An issue that rears its ugly head at homeowner associations are problems with the inital construction, more commonly called "defects". Most licensed builders are competent, experienced and honest. However, the building industry is changing for several reasons: Builders move from state to state to take advantage of housing booms. In "hot" markets, buildable land can become scarce, enticing builders to place new construction in steep areas, floodplains and other places they previously avoided. The scarcity of competent construction labor means some projects are being built by less experienced workers. Because of premature failure of products like Louisiana-Pacific (LP) siding, some builders are using new materials with which they may not be fully experienced (such as stucco). In some cases, builders are trying their hand at constructing condominiums and other larger structures, in response to high-density land use laws. These factors are causing construction defects to become more common.

What if construction defects are suspected and the builder's warranty has expired? Most builders sell homes with fairly short express warranties, often no more than a year. After the warranty expires, some builders deny responsibility for repairing problems. But even when a builder's warranty has expired, state law gives homeowners and homeowners associations certain rights. New home construction carries implied warranties which may exist even after the express warranty has expired. Homeowners normally have between one and six years to file suit after a problem is discovered. A contractor's negligent repair attempts may themselves give rise to a claim. Many states that have a statute of limitation for construction problems that lasts a number of years, 10 in Oregon for example. Therefore, although you should always act promptly when a problem is discovered, you still may have legal rights, even after the contractor's original warranty has expired.

Are there any special rules for row houses, condominiums or other homeowner associations? Many states give special protection to purchasers of condominiums, row houses and other common interest developments. In Oregon, for example, individual condo unit owners automatically are given a one-year warranty and the association is given a similar warranty on the common areas. To recover under these warranties, notices must be delivered in a timely fashion -- within one year of purchase for problems in individual units, longer for common-area defects -- but once those notices have been given, recovery for defects can be relatively straightforward. For multiple homeowners associations that are located within a larger "umbrella" or master association for architectural review, recovery can be a little more complicated, but homeowners can obtain leverage and "economies of scale" by pursuing matters together.

What should happen if construction defects are suspected? First, give the developer written notice of the problems. It is always a good idea to give the developer a chance to resolve the problems. Most builders are responsible and want to make their customers happy. If your builder does not adequately address your problems, however, or if you have any concern about a warranty or statute of limitation expiring, you should consult an attorney to protect your rights.

A good attorney should not interfere with a developer's good-faith efforts to solve the problems. However, an attorney can:

• Negotiate a "freeze" on the statute of limitations while the builder attempts repairs;
• Help you get the attention of a builder who may otherwise be too busy with new projects to pay attention to your problems;
• Negotiate with your insurance carrier to obtain payment for some problems;
• Explain the pros and cons of bringing a complaint with the state construction contractor licensing agency instead of a court, and help navigate the process where appropriate;
• Work with a team of construction professionals to be sure all problems -- not just the ones you know about -- are identified and fixed before you sign any releases; and
• Understand the technical aspects of construction and explain them to a jury if litigation is necessary.

Construction defects can be confusing and contentious. However, resolving the issues is an important step to keeping the association on track. The technicalities are complex to warrant the assistance of an attorney that is competent in construction and homeowner association law plus litigation. If you have them, resolve to contact one today.

For more information on this subject, see www.Regenesis.net.

Published: April 21, 1999

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Editor's Note: This article reflects the opinions of Richard Thompson only and not necessarily the views of this or any other publication, organization or Website owner.

Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .