Construction Defects: The Attorneys & Engineers Full Employment Act

As anyone who has spent a fair amount of time working with HOAs probably knows, they can be a somewhat litigious group when compared to society as a whole. Lawsuits must be filed to collect past dues assessments; disgruntled homeowners occasionally sue their own association over one transgression or another; neighbors sue neighbors over rule violations and other acts befitting only of scofflaws and general malcontents….and then we have the grand-daddy of all civil litigation that tends to sprout from the HOA landscape: construction defect lawsuits!

Construction defects occur when the builders and developers of an HOA somehow manage not to construct a sound building or, in some cases, various other common area improvements which are the responsibility of the HOA to maintain. The situation is exacerbated in the case of a condominium or other attached housing scheme because it is almost always the case that the homeowners association ends up being responsible for the exteriors of the buildings in which the condominiums are located.

“Exterior” in this context is a key word because it seems that 90-plus percent of all the architects, engineers, developers and contractors who design and build these developments cannot seem to design or build a building that doesn’t leak water. This in spite of the fact that there are countless builders, architects and engineers who have designed and built countless numbers of buildings throughout the annals of history which in fact, have managed not to suffer from water intrusion problems.

Lest we dwell too much on the issue of leaky buildings, it is worth noting that the HOA Detective was once told by a real estate agent in Las Vegas that there were more construction defect lawsuits initiated in Nevada over defective concrete pavement that any other cause. Logical considering how little it rains in southern Nevada and the massive surface areas that have been paved over with cheap, hastily constructed concrete pavement installations. But I digress……

The reality is that a very high percentage of the construction defect lawsuits filed in most jurisdictions are the result water intrusion; i.e. moisture that passes through the exterior cladding assembly, or as it is more properly know the “building enclosure.” This enclosure assembly consists of all of the sub-components which, when properly designed and installed, should serve to protect the structural framework and the interior of the building from the prevailing weather elements; most notably rainwater.

Some practitioners within the industry will use the term “building envelope” to describe the building enclosure, and while it has proven to be something of a topic of debate amongst the building sciences crowd, the preponderance of opinion is beginning to fall squarely on the side of the building enclosure camp, as Professor Allison Bailes III, PhD. notes in this 2012 article from the Green Building Advisor:

But again, I digress…

In the world of construction defect litigation there are a number of factors that have contributed to homeowners associations becoming prime targets for the attorneys and technical consultants who prowl the landscape looking for opportunities to ply their trade as plaintiff litigators and litigation support consultants. Not the least of which are the somewhat generous statutes that have been enacted in states like Oregon (where the HOA Detective resides), wherein the statutory period during which an HOA is entitled to bring a civil action against the builders and developers of a project can be as much as ten years, depending on a variety of factors that only seem to be understood by astute legal minds.

A second instigating factor is insurance; specifically the liability insurance that developers and virtually all of the contractors who work on the project are typically required by law to carry. As in the case of medical malpractice litigation, this pool of insurance funds serves as a readily identifiable target for anyone seeking to recover economic damages resulting from faulty construction or to enhance one’s retirement fund, in the case of the legal and technical consultants who have made construction defect litigation a virtual growth industry in many parts of the country.

Not to disparage the many intelligent, hard-working attorneys, engineers and technical consultants who serve as advocates for the wronged in these cases…In fact, the HOA Detective counts a number his best friends and colleagues among this group.

However, the bigger issue would seem to be, why do we continue to construct buildings in such a way that water is able to breach the building enclosure, thereby resulting in untold grief, harm and economic damages for the building owners? Seriously folks, if a contractor can rebuild the enclosure after a lawsuit has been successfully litigated in such a way that it doesn’t leak, then why can’t it be constructed so that it doesn’t leak in the first place?

The reality is that we have created a legal treadmill upon which countless individuals and corporations now depend for their collective livelihood. Whether it is the insurance companies who bear the ultimate financial burden for these cases, and in response simply raise their premiums to a level that insures that they remain profitable. Or whether it is the banks who often loan money to HOAs to finance litigation and/or defect repair work. Or whether it is the many highly successful attorneys and litigation support consultants who generate millions of dollars in fees from these cases, the fact is that there are significant forces in play that would prefer to maintain the status quo rather than seeking a permanent solution to the problem.

It has been said that repeating the same behavior while expecting a different result is the definition of insanity. Some have even attributed the statement to none other than Albert Einstein. While there is no verifiable evidence confirming that he was indeed the first to utter these words, there is a reasonable amount of truth and certainty to the notion that if we don’t learn from our past mistakes then we haven’t really made any progress.

To that end it would seem to the HOA Detective at least that the current legal climate surrounding the litigation of construction defect lawsuits, in particular those involving faulty building enclosures, is at worst, a form of insanity and at best it represents an area where we are making no progress.

After all, if we can send a man to the moon and we can build a deep space probe which is controlled by NASA engineers from tens of millions of miles away, it would seem that we should be able to design and construct a building enclosure that doesn’t leak water. Rather than having to build the building; litigate a lawsuit for millions of dollars and then use what’s left of the proceeds of the lawsuit (after the legal/technical consultants take their cut) to replace the building enclosure with one that doesn’t leak!

In the next installment of this series we will examine the timeline for how a construction defect lawsuit related to a leaky building enclosure typically unfolds.