- Can community associations, condominiums, and town homes pursue claims for construction defects?
- Who is legally responsible for defective construction?
- What claims can I pursue?
- Are there any special procedures which must be followed prior to filing a lawsuit?
- What kind of damages can I recover?
- At any time during construction defect litigation, do members have to move out of the building?
- How do I differentiate between a construction defect and a maintenance issue?
- How much does construction defect litigation cost and how do I pay for it?
Generally, yes, if the building was constructed or rebuilt within the time period specified by law, and your claim is within other time limits. A complete answer depends on a legal analysis of the specific facts about the project and the Conditions, Covenants and Restrictions (CC & R's).
Depending on the facts, the developer, the general contractor, design professionals and engineers, relevant subcontractors, and material suppliers can all be liable, and usually they are insured.
Community associations and owners of condominiums and town homes may pursue claims to enforce their CC & R's and to recover damages to (1) common areas, and (2) "separate interests" which are defects in common areas, are defects "integrally related" to common areas, or defects that the association is responsible to maintain or repair pursuant to the CC & R's. The definitions and provisions of CC & R's can be convoluted and confusing. We recommend that the home owners discuss the scope of property interests for which the association may have responsibility with a qualified legal professional with experience in community association law.
Depending on the facts of the case, for residential property in California sold by the builder prior to January 1, 2003, owners can pursue claims for negligence, strict liability in tort, breach of contract, breach of warranty, breach of implied covenants of fitness for purpose and habitability, fraudulent misrepresentation, and fraudulent concealment, among other legal remedies. Defects due to the negligence of a subcontractor, material supplier or design professional are also actionable. In California, for projects sold by the builder after January 1, 2003, community associations and owners of condominiums and town homes can pursue claims for failure of the builder to comply with a list of "functionality standards" adopted by the California Legislature. They may also pursue claims for breach of contract, fraud, and statutory violations.
In Arizona claims against the builder frequently include breach of contract, breach of express warranty, and breach of implied warranties. Arizona statutes require that the builder be given notice of the defects and an opportunity to inspect and either repair or offer damages for settlement prior to the filing of a lawsuit. Note that these statutes do not apply to arbitration.
Some purchase contracts in Arizona contain a binding arbitration agreement which attempts to limit a homeowners ability to file a construction defect claim in a court of law by requiring the dispute be settled by an arbitrator or a panel of arbitrators. If arbitration is used to resolve the matter, the decision that is made is as binding as one made by a court of law.
Yes. Typically, the association's CC & R's provide for special procedures that must be followed prior to pursuing legal actions for defective construction. These procedures may include requirements of notice to be provided to the membership, sometimes even requiring that a vote of the membership be held prior to engaging legal counsel. You should review the requirements of your CC & R's, and discuss them with qualified legal professionals prior to commencing any legal action.
In addition to the CC & R's, in California, special procedures are required to be followed by California statute. One of the procedures is commonly known as the "Calderon Process", and is generally required to be fulfilled prior to filing a lawsuit for defective construction. This process includes notices, exchanges of information, inspections, and mediations. Although intended to expedite claims for defective construction, the process can be manipulated by builders to add additional delay to resolving the issues if not diligently monitored by experienced professionals who understand and have experience with the process.
Another process in California that generally applies to residential properties sold for the first time after January 1, 2003, is commonly referred to as "SB 800". This process concerns claims for failure of residential structures to comply with the "functionality standards" discussed above. Prior to an individual or association filing suit for claims of violations of "functionality standards", the builder must first be given notice of the defects and have an opportunity to repair the conditions. The builder's "right to repair" process is extremely technical and contains many traps for the unwary consumer in which the builder can substantially delay the process. We recommend that you retain qualified legal assistance with expertise in construction well before any attempt is made to initiate the legal process, to ensure that your dispute not only includes all appropriate claims, but also moves forward as expeditiously as possible.
In Arizona the law requires that the builder be given notice of the defects and an opportunity to inspect and either repair or offer damages for settlement prior to the filing of a lawsuit. Note that these statutes do not apply to arbitration.
Usually in a construction defect action you can recover for the cost of repair, or the value of the reduction in value of the property, whichever is less, subject to certain factors that may increase your recovery. Because a community association is generally required by its CC & R's to maintain and repair common areas, the typical measure of damages is the cost to repair. Other potentially recoverable damages include the cost of investigation, relocation and storage, and other costs recoverable by contract or statute. Punitive damages are also available in cases in which fraudulent misrepresentation or fraudulent concealment is found.
No. Generally inspections and testing can take place while the units are occupied.
Typically, an expert consultant is retained to analyze the conditions, and a determination is made as to whether the condition is one of deficient design, improper construction, or inadequate maintenance. Often we find that the problems people consider to be maintenance issues are created by defects in the original construction.
There are a variety of ways to structure the fee arrangement, from paying for professional services based on time worked and costs incurred, to a contingent fee agreement. In a contingent fee agreement, you do not pay legal fees unless and until there is a recovery. Other costs of the litigation may be charged to the client, but may also be advanced by the law firm and recovered from proceeds of case resolution. Some of the investigation and analysis expenses can also be recovered at trial, assuming the case goes that far. Your CC & R's may also provide that you can recover attorney's fees in addition to the damages.