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Condo | HOA Lawyers

After Turnover Do a Developer’s Actions (or Inaction) Affect an Association’s Construction Defect Claims? YES

Yes, developers can be lazy, greedy good for nothing con-artists. Developers can also adversely affect the rights of an association by simply doing nothing.  Specifically, a developer (owner of the property and declarant of the association) with knowledge of construction defects can prevent the association and/or unit owners, after turnover, from potentially suing the contractor and/or engineer for construction defects.

Facts. In a 2017 case we learned that in the late 1990s a high rise apartment was built in New Jersey.  In 2004 it was converted into a condominium by 100 Old Palisade, Inc.  As part of the conversion, an engineer inspected the property and issued a report to the developer/declarant noting concrete spalling and cracking.  In 2006, the period of declarant control ended.  The association then hired its own engineer who issued a report in 2007 detailing various construction defects, upon which a series of lawsuits were filed beginning in 2009.

Decision. The court reasoned that an owner (even a declarant) with knowledge can’t sell a unit and thereby have a cause of action “spring to life.”   In other words, the time can’t be extended by some sale of the units or turnover of the association.  So by doing nothing, the prior owner of the property (the developer/declarant) who knew or should have known of the defects, thereby starting the clock on the statute of limitations, ended the ability of the association to sue on some causes of action because the time had passed.

Lesson.  When an association takes over control, it is imperative that the association immediately hire an engineer and thoroughly inspect the property for any defects.  If any exist, the association should retain a qualified and experienced attorney to advise the association as to its options, including what causes of action might exist against the developer, former board members, contractors, architects and/or engineers.

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