Construction-defect lawsuits 'terrible' for homeowners Half of all condominiums may have serious flaws, starting a trail of woe


If there's one thing on which virtually everyone who's been involved in a construction-defect lawsuit agrees, it's that the process is hardest on homeowners.

"It's the homeowner who really [feels] it in the long run," says Karen Conlon, president of the California Association of Community Managers. The organization educates the property managers who guide condominium and single-family-home owners' associations through defect litigation.

"It's terrible: In most cases homeowners are not able to get refinancing or sell their units because no one wants to walk into a situation like that," Conlon says. "A homeowner must disclose what's going on," all alleged defects, to potential buyers.

Plus, attorneys sometimes advise homeowners not to fix defects such as leaking roofs or windows because the damage is needed as evidence.

In the end, condo association attorneys usually recover enough money from the builders' and subcontractors' insurance companies to handle the major problems.

But often there's not enough money left over to fix cosmetic flaws, which owners had expected would get fixed and which affect the resale value of their homes.

Since their explosion in San Diego's condo market more than a decade ago, big-money construction-defect lawsuits have spread quickly through Orange County and the West.

Whether the defects themselves are quite so rampant is debated in residential real estate.

Building industry leaders don't deny that defects exist, especially with regard to the condos built at a furious pace during the 1980s. But they say much of the litigation brought against them is frivolous -- spurred largely by greedy plaintiffs' attorneys.

The attorneys, meanwhile, estimate that half of all condominiums and many single-family homes have serious defects, mostly resulting from lax supervision during construction. They contend that, when confronted with defects, builders often offer "Band-Aid" solutions, and that some builders want homeowners to waive their rights to lawsuits before work is done.

Homeowners who choose to sue can expect at least an 18-to-24-month legal fight. It's not unusual for a large homeowners association to spend hundreds of thousands of dollars on construction experts who tear apart the walls -- so-called destructive testing -- in a sampling of condo units in search of evidence of defects.

At the outset of these cases, homeowners associations often get conflicting advice on how to proceed.

Decisions are critical because the statute of limitations for suing a builder for defective construction is 10 years from the time the builder files a notice of completion for the project.

However, the statute of limitations shrinks to three years once a homeowner or homeowners association learns of a particular defect.

A lot of plaintiffs' lawyers urge immediate legal counsel. They say builders are experts at downplaying problems and stringing people along.

Builders say they deserve the first call -- that they're committed to fixing serious problems. Some in the association management business agree.

"We tell our members to try to work out the problems with the developer, and if you can't, use the same due diligence in selecting a lawyer," Conlon said.

She suggests that homeowners associations check an attorney's record with the state bar and ask for references, especially references who sued for similar damages. "Make sure the attorney doesn't over-inflate what the real problem is. Deal with real numbers," Conlon said.

The building industry contends that experts brought in to help evaluate the problem and who work closely with plaintiffs' attorneys have a vested interest in finding, if not creating, defect issues. They suggest that homeowners seek their own construction consultants -- ones who haven't made defect hunting a specialty.

Plaintiffs' attorneys encourage homeowners to, in fact, hire experts who are well aware of the common problems and know how to document them.

Pub Date: 8/09/98

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