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Boards should be aware of any construction defects before a potential buyer comes calling.
AUTHORIngrid Manevitz, Seyfarth Shaw
Construction defects are an apartment buyer’s nightmare. What should buyers be doing — particularly in a newly built building — to protect themselves?
Creating a punch list is very important, and everything you see in the apartment that’s not what it should be should be on the list. It’s important for a purchaser to do a thorough inspection of the unit. Test every electrical outlet, turn on every appliance. Turn on the shower and see how quickly it takes for the water to get hot and what the water pressure is like. Look at the floorboards. Open and shut the windows. Every little aspect of the apartment should be inspected.
The average buyer won’t be able to recognize everything, so is it advisable to bring along an architect?
I’m not sure it’s typical, but it is advisable. I would recommend that a purchaser bring an architect or an engineer to their pre-closing inspection to review the apartment and if it’s a newly built condominium, to compare it to what was promised in the offering plan. This will contain a description of the unit, what the finishes will be, what the appliances will look like, the dimensions of the rooms. A typical purchaser usually doesn’t have a trained eye, so it is important to bring in a professional.
You’ve got your punch list, things have been fixed, and you’ve closed your deal. Then time passes, and you discover there are problems with the building. What’s the next step?
There’s a difference between patent defects and latent defects, so it depends on the conditions that the people are complaining about. Often what you’ll have on a punch list are patent defects — things that are easy to see and can be noted. Then there are latent issues, like if you close on a purchase in the winter when the heat is going and then in summer you find that your air conditioner isn’t adequately cooling your apartment. It’s important to gather what the specific defects are and to pull all that information together before proceeding.
If the board gets involved, and if it hires an engineer to see what’s not working, are there different kinds of inspections it can request?
Usually a board will request what’s called a top-to-bottom assessment of the building, where an engineer reviews everything from the mechanicals in the basement to the roof and everything in between. You want an engineering firm that has specialists in facade and window issues but also one that can assess mechanical, electrical and plumbing issues. There are a number of architecture and engineering firms that do what I call forensic engineering and forensic architecture work.
Usually the first stage of the inspection is a visual, but if the pros notice particular issues, they need to dig deeper. For example, you notice that there are cracks in the facade, which are a visible condition. But determining how to repair the cracks and how extensive the damage is under them often requires further investigation, like probing and removing portions of the facade to look underneath.
And the engineer will give you a sense of what it will cost for the fixes?
Yes. Then the board needs to assess how to move forward and whether the costs are such that the building can assess the unit-owners and make the repairs itself, or whether they’re going to pursue a claim against the developer for construction defects. Which direction a board takes usually turns on how expensive it is to repair the problems.
But if you sue the sponsor, you could spend a lot of money in pursuit of a remedy that may not happen.
You certainly could spend tens or hundreds of thousands of dollars pursuing a sponsor. If you have millions of dollars’ worth of problems in your building, then certainly it’s worth the cost to pursue the sponsor. Assessing unit-owners to recover millions of dollars to repair problems that you inherited and that the developers should have done correctly in the initial construction is not what any unit-owner wants to hear or what any board wants to do.