Protect Valuable Property Rights in the event of construction defects and the resulting damage to your condominium or townhome project.

Frequently Asked Questions

1. Q. Does an association and its unit owners have a claim against the developer if there are defects in the project?

A. Yes.  For condo associations and their unit owners, there are statutory warranties of construction quality under the condo act which are very difficult for a developer to successfully disclaim.  For associations not governed by the condo act, there are “common law” implied warranties of construction quality which can be disclaimed only in limited circumstances.

2. Q. Does an association have legal standing to make a defect claim against a developer, or do the unit owners have to make the claim?

A. In most situations, if the association is governed by the condo act, the association can make the claim.  If the association is not governed by the condo act, the association will probably still have standing to make the claim if it involves a defect in a part of the project that the association has a duty to maintain.  If it does not automatically have the right to make the claim, an association not governed by the condo act can ask unit owners to assign their claims to the association and can act to the extent that unit owner claims have been assigned.

3. Q. Do unit owners have to authorize the board to take action against a developer, or can the board act without unit owner approval?

A. In most situations the board can take legal action without first having to obtain unit owner approval.  However, association governing documents should be reviewed to determine whether there is a unit owner approval requirement in those documents.  If there is, legal counsel should be consulted to determine the enforceability of such a requirement.  Such requirements are likely to be unenforceable if the association is governed by the condo act.

4. Q. Can an association with a defect claim against a developer take legal action without first giving the developer an opportunity to offer to make repairs?

A. Probably not.  Under a statute enacted in 2005 a claimant cannot take legal action based on a defect in construction without first giving the developer formal written notice of the defects, and an opportunity to inspect and to offer to repair.  However, the claimant may reject a repair offer and then file suit.  The notice of claim process usually takes about 90 or so days to play out.  At the end of that time period, the claimant can proceed with a lawsuit if the matter has not been resolved.

5. Q. Is a lawsuit necessary to get a defect claim resolved?

A. It usually depends on the number of defects and how expensive they will be to correct.  Small claims may be relatively easy to resolve without a lawsuit.  Bigger claims are likely to be more difficult to resolve without a lawsuit because of the amount of dollars involved.

6. Q. What is the likelihood that a defect lawsuit will be settled prior to trial?

A. It depends on the specific circumstances.  However, over 90% of all civil litigation is resolved without trial, and this is also true for construction defect litigation. So, while there are no guarantees, in most cases settlement is likely without trial.

7. Q. How long can an association or its unit owners wait before losing their 
rights to take legal action for breach of the statutory or common law warranty based on a construction defect?

A. It depends on a variety of factors.  For example, if the defect is in the common areas of a condominium, legal action must be taken within 6 years from the later of completion of the component or sale of the first unit.  If the defect is within the units themselves, the 6 year period starts to run separately as to each unit, on the date that unit is initially sold.  However, that 6 year period can be reduced to as little as 2 years if original purchasers sign a separate document to that effect at the time of purchase.  And, for condo associations, and their unit owners, the clock keeps ticking regardless of when the association or the unit owners discover the defects.

For associations or unit owners relying on the common law implied warranty of construction quality, the time period is 5 years.  But that 5 year period doesn’t begin to run until the defect was or should have been discovered.  However, at some point it will be too late to take legal action regardless of when the defect was discovered.  Moreover, the common law implied warranty may only apply to associations and their unit owners in projects not governed by the condominium act.

8. Q. What rights do associations and their unit owners have if they have waited too long to enforce their statutory and/or common law implied warranty rights?

A. It may be possible to pursue a claim against the developer for a violation of the Missouri merchandising practices act if the developer knew or should have known of the defects and failed to disclose them to purchasers.  It may even be possible to pursue a claim against the developer under the act for failure to disclose a defect regardless of whether the developer should have known of the defect.  In an action filed pursuant to that act, the court may have the discretion to make an award of punitive damages and/or attorney fees to the prevailing party.

The limitations period for filing an action under the act is 5 years from when damages were sustained and ascertainable.

Also, if defects were or should have been discovered during the period of declarant control and no action based on the defects is filed by the association against declarant during that period, an association may be able to make a breach of fiduciary duty claim against declarant and the directors designated by declarant to serve on the association’s board.

The limitations period for a breach of fiduciary duty claim is 5 years. And it would begin to run “when damage is sustained and objectively capable of ascertainment”.

9. Q. What impact does developer dissolution or bankruptcy have on a claimant’s ability to obtain a recovery from the developer?

A. Dissolution may shorten the time period within which a claimant must take legal action. Bankruptcy will have an impact on a claimant’s ability to satisfy the claim out of the developer’s assets.  However, most settlements of defect claims are funded by developer and contractor liability insurers. And the insured’s  bankruptcy normally does not affect the liability of their insurers under these policies.

10. Q. Can a claimant obtain an attorney fee award in a construction defect case?

A. In a construction defect case brought by a condo association or unit owners against a developer, the court has discretion to make an attorney fee award against the developer for breach of the statutory warranty of construction quality.

For associations not governed by the condo act, there is no provision for an award of attorney fees for breach of the common law warranty of construction quality.  However, depending on the language of its governing documents, and depending on whether a claim can be made under a statute, such as the missouri merchandising practices act, that has an attorney fee award provision, it may be possible for an association not governed by the condo act or its unit owners to obtain an attorney fee award.

11. Q. What if an association can’t afford to pay an attorney an hourly fee to prosecute its construction defect claim?

A. It may be possible to hire a law firm on a contingent fee basis.  Most of our law firm’s
Cases involve claims we take on a contingent fee basis.