Construction Damages Under Florida Law

Recovering Damages for Defective and Breached Construction Contracts

When a builder, contractor, or subcontractor fails to deliver what the contract promised, Florida law provides a well-developed framework for measuring what the owner is owed. Understanding which measure of damages applies and proving it with admissible evidence often determines the value of the entire case.

The Governing Rule: Cost to Repair or Replace

Florida’s default measure of damages for defective or incomplete construction is the reasonable cost to repair or complete the work in accordance with the contract.

In Grossman Holdings Ltd. v. Hourihan, 414 So. 2d 1037 (Fla. 1982), the Florida Supreme Court adopted Section 346(1)(a) of the Restatement (First) of Contracts as the law of this state governing breaches of construction contracts. Under that rule, the owner recovers the reasonable cost of construction and completion in accordance with the contract if that is possible and does not involve unreasonable economic waste.

This is reflected in Florida Standard Jury Instruction (Contract & Business) 504.5, Owner’s Damages for Breach of Contract to Construct Improvements on Real Property, which instructs the jury to award the reasonable cost of completing or correcting the work.

Damages are measured as of the date of breach. Post-breach fluctuations in construction pricing do not increase or decrease the recovery. Grossman, 414 So. 2d at 1039-40. Florida’s appellate courts have recently reinforced this point in construction defect litigation, rejecting repair estimates prepared years after the breach as too speculative to support an award. See Bandklayder Development, LLC v. Sabga, 406 So. 3d 265 (Fla. 3d DCA 2025); Vuletic Group, LLC v. Malkin, 418 So. 3d 627 (Fla. 4th DCA 2025).

Practical consequence for owners: repair estimates must be tied to the date the defective work was performed or the project was abandoned, not to today’s material and labor costs. Retaining a qualified estimator early, and having that expert opine to date-of-breach pricing, is critical.

The Exception: Diminished Value When Repair Would Cause Economic Waste

Florida law will not force a defendant to pay to tear down and rebuild a completed structure when doing so would be imprudent and unreasonable. Economic waste exists when the cost of correcting the defect is grossly disproportionate to the benefit gained, typically where the defect cannot be physically remedied without demolition and reconstruction.

Where unreasonable economic waste is established, the measure of damages shifts to diminution in value: the difference between the value of the structure as contracted for and the value of the structure as actually built, measured at the time of breach. Grossman, 414 So. 2d at 1039-40.

The Standard Jury Instructions account for this alternative directly. Form 504.5(b) is the model verdict form for owner’s damages where unreasonable economic waste is claimed, requiring the jury to determine whether repair would cause such waste before selecting the applicable measure.

Who this helps, and when:

• Owners generally prefer the cost-to-repair measure, which is usually larger and easier to prove through a contractor’s estimate.
• Contractors and design professionals invoke economic waste defensively, to cap exposure at the (often much smaller) diminution in market value.
• Economic waste is a fact question supported by expert testimony, typically a licensed general contractor or engineer on feasibility of repair, paired with a state-certified appraiser on value. A claim or defense asserted without that expert support rarely survives.

Additional Categories of Recoverable Damages

Cost to repair and diminished value are the headline measures, but they are rarely the whole claim.

Loss of Use. An owner deprived of the use of the property by construction delay or by defect repairs may recover loss-of-use damages, measured by the reasonable rental value of the property during the period of deprivation. Gonzalez v. Barrenechea, 170 So. 3d 13 (Fla. 3d DCA 2015); Fisher Island Holdings, LLC v. Cohen, 983 So. 2d 1203 (Fla. 3d DCA 2008). Importantly, a complete loss of use is not required; loss of use of a substantial portion of the premises may suffice, and a defendant seeking a setoff for the owner’s partial use must put on its own valuation evidence rather than merely attacking the owner’s appraiser.

Consequential Damages. Losses that flow from the breach and were reasonably foreseeable at the time of contracting: lost rental income, business interruption, temporary relocation and storage costs, lost profits. These are recoverable in Florida, including on breach of warranty claims, Marcus v. Anderson/Gore Homes, Inc., 498 So. 2d 1051 (Fla. 4th DCA 1986), but they are frequently waived by contract. Owners should scrutinize AIA and custom agreements for waiver-of-consequential-damages clauses before signing; contractors should confirm the clause is present and enforceable.

Resulting and Consequential Property Damage. Damage caused to otherwise non-defective portions of the structure (water intrusion damaging drywall, flooring, cabinetry, and personal property) is recoverable in addition to the cost of correcting the defective component itself, along with the cost of accessing the defective work to perform repairs. See Mid-Continent Cas. Co. v. Treace, 186 So. 3d 11 (Fla. 5th DCA 2015).

Investigation, Testing, and Expert Costs. Destructive testing, moisture surveys, engineering evaluations, and forensic reports incurred to identify the scope of the defect.

Cost of Completion and Cover. Where a contractor abandons the project, the increased cost of engaging a replacement contractor to finish the work in accordance with the contract.

Prejudgment Interest. Because construction damages are liquidated as of the date of breach under the Grossman framework, prejudgment interest generally accrues from that date. Argonaut Ins. Co. v. May Plumbing Co., 474 So. 2d 212 (Fla. 1985).

