Common Construction Issues for Condominium and Homeowner’s Associations

<Construction law

There are  a number  of  common  construction related  issues that  condo  and homeowner’s associations should keep in mind when conducting any construction.

Defects – Defects in the construction of buildings, fixtures, or other  improvements owned  by an association or an individual  property owner  within an association re sometimes  revealed. These flaws can be caused by deficiencies in the design, planning, supervision, construction, or remodeling of the property.

When a construction defect is discovered, the contractor, architect, or other person responsible for the defect must be served with a written notice of claim at least 60 days prior to filing an action. Associations representing more than 20 units must serve such notice within 120 days. The contractor or other person then has the opportunity to  perform  repairs, agree to  pay damages for the defect, or dispute the claim.

Warranties – A warranty is a promise of  indemnity for  any  defects  in  design, planning, supervision, construction, or remodeling of real property. Some warranties  are expressly made by the person performing the construction. Others are implied, such as the warranties  that  all construction  is  done  in  a  workmanlike  manner   and  that  a  residence  is  habitable   upon completion. Condominium  developers  may also be bound by an implied  warranty  that  all construction complies with and restrictions of the association.

There are also warranties established by statute. A condominium  developer is statutorily bound by a 3 year warranty of fitness and merchantability of all units and improvements. Contractors and subcontractors  are bound by a 3 year warranty on roofs, structural  components, and mechanical and plumbing elements.

Statutes  of  Limitations  – Once a construction defect is discovered, a claim for  damages against  the  responsible  party  must  be  filed  within the  limited   time  period  established  by statute.  For construction  defects that  are known  or should be known, a suit must be brought within 4 years after the latest date of actual possession by the owner, the date of issuance of a certificate of occupancy,the date of abandonment of construction if not completed, or the date of  completion or termination of the  contract  between  the person  responsible  for the  defect and the employer.

For latent  defects, those not immediately apparent, an action must be commenced  within 10

years of when the defect is discovered or should have been discovered with the exercise of due diligence. However, this time period cannot extend beyond 10 years after the latest date of the events described above. This means that a suit based on a latent defect first discovered after 10 years of that date is barred by the statute.

Liens– Those who perform  construction work on a property such as contractors, laborers, and architects may be able to file a lien against a property  if unpaid for work performed or materials supplied. For construction  on common  elements, a lien may be applied to all parcels benefitting from   the  common   element.  This  means  that   a  lien  could  be  applied  to  all  units  in  a condominium for a prorated share of any unpaid construction  on a common element.

The amount  of time  in which  such a lien can be claimed is determined  by the  status of the person making the claim. The time periods and procedures vary for contractors, subcontractors, laborers, and other lienors.

Avoiding Defects -It is important for an association to ensure construction on both common elements  and individual  units  is completed  without substantial defects that  could  potentially damage the  property.  Hiring  an independent project  manager or construction  consultant  to oversee the work of any construction project  can be helpful in discovering defects early on or preventing  them  altogether.  In addition, requiring  that  the  performance  of any construction work be backed by payment  and performance bonds can help reduce the potential cost to the association of incomplete, defective, or unperformed work.

by Jaremy J. Shelton,Esq.

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