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Top 10 Questions Regarding Condominium Construction Defects

The following are the 10 most frequently asked questions by Condominium Associations that are facing potential claims for construction defects:

1.    What is a construction defect?
Construction defects can be classified into three categories:  defective building material; faulty workmanship; and improper design.

2.    Who is responsible for the construction defect?
The developer, design professional, and contractor may all be responsible. Historically, the law has recognized that the various participants in the construction process are liable only for those defects that fall within their respective areas of expertise. For example, a contractor who builds a structure according to the design supplied by the owner generally is not responsible for the adequacy of the design.

3.    What warranties should the Association be aware of?
In addition to express written warranties received from the developer and contractors, the Association should be aware of warranties provided by the Condominium Act. The Condominium Act provides implied warranties in favor of individuals who purchase their units from the developer. The warranties as to the developer, run 3 years from completion of the building, (usually measured by the issuance of the Certificate of Occupancy) or 1 year from transition of control from the developer to non-developer unit owners but in no event more than 5 years from completion of the building. There is also a common law implied warranty under which the Association can make claims for a period up to 4 years from transition.

The warranties as to the developer are as follows:

–    As to the roof and structural components of a building or other improvements and as to mechanical, electrical, and plumbing elements serving improvements or a building, except mechanical elements serving only one unit, a warranty for a period beginning with the completion of construction of each building or improvement and continuing for 3 years thereafter or 1 year after owners other than the developer obtain control of the association, whichever occurs last, but in no event more than 5 years.

–    As to all other improvements for the use of unit owners, a 3 year warranty commencing with the date of completion of the improvements.
Contractors, subcontractors, and suppliers all grant warranties as to work or materials supplied as follows:

–    For a period of 3 years from the date of completion of construction of a building or improvement, a warranty as to the roof and structural components of the building or improvement and mechanical and plumbing elements serving a building or an improvement, except mechanical elements serving only one unit.

–    For a period of 1 year after completion of all construction, a warranty as to all other improvements and materials.

4.    How do we prove that a construction defect exists?
In most cases, the Association will need to hire the services of an independent expert. Experts are those who have the necessary training, education, and experience to give testimony in court as to the cause of a defect. For example, if your roof leaks, a roof expert who has designed roofs, evaluated other defective roof systems, and knows how roofs should be built would be in a good position to testify. A general or roofing contractor can repair a damaged roof, but he may not be the best person to act as the expert.

5.    What kinds of damages can we recover if a lawsuit is filed?
Generally, the measure of damages is the cost to correct, repair, or replace the defective building component.

6.    How long do we have to file a lawsuit?
A lawsuit must be filed before the Statute of Limitations expires. The Statute of Limitations as to defects which the Association knew of or should have known of through the exercise of reasonable diligence is tolled until time of transition and then runs for 4 years. If there are latent defects, the Statute of Limitations as to those defects commences when the Association knows or should have known through the exercise of reasonable diligence of the existence of the defect and runs for 4 years with an absolute bar of 10 years from the time the building was completed (Statute of Repose), measured as of the date of the Certificate of Occupancy.

7.    How much will a lawsuit cost?
The total cost of prosecuting a lawsuit on behalf of the Association will depend on a number of factors, including the nature and amount of damages, the number of parties, and the attitude of the parties. Some lawsuits are settled within a short period of time, while others are not resolved until just before trial. Construction defects lawsuits can be extremely expensive, and close cooperation between the Board of Directors of the Association, property manager, expert, and attorney is necessary to contain the costs as much as possible.

8. Will the Condominium Association insurance cover damages caused by construction defects?
Usually, the Association’s insurance policy will not cover damages caused by construction defects. The language in most insurance policies excludes coverage for faulty construction, design, workmanship, and/or defective materials. However, disaster coverage such as coverage for flood, earthquake, and hurricane must be evaluated separately as coverage may be afforded under said scenarios.

9.  Is the Association required to make repairs while the lawsuit is pending and can said cost of repair be recovered in the lawsuit?
The Association is required to mitigate damages. That is, the Association must take all required steps to protect the property from sustaining additional damage. These costs are usually recoverable if a lawsuit is filed. However, if temporary repairs are made, said repairs must be carefully evaluated with the Association’s expert to assure correct documentation of the temporary repairs. Furthermore, it is recommended that notice be given to all parties of the proposed repairs to be made.

10. Should the Association allow the developer and/or the contractor to make necessary repairs?
The proposed repair should be evaluated by the Association and its expert. If the proposed repair meets the approval of the Association’s expert, the Association should allow the repair unless other reasons exist to reject it. The same expert should oversee actual repairs. Once repairs are agreed upon, a proper settlement agreement should be drafted that only releases the developer of liability for the limited and defined repairs being made, and then only after the repairs have proved effective.

Thomas Code

Thomas Code

tcode@bplegal.com

Tom Code is a Board Certified Construction attorney with a broad range of experience in the areas of civil litigation, complex and commercial litigation, arbitration, contract issues and corporate decision-making. Fully bilingual in Spanish and English, he has represented diverse business interests ranging from developers, contractors, and property owners to financial institutions, hotel owners, pharmaceutical companies and multinational companies in breach of contract, product liability and other litigation.

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