Nominal Damages. Where a breach is proven but the owner fails to establish the amount of loss, only nominal damages may be awarded. Fla. Std. Jury Instr. (Contract & Business) 504.11. This is a real risk in cases tried without adequate expert damages testimony.

Tort-Based Claims and the Economic Loss Rule

Construction defect claims are not always confined to contract. A plaintiff may wish to plead negligence against a contractor, design professional, or other party to reach conduct outside the contract, to pursue a party with whom there is no contractual privity, or to reach different damages or a different limitations period. Whether such a tort claim is viable turns on two doctrines.

The economic loss rule after Tiara. In Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., 110 So. 3d 399 (Fla. 2013), the Florida Supreme Court limited the economic loss rule to products-liability cases. That ruling appeared to open the door to negligence claims in construction defect actions, and plaintiffs’ counsel widely amended pleadings to add tort counts after it was issued.

Casa Clara and the “home as a single product” problem. Tiara did not disturb Casa Clara Condominium Ass’n v. Charley Toppino & Sons, Inc., 620 So. 2d 1244 (Fla. 1993), which treats a completed home as a single product rather than a collection of separate components. The practical effect is that a defect in one part of the home that damages another part of the same home may not qualify as damage to “separate” or “other” property sufficient to support a tort claim when the only loss is the cost to repair the home itself.

The independent tort requirement. Even after Tiara, Florida courts require that a tort alleged alongside a breach of contract be independent of the acts that constitute the breach. As the Third District has put it, when a contract has been breached, a tort action lies only for acts independent of those establishing the breach. Peebles v. Puig, 223 So. 3d 1065, 1069 (Fla. 3d DCA 2017). A negligence count that merely restates the failure to perform the contract will be dismissed.

Professional negligence. Design professionals such as architects and engineers may be sued for professional negligence under Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999), even where the losses are purely economic.

Practical takeaway. Pleading both contract and tort theories can be valuable where privity is missing, where a longer tort limitations period matters, or where punitive damages or additional defendants are in play, but the viability of a negligence count in a defect case remains fact-dependent and is still being sorted out in the trial courts after Tiara. Each proposed tort count should be tested against the independent-tort requirement and the Casa Clara single-product rule before it is filed.

Limits on Recovery

Mitigation. An owner cannot recover for losses that could have been avoided by reasonable effort. Fla. Std. Jury Instr. (Contract & Business) 504.9. Allowing a minor water intrusion issue to progress into structural rot invites a reduction.

Reasonable Certainty. Damages may not rest on speculation or guesswork. The amount need not be proven with mathematical precision, but the evidence must supply a reasonable basis for the jury’s calculation.

Foreseeability. Consequential losses must have been reasonably foreseeable to the breaching party at the time of contracting.

Contractual Limitations. Liquidated damages clauses, damage caps, consequential-damages waivers, and warranty-exclusivity provisions are routinely enforced in Florida and may control regardless of the common-law measure.

Attorney’s Fees: Governed by Contract or Statute

Florida follows the American Rule. Each party bears its own attorney’s fees unless a contract or a statute provides otherwise. There is no general right to recover fees simply for prevailing on a construction defect or breach of contract claim.

Fee exposure and fee recovery in construction disputes typically arises from:

• The construction contract itself. Most well-drafted construction agreements contain a prevailing-party fee provision. Section 57.105(7), Florida Statutes, makes a one-sided fee provision reciprocal, so a clause drafted to protect only the contractor may end up benefiting the owner.
• Construction lien claims. Section 713.29, Florida Statutes, awards a reasonable fee to the prevailing party in an action to enforce a lien under Chapter 713. Determining who prevailed for purposes of this statute is itself frequently litigated.
• Payment bond claims. Section 713.23, Florida Statutes, and, on public projects, section 255.05, Florida Statutes.
• Proposals for settlement. Section 768.79, Florida Statutes, and Florida Rule of Civil Procedure 1.442 create a fee-shifting mechanism independent of any contract. A properly served, unaccepted proposal can convert a defense win into a substantial fee judgment, or vice versa. Strict compliance is required and technical defects are fatal.
• Chapter 558 pre-suit notice. Chapter 558, Florida Statutes, requires a notice-and-opportunity-to-repair process before most construction defect actions are filed. Failure to comply does not itself shift fees, but it can result in abatement and affects settlement leverage.

Bottom line: the fee provision in your construction contract frequently has more impact on the economics of a dispute than the underlying measure of damages. It should be reviewed before a contract is signed, not after a lawsuit is filed.

How We Approach Construction Damage Claims

At Gagnon Eisele, P.A., we represent owners, contractors, subcontractors, and suppliers in construction disputes throughout Florida’s circuit and county courts. Our approach to damages begins with three questions:

1. Which measure applies: cost to repair, or diminished value under the economic waste doctrine?
2. When did the breach occur, and can the damages be proven as of that date?
3. What does the contract say about consequential damages, caps, and attorney’s fees?

Answering those questions correctly at the outset shapes expert retention, discovery, and settlement posture for the entire case.

This page is provided for general informational purposes and does not constitute legal advice or create an attorney-client relationship. The measure of damages in any construction dispute depends on the specific contract, facts, and procedural posture of the case.