Survey: Poor Workmanship Tops List of Construction Defects

March 7th, 2017 by Editor

According to a new survey from the Community Associations Institute (CAI), most construction deficiencies occur in new condominium developments and are caused by poor workmanship. The most common deficiencies are bad waterproofing, such as flashing around windows, and problems related to the roof or structure.

The report, titled “Protecting Homebuyers and Homeowners from Construction Deficiencies in Condominiums and Preserving Property Values Survey,” examines the scale of construction deficiencies, litigation surrounding those claims, and the national impact on homeowners and community associations.

According to the report, 81 percent of respondents claim poor workmanship is the leading cause of most deficiencies. A total of 48.2 of respondents said deficiencies in waterproofing were the most common ones they saw.

As DWM reported in its August-September 2015 issue, up to 60 percent of installed windows might be flashed  incorrectly.

“The majority of the windows that we replace were not properly flashed,” John Azeri of Nationwide Windows in Paterson, N.J., told DWM at the time. “If you don’t have a qualified contractor installing windows, you could have major problems later on.”

In addition, 35 percent of survey respondents reported that construction deficiencies negatively impact a homeowner’s property value and the ability to re-sell the home.

The 2017 CAI study found that the vast majority of claims (44 percent) were resolved outside of the courthouse. Most were resolved with direct negotiation.

“The process for associations to recover damages from a building deficiency is far more complex than filing a lawsuit,” says Dawn M. Bauman, CAI senior vice president, government and public affairs. “Associations must determine whether the cost and time to pursue claims outweigh the repair costs.”

The report found it took more than a year for nearly two-thirds of the communities to recover damages, and only one-third reported the damages paid were enough to cover the repair.

“Market forces are dictating whether condominiums are being built, not warranties,” Bauman said. “Laws are present in the states that make associations weigh the breadth of filing a warranty claim before doing so. Reducing consumer protections by watering down the statutory warranties will not reduce purchase prices, but will increase the post-sale cost of home ownership.”

While construction-defect lawsuits can yield big payouts, two experts in the field say it’s best to avoid them if possible.

“Developers and contractors are professionals whose businesses are challenging under even the most ideal conditions,” write attorneys Ross Feinberg and Ron Perl in the introduction to their book Construction Defect Litigation. “Residential development and construction are made all the more complex by fierce competition for resources, a shortage of qualified labor, an erratic economy, and incessant market demands. Developers and contractors dislike construction defect litigation as much as homeowners do, and most will make genuine efforts to resolve problems quickly and efficiently—if you let them.”

Feinberg and Perl say negotiation is critical.

“Whether a defect is severe enough to warrant legal action depends on which side of the contract you signed,” they write. “For the homeowner, understandably, all defects are serious; but, from a practical standpoint, most probably aren’t serious enough to require a lawsuit. Constructive negotiations with the developer, builder, or contractor nearly always lead to resolution. In fact, most construction defects are resolved without legal action—and for good reason. Litigation is extremely costly. Associations and homeowners must compare the cost to repair construction defects against the cost to argue about them.”

The survey respondents included 525 individual responses from condominium and homeowner associations across the country, with the number of homes ranging from a couple dozen to more than 1,000.

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