MARYLAND CONSTRUCTION LAWYERS AND CONSTRUCTION LAW ATTORNEYS
The Maryland Court of Special Appeals, recently issued an opinion in Greenstein v. Council of Unit Owners of Avalon Court Six Condominium, Inc. finding that a Maryland condominium association can be sued by its unit owner members if it fails to take timely legal action against a developer to pursue construction defect warranty claims or other legal remedies. In that case, the association was aware of construction defects and deficiencies at the condominium, including many leaking at many wind locations. While negotiating with the developer, the condominium association’s construction law attorney failed to take action to preserve warranty rights and other legal claims. Ultimately when negotiations broke down and the condominium association’s attorney did file a lawsuit against the developer, it was too late because the statute of limitations had already expired on the association’s legal claims. As a result, the suit against the developer was dismissed and the condominium association was forced to assess its unit owner members for the $1 Million in repair costs needed to repair the developer’s construction defects and the damages caused thereby. Some of the unit owners then sued their condominium association, seeking to recover the cost of their assessments on the ground that the association was negligent in failing to pursue a timely legal action against the developer for the cost of repairing the construction defect damages.
On appeal, the court was asked to decide whether state law permits owners to sue their condominium association for negligently failing to sue a developer for common element construction defects. The court found that an association could be held liable to its members. The Maryland Court said: “The duty to maintain, repair, and replace the common elements together with the exclusive right to initiate litigation regarding the common elements [which was stated in a provision of the association’s by-laws] creates a concomitant obligation on the part of the [Association] to pursue recovery from [the Developer] on behalf of [the unit owners] for damage to the common elements caused by [the Developer’s] negligence, breach of contract, or violation of any applicable law.”
The particular effect of the court’s opinion on other condominium associations remains to be seen. It appears that court’s opinion was based in part on the fact that the association’s by-laws provided it with an “exclusive” right to sue for common element construction defects. Although existing Maryland law recognizes the right of individual unit owners to sue for common element construction defects, this law was not addressed in the documents filed by the parties in the case or the court’s opinion. In addition, because the court ordered that a trial be conducted to determine whether the association was negligent in that case, it is not yet known whether the association will actually be made to pay damages for the construction defect repair assessments.
One take-home lesson from the court’s opinion is clear: whenever construction defects are discovered at a condominium, an association should discuss its legal obligations and options with an attorney as soon as possible. As a general matter, condominium associations should conduct a professional evaluation of the construction of the condominium so that potential warranty claims can be brought to the developer’s attention before they expire. Whenever there is evidence of common element construction defects, an association should take immediate action with the developer to protect its unit owner membership by preserving warranty claims so that the statute of limitations does not expire while negotiating repairs.
For more information regarding this case and strategies for preserving construction defect warranty claims without having to resort to litigation, please contact Cowie & Mott or sign up for the next CAI/CRC seminar entitled “Successful Strategies for Resolving Construction Defect Disputes with Developers”.
-Nicholas D. Cowie, Esq.
Nicholas Cowie is a Maryland condominium construction defect attorney and Maryland construction lawyer with the construction law firm Cowie & Mott, P.A. Mr. Cowie established the construction law course at the University of Baltimore where he served as an adjunct professor of construction law. Mr. Cowie has been practicing as a Maryland construction defect lawyer for 23 years and his legal work in the courts and legislature has greatly strengthened the rights of condominium associations and their members in construction defect claims. The law firm of Cowie & