida, whether a contractor has breached implied warranties of fitness and merchantability in a construction context hinges on “whether the premises meet ordinary, normal standards reasonably to be expected of living quarters of comparable kind and quality.” Maronda Homes, Inc. of Florida, 127 So. 3d at 1268. “This breach includes situations in which contractors breach the building contract by deviating from pre-drawn specifications.” Continental 332 Fund, LLC, et al v. David Albertelli, et al, 2:17-CV-41-FTM-38MRM, 2018 WL 839318, at *7 (M.D. Fla. Feb. 13, 2018) (citing David v. B & J Holding Corp., 349 So. 2d 676, 677 (Fla. 3d DCA 1977)). Deviating from the plans and specifications filed with and approved by the local building department is a breach of this implied warranty. B & J Holding Corp, 349 So. 2d at 677.
Analysis of B & J Holding Corp. Case
The case of B & J Holding Corp is a leading case on this issue. In B & J Holding Corp., the trial court found that condominium unit purchasers were not entitled to relief from defect damages arising from contractor’s failure to build in accordance with the plans approved by the building department. The trial court reasoned that where the purchasers were not party to the construction contract, “but rather a contract for purchase of a condominium unit, and [contractor] not having entered into an agreement to build [purchasers] a unit in the [condominium],” there was no implied warranty of fitness or merchantability obligating the contractor to construct the building in accordance with such plans or any specific plans. In other words, the contractor was not contractually bound to the condo purchasers to build only the design reflected on the permit set. Thereupon, the trial court held the condo owners were not entitled to any relief sought with respect to the contractor’s deviation from the permit set.
However, the condo owners appealed, and Florida’s Third District Court of Appeals reversed the trial court’s ruling. The Appellate Court found that the “trial court erred in failing to grant them damages for breach of implied warranty when the evidence clearly established that their condominium unit was not built in accordance with the plans and specifications as filed with and approved by the Town of Bay Harbor Islands.” Id.
The Appellate Court reasoned that “[a]n implied warranty arises by operation of law and exists regardless of any intention of the vendor to create it.” Id. at 677-78. Notwithstanding the fact that the contractor did not provide an express warranty, the law provides that contractor “impliedly warranted to the plaintiff condominium purchasers that their unit would be constructed in accordance with the specifications contained in the building plans filed with and approved by the appropriate governmental authority, the Town of Bay Harbor Islands.” Id. Even though the contractor did not grant such an express contractual warranty to condo owners, contractor owed an implied warranty that arose automatically by operation of law. The contractor had a duty to build exactly what was shown on the drawings in the public record (i.e. the permit set).
After setting forth that point of law, the Appellate Court found that the contractor was liable to the condo owners: “The evidence is undisputed that defendant builder failed to construct the party walls of plaintiff’s unit in accordance with those specifications filed with the Town of Bay Harbor Islands as a matter of public record and, therefore, having departed from those specifications, is liable to plaintiffs for breach of implied warranties of fitness and merchantability.” Id.
In defense, the contractor argued that its contract allowed for changes in the design—that it was not contractually bound to only build the design in the permit set. The Appellate Court held that the implied warranty overcame that contractual proviso. The Appellate Court said: “Defendant [contractor] argued that under the terms of the sales contract, it reserved the right to make changes in the specifications. Nevertheless, those specifications being filed as of public record and approved by the Town of Bay Harbor Islands, defendant was under a duty to file the modified specifications with the Town for its approval and to make the new specifications a matter of public record.” Id.
The implied warranty does not prevent changes to the design, but it does require that any design modification must be codified in the public record. Design modifications must be submitted for approval by the local building authority. This is a trap that many contractors often fall into—they forget to submit design modifications, made after the permit was issued, to update the permit set with the building department public records.
Legal Trend toward Protecting Homeowners
The modern rule which has developed over the past few decades is that implied warranties of fitness and merchantability do extend to the purchasers of new homes and new condominium units and likewise liability has been predicated upon the breach of the building contract in the form of deviation from specifications, such deviation resulting in a defective condition. Id. “Being a progressive state particularly in the area of condominium law with respect to protection of purchasers of such units, Florida . . . has adopted the rule of law that implied warranties of fitness and merchantability extend to the purchase of new condominium units from builder-developers.” Id. Undoubtedly, the law regarding the liability of a builder-vendor of new houses is changing. The above cases indicate a growing trend away from caveat emptor and toward the theory of implied warranty.
Contractors should be wary of deviating from the permitted set of plan and specs. If a contractor decides to deviate from the permit set, or if the developer institutes a design change, the contractor would be wise to file an amendment with the building authority. Design changes made in the field (or even by the architect) can come back to bite the unsuspecting contractor.