WRITTEN DEFECT REPAIR AGREEMENTS – Use them to Avoid Developer Disputes and Effectuate Proper Repair of Construction Defects

Condominium associations facing serious construction problems, such as leaking at roofs and windows, often find that repeated developer repairs do not solve the problem. Construction Defect Attorneys Using Written Repair Agreements 

In some cases, it is eventually discovered that the underlying construction defect causing the leaking (such as improper installation or lack of window or roof flashing) was not being addressed at all in the developer repairs. If the defect is widespread though out the entire community, insidious and extensive damage can go on unseen for years behind exterior wall and roofs ultimately burdening the community with costly structural repairs. Getting it “right ” the first time is important and written documentation is key.

Attorneys at Cowie & Mott negotiate construction defect repair settlement agreements with developers and builders on behalf of condominium associations and other property owners. In cases involving serious or wide spread construction defects,  it is typical to resolve the dispute with a settlement agreement. These agreements typically fall into three broad categories: (1) pure monetary settlements; (2) pure repair agreements; or (3) combination of monetary settlement and repairs. There are pros and cons to each type of settlement depending on the facts of the case. However, when a developer or contractor is going to perform repairs, it is always preferable to have engineering consultants working for the building owner hammer out the details of the repairs (i.e. the specific method of repair and the locations where it will be performed) with the developer  or contractor and document those repair details in writing to become part of an agreement that involves inspection procedures, warranties, reimbursement of expenses, etc.

Below is a reprint of portions of an article I wrote regarding some of the basics of repair agreements:

“Condominium associations should be careful about accepting verbal offers from developers to make unspecified “repairs” in response to complaints about construction defects.  The informal nature of such an agreement may be appropriate given the circumstances.  On the other hand, problems may arise when the developer’s definition of “repair” differs from what is required by code, contract or industry standard.  For example, when a developer agrees to informally repair a window or roof leak, the “repair”, as far as the developer is concerned, may consist merely of sending out a worker with a caulk gun to seal gaps that should have been protected with a solid flashing material during the original construction.  Caulk is generally not an appropriate substitute for flashing.  In this example, caulk is a temporary fix that conceals the underlying absence of flashing until the caulking seal breaks and the leak reappears six months later.

This example demonstrates the need for written clarity as well as the opportunity to seek the assistance of a construction expert.  The association does not have to accept whatever repair the developer is offering.  Instead, the association can request a written description of the proposed repair.  That description can then be evaluated by a construction consultant working for the condominium.  The consultant can review the applicable drawings and field conditions and advise the association whether the repair is reasonable and appropriate and also suggest alternatives or request additional information if necessary.  In this manner, the association makes an informed decision rather than accepting whatever the word “repair” means to the developer.  In effect, the written description of the developer, if accepted, becomes a written repair agreement and creates a standard by which the repair can be judged.

This model can be employed on a larger scale when the association is negotiating the repair of defects discovered during a “warranty study”  or  “transition study.” Repairs agreed upon by the parties should be specified in writing, including a description of the method of repair, the scope of repair (i.e., locations where it is to be performed), and any construction standards by which the repair is to be judged.  These written understandings can then be incorporated into a larger ongoing draft repair agreement.  Where repetitive repairs are concerned, it is often appropriate for the parties to agree upon a prototype repair in the field that will serve as a standard for all other repairs.

Work agreements can also take into consideration certain future contingencies.  For example, should there be a dispute as to whether a repair was performed properly under the repair agreement, a mutually agreed upon third-party can be designated to resolve the dispute, with the losing party paying the expense of the successful party involved in the resolution process.  A provision can also be provided for unforeseen defective conditions that are discovered during the repair process.  For example, if a repair involves removing siding, which reveals an unknown latent defect, it should be repaired and not simply built over.  The parties can agree that such unforeseen defective conditions will be repaired by a mutually agreed method of repair, and if unable to agree, have a third-party resolve the dispute on their behalf.

Repair agreements should have a provision for the association’s expert consultant to inspect the developer’s repair work for approval purposes.  This helps provide finality and acceptance of the work.  During the approval process, punch lists can be created setting forth miscellaneous items that need to be addressed before the work is deemed finally completed. Reimbursement of expenses incurred by the association for expert consultant expenses, attorney fees and inspection of repairs can also be negotiated.

Typically, developers and builders prefer to do the repair work themselves because they can call back the subcontractors that caused the problem without charge. Homeowners are sometimes hesitant to have the same person who “got it wrong the first time,” do the repair. That concern can usually be overcome if  the repair is inspected and approved by the the association’s expert construction consultant. In some cases it is appropriate to incorporate warranties on the repair work or warranties on the performance of suspect areas of a building where it is not possible or practical to investigate .

Maryland Construction Defect Lawyers