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.