Michigan Condominium Lawyers

Michigan Condo Attorneys Assisting with Condo Construction Defects

Michigan condominium associations are responsible for the maintenance and repair of the general common elements. While many condominium associations budget for repairs and maintenance of the common elements over an extended period of time, most associations are unprepared to address common element construction defects caused by a developer’s inadequate design, use of defective or substandard materials, insufficient site testing or inferior workmanship. The failure of a board of directors to appropriately investigate and respond to construction defects immediately after the transition control date can be financially devastating to a condominium association.

Hirzel Law’s attorneys are experienced in dealing with condominium construction defects and can better help address how to resolve common element construction defects within Michigan condominiums.

What is a Condominium Construction Defect and how is it discovered?

A common element construction defect is defined as a deficiency in the 1) design 2) materials and/or 3) workmanship in the common elements of a condominium. The defect typically poses a safety hazard, shortens the life expectancy of the common element and/or makes the common element partially or fully unusable. Construction defects, whether due to a deficiency in design, materials, or labor, are classified as either patent defects or latent defects.

A patent defect is readily apparent and discoverable based upon a reasonable inspection of the common elements. Examples of patent defects include visible holes in a building, missing gutters or downspouts, missing handrails, or missing chimney caps. Patent defects are typically discovered by board members, co-owners, or property managers through a casual observation of the common elements.

In contrast, a latent defect is concealed and not readily observable. Latent defects will only appear after the passage of time, and they are not something that would typically be discovered during the initial municipal inspection. Examples of common latent defects are as follows: 1) Collapsing retaining walls resulting from improper installation; 2) Cracking in the foundation or drywall caused by concealed foundation issues; 3) Electrical wiring that is not properly installed within common element walls; 4) Flooding by improper installation of the underground storm water drainage system; 5) Heaving or cracking of concrete porches, driveways or sidewalks due to poor drainage; 6) Leaks, mold and other water issues caused by improperly installed roofing, siding, flashing and/ or windows; 7) Noise related to insufficient insulation and poor sound protection; 8) Pipe bursts that result from a failure to insulate common element pipes; 9) Premature road failure resulting from failing to test and/or account for soil conditions, improper use of base course materials or drainage issues and 10) Missing or improperly installed trusses, which compromise the structural integrity of the roofing and/or building.

Given that latent defects are not discovered by a casual observer, a latent defect is typically only discovered after major problems occur or the condominium association commissions a detailed inspection of the common elements by a licensed engineer or other professional construction expert.

How does the warranty of habitability help condominium associations with construction defects?

The Michigan Court of Appeals has recognized that an implied warranty of habitability is created when a condominium developer transfers the common elements to a condominium association.  Specifically, the Michigan Court of Appeals has held as follows:

We conclude that implied warranties are created when a developer-vendor transfers common areas to an Association. In Smith v. Foerster-Bolser Construction, Inc., 269 Mich.App. 424, 431, 711 N.W.2d 421 (2006), this Court held that an implied warranty of habitability is created when a developer-vendor transfers a new home to a purchaser. In Plymouth Pointe Condominium Ass’n v. Delcor Homes-Plymouth Pointe, Ltd, unpublished opinion of the Court of Appeals, issued October 28, 2003 (Docket No 233847), this Court noted that other jurisdictions have held that the same warranty of habitability also applies to the development and purchase of new condominiums and the accompanying common areas (see Berish v. Bornstein, 437 Mass. 252, 770 N.E.2d 961 (Mass, 2002). Such a rule is logical and necessary. If this Court were to accept defendants’ logic, developers could routinely avoid liability for defective common areas by inserting disclaimers into the purchase agreements of the individual homeowners. Associations would be left without a remedy, despite the fact that they were not parties to the purchase agreements. Therefore, we hold that because Heritage LLC was a developer-vendor, the transfers of property created implied warranties of habitability relating to the individual units and the common areas.

Heritage in the Hills Homeowners Ass’n v Heritage of Auburn Hills, LLC, unpublished opinion of the Court of Appeals, issued February 2, 2010 (Docket No. 286074), 2010 WL 364186, p *10

Accordingly, many condominium construction defects result in a breach of the implied warranty of habitability that a developer must honor when transferring the common elements in the condominium to the condo association.

