Property Management Professionals (PMP)

Dr. HOA,
I recently moved into a new condominium community. A few days ago, I received a letter in the mail from a law firm stating that they are investigating my community, and my building in particular, for a possible construction-defect lawsuit.

They provided a list of items to look for, including yard-drainage deficiencies, stucco cracks, wood deterioration and poor painting.

I personally have not noticed any problems, but should I contact the law firm to do an investigation of my unit? I am now worried that I may have a problem with my new home.
—E. Schwartz

Hello E. Schwartz,
First, let me be clear that I am not an attorney, so this should not be considered legal advice. That said, throughout my career as a real estate professional, I have seen these types of mass-mailings to homeowners in newer communities by a small group of law firms “specializing” in construction-defect litigation in an attempt to solicit new business.

The problem is, often these types of class-action construction-defect lawsuits end up doing more harm than good, so I always encourage homeowners to do their due diligence and make sure they know what they are signing up for.

I would like to first address the topic of class-action construction-defect lawsuits and then I will speak to your situation specifically.

Generally speaking, if a homeowner discovers what they feel to be construction-related deficiencies, I encourage them to first contact the builder and schedule an inspection. I have found that most homebuilders are committed to addressing homeowner concerns in a timely manner.

If the homeowner’s efforts to work with the builder to resolve the issue(s) are unsuccessful, and he or she feels justified in pursuing legal action, then by all means, homeowners should do what they feel is necessary to protect their interests.

But I encourage homeowners to always give the builder the opportunity to address any construction concerns before pursuing legal action, while being mindful not to let any statues of limitations pass that might impact their ability to pursue legal recourse in the future.

Additionally, I encourage homeowners to do their due diligence and make sure they understand the potential results of entering into a construction-defect lawsuit.

For instance, many homeowners are not aware that entering into a construction lawsuit will most likely void any existing builder warranties on the home.

Additionally, construction-defect lawsuits are recorded against the property and a matter of public record. It may also be required that owners disclose the lawsuit to future potential buyers, making the property difficult to sell, or creating issues for homeowners trying to refinance.

I have also found that often times the settlement amount is far less than the estimated amount first proposed by attorneys, and sometimes, not enough to cover repairs. You can begin to see why many of these class-action lawsuits end badly for homeowners.

As it relates to your specific situation, I am unclear why you would personally be receiving this type of letter. Because you are an owner in a condominium community, the association, not you personally, owns the building.

As such, the association would have to be the party to initiate and pursue a construction-defect lawsuit. It sounds like the letter is nothing more than a marketing mass-mailer by a law firm trying to drum up business.

If you discover what you feel may be construction-related deficiencies, contact your association and ask them to have the building inspected.

The association should then consult with the builder and whatever other independent experts they feel necessary to determine whether there is actually a problem.