Condo Claims

Condo Claims

Washington’s single most consumer-friendly piece of legislation is the Washington Condominium Act.  The Condo Act says, essentially, that the anything the Developer builds must be built correctly.  Unfortunately, it is difficult to build every part of a building properly under the best of conditions and under the incentive structure for Developers, every condo project has a significant likelihood of hidden construction defects that cause property damage, increase maintenance costs, and reduce the useful life of the building.  

As the saying goes, there are three types of condominium associations in Washington, those that have been through litigation, those that are in litigation, and those that will go through litigation.  

The Condo Act establishes a high standard for performance.  Unfortunately, a Developer is not generally incentivized to meet that standard.  The condo units will sell for a market price that is independent of the cost of construction.  Therefore, every dollar that the Developer saves building the building is a dollar that goes in the Developer’s pocket.  Developers build projects through single-asset entities that are dissolved as soon as possible after the last unit is sold.  Some Developers purchase insurance to cover possible claims, some do not. 

Unfortunately for Owners, insurance does not cover bad work.  With a Swiss cheese approach to insurance coverage and exclusions, insurance typically only covers damage to other parts of the building that a Contractor or Subcontractor’s work caused, referred to as “consequential damage.”  Identifying consequential damage is the single most important task in recovering money to fix the building.  Identifying consequential damage is expensive because a team of forensic building envelope specialists and a competent contractor have to remove significant portions of the exterior of the building to document the conditions under the exterior cladding and roofing. 

Fortunately, the Condo Association is well-positioned to participate in a collective action, where all the owners, through the Association, share the costs and proceeds of litigation.  In fact, a Condo Association Board has a duty to preserve the condition of the buildings and pursue any legal actions available to recover funds to remediate the buildings. 

The Condo Act has a strict deadline of four years to file a claim against the Developer.  However, that four years is measured from several possible starting points.  It is best to consult with an attorney as soon as possible to ensure that the deadline is not missed.