How should the board of directors resolve common element construction defects?

1. Inspect the Common Elements. The board of directors and/ or the property manager should perform regular visual inspections of the common elements. Additionally, the board of directors should ensure that a reserve study is performed immediately after the developer turns over control to the co-owners and that a reserve study is performed every three to five years thereafter.
2. Consult with an Attorney. After the board of directors becomes aware of a potential construction defect, the board CONSTRUCTION DEFECTS…from page 30. should immediately consult with an attorney to determine the potential claims and ensure that the claims are not time barred by the statute of limitations. MCL 559.276 typically provides an association with three years from the transitional control date or two years from the date that a claim accrues to pursue a construction defect claim arising out of the development or construction of a condominium. A claim for breach of contract against a contractor for a defect that arises from the repair or replacement of a construction defect, typically has a six-year statute of limitations. While the statute of limitations could be extended through various theories, such as fraudulent concealment, among others, an association’s odds of success are greatly increased by vigilance of the board of directors. In addition, a developer or contractor often defends a construction defect claim by arguing that the defect was caused by natural wear and tear or improper maintenance by the association. Accordingly, the sooner the association acts, the better the chance of success.
3. Consult with an Engineer. After the board of directors consults with an attorney, the board should hire a civil engineer or other qualified professional to prepare a report outlining the construction defects, the cause of the defects, a proposed fix, and the estimated cost to fix the problems. The engineering report will assist the board of directors and the condominium association’s attorney in evaluating the scope of the problems and determining the best course of action.
4. Negotiate with the Contractor/Developer. After the board of directors becomes aware of a potential construction defect, the association should attempt to negotiate a resolution with the responsible parties. The process is typically started by sending a demand letter to the contractor or developer. The demand letter should 1) outline the known construction defects, 2) offer a proposed solution to the defects and 3) summarize the potential costs involved. If settlement negotiations prove unsuccessful, the board of directors should evaluate whether a lawsuit should be filed or whether the association should repair the problem itself.
5. File a Lawsuit or Repair the Defect. The board of directors has a fiduciary duty to ensure that the common elements are appropriately maintained, and it must act when learning of construction defects. A condominium association has two options with respect to dealing with a construction defect that a developer or contractor is unwilling to repair: 1) file a lawsuit or 2) fix the defect. The board of directors must decide whether the association is going to levy an additional assessment to fund a lawsuit or levy an additional assessment to repair the construction defect. While imposing an additional assessment is typically not popular with the co-owners, an unplanned expenditure is often unavoidable when a construction defect is discovered. Typically speaking, the assessment to pursue the lawsuit is cheaper than paying the entire cost of the repair. Accordingly, it is often more prudent for the board to pursue the developer and/or contractor that caused the construction defects instead of shifting that burden to the co-owners.

Contact Our Michigan Condo Construction Defect Lawyers to Help Solve Your Complex Issues

At Hirzel Law, PLC, our Michigan condo construction defect lawyers can help with your complex issues. We stand by our clients, offering the highest quality legal representation and promptly responding to our clients’ needs.

Contact Hirzel Law online or call 248-986-2290 (Farmington) or 231-525-5832 (Traverse City) or 616-319-4527 (Grand Rapids office) to see how our Michigan condo construction defect lawyers can represent you.

If a co-owner is in violation of the bylaws, several actions may be taken. First, the condo board may meet with the disputing parties to discuss the issue or send a warning letter. If an informal meeting or warning letter is not successful, then the board may start formal proceedings to resolve the dispute and enforce the bylaws.

After a violation of condo bylaws is turned over to our firm, we typically start by sending a demand letter, unless there is an emergency that requires immediate court involvement. If the violation of condo bylaws is not resolved, the most common method of enforcement is seeking an injunction to require the owner to comply with the bylaws. The experienced Michigan condominium lawyers at Hirzel Law, PLC can help you take the correct steps to enforce rules and bylaws while considering the rights of all involved parties.