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The post below was published on Tuesday, December 28th, 2010 at 11:26 AM.

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Certified Conflict: Elegant, If The Court Does Say So Itself

This decision from the Fifth District is the first in Florida to hold that a homeowners association can bring a cause of action against a developer for breach of implied warranties of fitness and merchantability with respect to private roads, drainage systems, retention ponds and underground pipes in a residential subdivision.

An earlier decision from the Fourth District held that a homeowners association could not bring such claims. That case involved a subdivision’s roads and drainage areas.

Both cases relied on the Florida Supreme Court’s 1983 decision in Conklin v. Hurley. There, purchasers of a vacant land attempted to sue a developer regarding the land’s only improvement — a seawall that collapsed. The high court held that implied warranties do not extend to first purchasers of residential real estate for improvements to land, other than the construction of a home and other improvements “immediately supporting the residence thereon, such as water wells and septic tanks.”

So implied warranties of fitness and merchantability (well, habitability, for a home) exist for first purchasers of homes and improvements “immediately supporting the residence thereon.”

In the Fourth District’s case, the court determined that the roads and drainage areas at issue did not immediately support the residences.

The Fifth District disagreed. It announced “a test that is elegant in its simplicity: in the absence of the service, is the home inhabitable, that is, is it an improvement providing a service essential to the habitability of the home?” Applying this “elegant” test and answering its question in the affirmative, the court held that warranties ran from the developer to the homeowners for the roads and other areas at issue. Citing judicial efficiency, the court further held that a breach of warranty claim could be brought by a homeowners association.

The decision is fascinating in many respects. If you enjoy decisions that focus on common law doctrines and how they continue to evolve, this decision is one to read. The court clearly saw itself as expanding the law. It relied on what it characterized as the complexities surrounding modern permitting and site development to support the expansion.

The case also raises some questions. For instance, while the Fifth District placed great reliance on the implied warranty cause of action recognized in Conklin, one might wonder if Conklin really applies in homeowners association litigation. Conklin involved a seawall present on the purchased property, whereas homeowners in a private subdivision are unlikely to hold any direct ownership of the subdivision’s roads, drainage systems, retention ponds, and underground pipes. Their ownership is more likely to be indirect, as members of an association that succeeded to the developer’s ownership interests in those areas. Yet the Fifth District held that individual homeowners can bring implied warranty claims relating to roads and drainage systems, and of course the court expanded that notion to apply to associations. Under this decision, how would things work out if a homeowners association decided not to bring a claim but an individual homeowner went forward? Would the court have reached the same conclusion if the issue had been framed as whether an association that succeeds to a developer’s interest in common areas can bring a common law implied warranty claim against the developer for defects?

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