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Eighty-one percent of recently surveyed respondents by the Community Associations Institute say poor workmanship is the most common type of deficiency in the construction of condominiums. The poor workmanship, they say, resulted in plumbing leaks, electrical or mechanical problems, or cracks in foundation walls, according to a recent report by the Community Associations Institute.
Read more: Condo Builders Put on Brakes Fearing Lawsuits
Most of the construction deficiencies cited—57.3 percent—are in the development of new condominiums compared to only 17.7 percent problems cited in the construction of townhomes or single-family homes, the report says.
What’s more, the warranty period had expired in nearly half of all communities experiencing a construction deficiency. Further, it often takes more than a year for the majority—62.3 percent—of communities to file a suit to recover damages. Community associations that are unable to recover damages often have to turn to special assessments to make the repairs or do not repair the deficiency at all, the report found.
Not surprisingly, those defects can affect resale value. Thirty-five percent of respondents reported construction deficiencies negatively impacting their property value and ability to resell the home.
CAI completed the survey because they say community associations “have been under attack in state legislatures and municipalities by legislation and ordinances that have sought to strip associations’ ability to seek relief from damages due to legitimate deficiencies found in the construction of homes, units, or common areas.” The bills add steps associations must take before filing a lawsuit and, in some cases, limit the definition of a construction defect to those only causing physical, bodily harm, CAI says.
The majority of defects are not serious, and don’t often require a lawsuit, according to Ross Feinberg, author of “Construction Defect Litigation,” published by CAI. In a 2017 study conducted by CAI, the majority of claims—44 percent—were resolved outside of court. The majority of claims are resolved with direct negotiation.
“The process for associations to recover damages from a building deficiency is far more complex than filing a lawsuit,” says Dawn M. Bauman, CAI senior vice president of government & public affairs. “Associations must determine whether the cost and time to pursue claims outweigh the repair costs.”
CAI’s report found that it took more than a year for nearly two-thirds of communities to recover damages, and only one-third reported the damages paid were enough to cover the repair.
“Market forces are dictating whether condominiums are being built, not warranties,” Bauman says. “Laws are present in states that make associations weigh the breadth of filing a warranty claim before doing so. Reducing consumer protections by watering down the statutory warranties will not reduce purchase prices, but will increase the post-sale cost of homeownership.”
Source: Community Associations Institute
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