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CALIFORNIA PROPERTY OWNERS' RIGHTS AGAINST FAULTY CONSTRUCTION A consumer rights guide published by Gerard & Associates. COMMONLY ASKED QUESTIONS
Q. What
is a construction defect? A. A defective condition can be the result of faulty design, materials, and/or workmanship. A construction defect includes: "...a failure of the building or home to be constructed in a reasonably workmanlike manner and/or to perform in the manner that is reasonably intended by the buyer." Common examples of defective construction may include: Significant cracks in the slab and/or foundation; unevenness in floor slabs caused by abnormal soils movement; leaky roofs and/or windows; moisture problems due to improper drainage and/or waterproofing; faulty or corroded plumbing; faulty framing; over stressed structural members, bowing or slanting of floors and walls; doors and windows that bind and are difficult to open and close; and cabinets or counter tops that are separated from walls or ceilings. (This is not an all-inclusive list.) Any condition in your property which makes it unsuitable for its intended use may be considered a defect. [Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224; Del Mar Beach Club Owners Ass'n v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898; Raven's Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783.] Q. How
do I know if I have a claim? A. Of course, some conditions may be obvious, such as large cracks in the foundation, floor slab, or walls. However, as a general rule, most defective conditions become apparent approximately 3 to 5 years after the completion of construction. They initially appear as hairline cracks or other minor problems. In our experience, if you own a tract home or condominium, the problems or concerns you have are not unique to your property. Talk to your neighbors _chances are, they will have similar conditions. In all circumstances, we suggest that you contact your builder/developer for an explanation concerning the potential problem as well as assistance in fixing it. Be careful to make sure that the problem is fully identified and that the proposed fix is not a temporary "band-aid." For the most objective opinions, we strongly suggest that you have a qualified construction expert inspect your property as soon as you suspect that a problem exists. Q. Who
is responsible for defective conditions? A. The builder/developer is responsible for all defective conditions even if the actual work was performed by a subcontractor or if the defective materials used in construction are manufactured by someone else. Of course, the involved design professionals and subcontractors remain responsible for their work. However, in light of the builder/developer's responsibility for the work of others, it is easier for the property owner to go directly to the builder/developer for recourse. Many of our clients relate horror stories in which the builder/developer disavowed his/her own responsibility and advised the property owner to "chase" the subcontractors. We advise our clients that in many cases, this is unnecessary and fails to result in a satisfactory resolution. [Standard Pac. of San Diego v. A.A. Baxter Corp. (1986) 176 Cal.App.3d 577.] Q.
What are my rights under California law for faulty construction? A. California law favors the property owner. In the case of mass produced tract homes or condominiums, the builder/developer is strictly responsible for all defective conditions that may exist within your property or community. Claims may also be pursued for negligence, breach of warranty, and in limited cases emotional distress. [Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 244; Pollard v. Saxe & Yolles Dev. Co. (1974) 12 Cal.3d 374.] Q. What
are my recoverable damages? A. Damages may include the cost of repairs, diminution in value of property, the costs of expert investigation, additional living expenses incurred while the necessary repairs are made, loss of use and enjoyment, and in some cases emotional distress. [Civil Code _ 3333; Code of Civil Procedure _ 3283.] Q. Who
may assert claims for construction defects? A. Any individual or entity whose interest in the real property has been harmed may assert a claim for construction defects. One need not be the original owner. A subsequent purchaser has the same rights to pursue claims as the original owner. However, a subsequent purchaser's claims may be limited to the extent possession of the property was acquired with knowledge of the defects. Similarly, a homeowners association in a common interest development such as a condominium project may assert claims for damages to the common areas, as well as for damage to an individual owner's separate interests which "arises out of, or are integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair." [See, Vaughn v. Dame Construction Co. (1990) 223 Cal.App.3d 144. Code of Civil Procedure _ 383.] Q. How
much time do I have to make a claim? A. Do not be fooled by a builder's one-year warranty disclaimer. In certain circumstances, you may have up to ten years from the date of final inspection, recorded notice of completion, or first occupancy of the structure (whichever first occurs), to file an action to recover damages for latent defects (i.e. those not apparent by reasonable inspection) in your property. For patent defects (i.e. those apparent by reasonable inspection) you may have up to four years from substantial completion of your property to file an action to recover damages. All time limitations may also be extended because of fraud, willful concealment, bankruptcy, or repairs performed by the builder/developer or other respon-sible parties. But remember, your actual time to file an action for damages may be as little as three years from the date that you first became aware of the nature and extent of a problem, even though you are within the four-year (patent) or ten-year (latent) window provided by the statutes of limitations. [Code of Civil Procedure __ 338, 337.1, and 337.15.] Since California law on the issue of the statutes of limitations for faulty construction is factually and legally complex, it is critical that you have your claim reviewed by an attorney experienced in the area of construction defect litigation to determine the applicable time limitations. Q.
