Practical Considerations To Recovery For Damages Caused By Latent Construction Defects

J. Keith Ramsey is an Associate and Christopher J. Weiss is a Partner in our Orlando office

Purchasers/Owners of Real Property, Architects, Contractors and Developers Are Impacted

This is the first in a three-part series of alerts about latent construction defects.

Definition of Latent Defects

In the typical construction contract, such as AIA Document 201, there are specific notice and default procedures that an owner must comply with in order to bring an action against the contractor and its surety for known problems that arise from construction. Parties can limit their liability by requiring mandatory notice and default provisions. Additionally, states across the country have statutes that require different types of compliance. Likewise, sureties can plan notice requirements that must be complied with for actions on their bonds.

However, construction defects are not always immediately apparent and frequently the damage from a negligent act that occurs during construction does not manifest until years after construction is completed and the project is turned over to the owner. For example, water intrusion causing rot in a wall cavity. This alert highlights some of the practical considerations which come into play when litigating latent defects.

In the field of construction litigation, it is imperative for all participants – owners, architects, contractors and their counsel – to have a good working knowledge of latent defect claims. From an owner or developer's perspective, it is crucial to have an understanding of when a latent defect becomes patent in order to avoid sitting idle through the statute of limitations period. On the other hand, a contractor defending against a construction defect claim needs to know how to factually determine when the latent defect manifested itself to the owner. This is when the problem evolves from a latent defect to a patent defect. Although this determination is always based upon a fact-by-fact analysis, there are guidelines that courts have adopted to make this analysis more consistent, such as those in Florida.1

"Latent defects are generally considered to be hidden or concealed defects which are not discoverable by reasonable and customary inspection, and of which the owner has no knowledge."2 A latent defect is one not apparent by use of one's ordinary senses from a casual observation of the premises.3 However, knowledge can be inferred when the defect should have been discovered by due diligence of conducting a reasonable inspection.4 In other words, an owner can't just assert ignorance of a visibly manifest construction defect. A state of blissful ignorance alone can't avoid having imputed the requisite knowledge of what is not a patent defect.

Latent Versus Patent Construction Defects

At some point in time, a distinct evolution takes place and a latent defect, as a matter of fact and law, transforms into a patent defect. It is at this point that the statute of limitations period begins to run.5...