Defects in Buildings/Warranty Claim against Declarant
Newly formed boards in new construction condominiums sometimes face the issue of what action to take against a developer who has not corrected a number of common area construction defects. They are not sure what to do to properly notify the developer and get a response.
The first thing to do is determine your rights under State law. The Condominium Act provides for a two year warranty for construction related issues. This two year warranty begins as to each unit on the date the unit is conveyed to a purchaser and extends not only to structural matters as defined by the Condominium Act, but also the unit must be constructed in a workmanlike manner and fit for habitation. As to the common elements, it is a structural defects warranty, again, as defined in the Condominium Act.
The Condominium Act defines structural defects as follows:
… those defects in components constituting any unit or common element which reduce the stability or safety of the structure below accepted standards or restricts the normal intended use of all or part of the structure and which require repair, renovation, restoration, or replacement. Nothing in this subsection shall be construed to make the declarant responsible for any items of maintenance relating to the units or common elements.
In the event it becomes necessary to file suit against a developer, there is a five year statute of limitations which applies. It is important to note that some declarants are "single purpose entities", that is, a legal entity set up for the sole purpose of developing and building a particular condominium and that upon the conclusion of sales will distribute profits to the principals and cease to exist. At that point the entity will have no assets and will, in essence, be judgment proof. If an action is to be taken against an entity of this type, immediate action must be taken to freeze, by a legal process known as "attachment", whatever assets the developer may have left in the entity, which would include any unsold units.
Before filing any significant court actions, the Association should engage an architect, structural engineer or other expert(s) who are familiar with the condominium warranty and can inspect the building(s) and create a list of warranty defects. Armed with that list, your attorney can make a convincing demand on the developer to make appropriate repairs.