How do I make a claim? A. The procedures which should be followed vary depending on whether you are pursuing claims on your own behalf, or if your homeowners association is pur-suing claims for damages against the builder/developer, based upon defects to the common interest development in which you reside. Individuals: Generally, we advise our clients to first contact the builder/developer and detail the condition(s) that concern you. (This contact should always be done in writing via certified mail, return receipt requested.) Second, allow the builder/developer to inspect the property and submit a written report (including any repair recommendations). Third, hire a competent construction expert to inspect your home and review the builder's explanation concerning the construction problem(s) as well as the proposed repairs. Fourth, if you have a discrepancy in the identification of the problem and/or the repair, we suggest that you have the experts (yours and theirs) discuss it and find out why the differences exist and then explain them to you. Fifth, if the builder/developer does not agree to a permanent repair or to the damages that you claim are owed, or denies responsibility, contact an experienced construction defect attorney to advise you as to additional steps that may result in a resolution or in the filing and presentation of a lawsuit. Homeowners
Associations: The State of California has recently enacted legislation dictating procedures which must be followed by an association when asserting claims against a builder/ developer for defects in the design or construction of a common interest development, such as a condominium project. [California Civil Code _ 1375.] The process is complicated. Therefore, we recommend an association with construction deficiencies retain an experienced attorney for assistance and to ensure compliance with all statutory procedures. In summary, under the statute an association must give written notice (via certified mail) of its intent to pursue construction defect related claims against the builder/developer. With the notice, the association must further provide a preliminary defect list and a summary of any inspection results so that the builder/developer may determine the nature and extent of problems, arrange for a meeting with the builder/developer to discuss the nature and extent of the alleged defects, allow the builder/developer to inspect the project and to conduct its own tests, and hold a meeting with all association members. After the builder receives an association's notice of intent to file suit and decides to meet and confer on the issue, the builder/developer must then notify its insurance carrier. Thereafter, the insurance company has a duty to defend the builder/developer if part of the policy would be triggered by the alleged defects. Civil Code _ 1375 provides the builder/developer an opportunity to participate in a 90-day negotiation period. If a settlement cannot be reached during this period, the association must then inform the individual homeowners of the alleged claims and the builder/developer's response, if any. The association must then hold a meeting 15 days before filing a lawsuit. During this process, the statute of limitations is extended for up to 150 days. During this period, the builder/developer is allowed to conduct destructive testing, but only to the extent that similar testing has been completed by the association. The builder/developer's testing must be completed within a 15-day period, which is part of the 90-day negotiation period. Within 30 days of this inspection and testing, the builder/developer must submit a request to meet with the association and make a settlement proposal. If after meeting these requirements a resolution has not been reached, then the association may file suit. [See, Construction Defect Lawsuits Will Be Tougher To File, San Diego Daily Transcript, Wednesday, October 18, 1995, Vol. 110, No. 143.] Q. Can
the building inspector be held responsible for my construction defects? A. In just about every case, we are asked by our clients: "Why did the building inspector ever approve our property when it is defective?" And, "Why can't we sue that inspector?" The answer is: We would like to, but public employees are generally immune from suit for acts within their discretion. Further, building officials who act in good faith and without malice (ill will or evil intent) in the discharge of their duties are statutorily immune from liability. [See, Uniform Building Code, _ 104.2.6 (1997 Ed.)] Q. Will
any governmental agency help me? A. A governmental agency that is promoted to protect the consumer is the Contractors State License Board. This state-run program will take a consumer's complaint and attempt to investigate the matter with the involved contractor and come to some resolution. In certain cases, it may be appropriate to make a claim with this agency and to seek its assistance. Q. Do
I need to hire a lawyer that is experienced in construction defect litigation
to represent me? A. Today, most attorneys work in a specific area to provide greater service and expertise to their clients. In the area of construction defect law, your lawyer must be knowledgeable in all the following:
Effective counsel typically has a track record of successful settlements and court verdicts from which you can gauge his/her ability to fully and adequately represent you. As a potential client, do not be afraid to ask about a lawyer's experience. Q.
How much will it cost me to retain a construction defect attorney? A. Most experienced construction defect lawyers provide a no charge consultation with a potential client to determine the merits of a claim. In most cases where a significant defect exists, the lawyer will take the case on a contingency (no recovery/no fee) basis. Although the attorney will work on a contingency fee, the client will be expected to pay the costs of the expert investigation, as well as the out-of-pocket expenses of the litigation. Q.
Can I still recover money damages if my builder/ developer
or other responsible party filed for bank-ruptcy protection? A. Most likely yes! The mere fact that the builder/ developer filed for bankruptcy protection does not afford protection to any liability insurance policies for the builder/developer, subcontractor or whoever it is that filed bankruptcy. Typically, upon a motion made before the bankruptcy court, or by agreement with the attorney appointed by the insurance company to defend the developer, the bankruptcy court will allow the lawsuit to proceed, with the recovery limited to the proceeds of insurance policies. In all instances where bankruptcy has occurred, there must be a careful evaluation of the potential for insurance coverage, and the nature of the bankruptcy proceeding. Q. Can
I recover my attorney fees and costs of litigation? A. Insofar as attorney fees are concerned, typically, these are not recoverable in the absence of a contract, or a special statute. In some instances, where the developer has prepared and filed the CC&R's for the Association, there are attorney fee provisions contained in the CC&R's. We have made arguments in the past to try and recover attorney fees from developers through the CC&R's, and as of yet, the courts have been reluctant to permit such recovery. However, each case must be evaluated on its own facts. Typical costs of suit (i.e., depositions, filing fees, and subpoena costs, etc.), can be recovered by the prevailing party. Expert fees can generally be recovered as investigative costs. Additionally, if a C.C.P. _ 998 offer is used (this is a pre-trial offer to settle in a certain form), there is a potential to recover additional expert witness fees related to preparing for depositions and testifying at trial. Q. What
if it becomes necessary to file a lawsuit? A. When all else fails, and you receive no satisfaction from the builder/developer of your property, the next step is to file a lawsuit. To make the litigation process easier and more efficient, you should fully and timely cooperate with your attorney and provide specific information regarding your property and the damage it has suffered. The lawsuit will go much more smoothly if this information is provided to your lawyer prior to filing the suit.
If any representations regarding the condition of your property were made to you by the builder or the builder's representatives. Give the name of the representative and relate what representations were made. (For example: Bill Smith with Build'em Right told us that it is normal for the patio slab to move up and away from the house. He told us that in March of 1990).
As we advise each of our clients, never make a "mountain out of a molehill." Each defect that you allege to exist within your property must be later disclosed to a would-be buyer. However, there is no question that a property owner is entitled to the quality product the builder/developer represented. California law provides you, the owner, the legal right and procedures to recover the value of your home and investment when significant construction defects exist. This Consumer Rights Guide for Property Owners is for general informational purposes only; does not provide specific legal advice; and is not meant to be relied upon as applying to a particular set of facts or circumstances. An attorney-client relationship is not intended nor created by receipt of this Guide. Although every effort has been made to ensure the accuracy of the information contained in this Guide, no warranty is made, either express or implied, and neither the publisher nor the authors assume any liability in connection with or resulting from its use. 1998 Copyright Gerard & Associates. All rights reserved. |
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