A construction defect occurs when something built by the developer was not built to the industry standard, such as walls that are missing vapor barriers.
Owners generally only have claims on damages from the paint on the drywall and inward. This is the general bounds of the unit. Everything else is generally part of the common elements and is a claim of the association. Individual owners have warranty rights based on the contract with the developer. Generally, the developer exclaims the implied warranty of habitability, a broad and powerful warranty that re- quires the building to be built in such a way as to be free from defects and allow for habitation, and instead grants a narrow express warranty. The express warranty is limited to certain items. In contrast the association does not have a contract with the developer. Thus, the association is generally able to assert the implied warranty of habitability when defects are noted. Additionally, a condominium association can assert claims, including warranty claims, on behalf of all of the owners for defects noted inside of the units.
If an association notices deficiencies, it should hire a contractor to inspect and solicit bids to fix the issue. The association should then notify the developer of the claim. If the claim is for issues with the unit, the purchase contracts must be reviewed to determine where the appropriate notices should be sent and how long they have to give the developer to fix the issues.
How can an association complete necessary repairs quickly while still pursuing any claims they may have against their developer?
Associations that need to make repairs due to a danger to life, health or property, should notify the developer of its intent to make the repairs. This will give the developer the opportunity to inspect the property before it is altered. If the situation is urgent, the developer will likely have to act quickly. Assuming the developer has refused to fix the issue, the association can have the emergency repairs completed.
Should contractors working to remedy a construction defect document everything they do, and if so, in what ways?
It is vital that the contractors document everything they do on the property. Some contractors go as far as to have a staff member do nothing but take pictures and video record the work. Also, any original materials that can be salvaged should be kept as potential evidence.
Generally, the association and the owners need to notify the developer by certified mail. However, the sales contract will dictate how the notice is to be sent. The association should notify the developer as soon as practicable after it knows that it has a problem.
It would not be unusual for developers to argue that the express warranty has expired if it has. However, if the issue is a common element issue, the implied warranty of habitability may not have expired yet. Additionally, if the developer knew of the issues while it was in charge of the association and failed to act, it likely breached its fiduciary duties to the association, which generally will have a longer statute of limitations than the warranty period which is usually one year.
Yes. The board can modify the rules and regulations the developer drafted. It is one of the first things associations do after turnover.
Arbitration is widely viewed b companies as a means by which they can reduce potential losses. Developers often put provisions in governing documents requiring the associations to arbitrate disputes rather than litigate them. However, the Condominium Property Act was amended a few years ago to make it difficult for a developer to force an association to do so. Since arbitration can be just as expensive as litigation, most associations would rather just litigate the case.