Q&A: Responsible for Construction Defects?

Q I would like to educate myself about the process whereby a condo association identifies new construction defects in a timely manner and obtains repairs from the builder. I also would like to understand the basics of how a 10-year warranty works for major construction defects. I own a townhouse in New Jersey that was built in 2005. My townhouse has installation defects in the exterior envelop (stucco) and roofing.

—Concerned about Construction

A “Pursuant to the master deed and bylaws of a condominium association, the Board of Directors (sometimes called a Board of Trustees) of the association is obligated to maintain, repair and replace the common elements of the condominium association,” says Donald B. Brenner, an attorney at the law firm of Stark & Stark in Lawrenceville. “Once the sponsor-developer turns over control of the condominium association to the unit owners, the unit owner-elected Board of Directors typically hires an engineering or architectural firm to conduct an investigation to determine the condition of the common elements of the condominium association. The engineering or architectural firm documents the condition of the common elements, including all deficiencies. Normally the inspection is a visual inspection designed to catalog the most obvious and visible design and construction deficiencies. Where warranted, the engineer or architect also makes recommendations for additional investigations, some of which may be invasive in nature.

“If, as commonly happens, water infiltration through roofs, exterior siding, windows or exterior doors is suspected, the engineer/architect will usually take moisture probes and test cuts to determine how much moisture is getting behind the exterior cladding and/or roof or fenestrations and whether it is damaging other property, including, but not limited to, sheathing, framing and interior finishes. Moisture probes are taken with a moisture meter, which usually has two prongs that get inserted through the exterior cladding and inside the wood or other substrate. If the moisture content of the wood substrate exceeds 19%—that means damage is likely beginning. If it exceeds 30%, that means the substrate is damaged and needs to be replaced. Test cuts will be taken in areas where high moisture readings are taken to expose the condition of the wood or other substrate underneath. Once the extent of the damage is determined, repair protocols and professional cost estimations can be developed by the design professionals.

“A fully documented report is then prepared by the design professionals. That report is given to the sponsor-developer with a request that the deficiencies noted in the report be repaired under the supervision of the association’s design professionals at the cost of the sponsor-developer. Negotiations often take place but rarely is a settlement achieved because of insurance issues and indemnification and contribution issues too complex to discuss in this short article.

“Although water infiltration is the source of most complaints by unit owners, it is by no means the only complaint made by unit owners. Structural defects are sometimes reported to the association. There are a virtually limitless array of structural claims that can be made and there simply isn’t room in this short article to address them. If you think you have a major structural defect, you should be aware that the homeowner warranty is virtually useless in our experience. It provides 10 years of coverage for “damage to the load-bearing portion of the home due to subsidence, expansion or lateral movement of the soil, (excluding damage caused by flood or earthquake) which affects its load-bearing function and which vitally affects or is imminently likely to vitally affect the use of the home for residential purposes.” NJSA 46:3B-2. The house or condominium unit has to be practically uninhabitable to prevail on such a warranty claim and you are not going to get anywhere near the award you would get from a jury. Your claim is going to be decided by someone appointed by the warranty company who may be an engineer, a lawyer, a contractor, or a knowledgeable lay person. You have no right to a judge, a jury, to take discovery, to cross-examine witnesses, to put on testimony, or to appeal except in the most limited of circumstances where you can establish that some sort of fraud has taken place in the warranty deliberation process. Moreover, the statute also provides that if you file a claim under your warranty, you have elected a remedy and, if you are disappointed in the outcome of the warranty process, that’s too bad because you are forever barred from litigating in court.

“You need to have counsel help you carefully weigh myriad decisions in deciding how to handle the issues implicated by your questions.”

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Comments

  • Vincent Gil vgil@vanguard.edu on Wednesday, July 29, 2015 2:21 PM
    We are an HOA Townhome/condo Association. I have significant cracks running through my hard suface floors in kitchen and living room, all vertical to structure, and seemingly above post-tension tendons. I have asked the association to investigate since I don't own the pad--the association does. I've pursued with builder but of course they sent out an inspector that just concluded 'wait and see'. The association has declined to investigate but I feel it is their fiduciary responsibility to conduct a structural engineering test since the condos sit on expansive soil (7 years old). and other homes have had pad failures in the area. Am I wrong in assuming that it is the HOA, not me who is responsible to investigate further? Advise please so that I can present to my board some evidence of their need to respond proactively (Fisher vs Shipyard Village 4/2014?)!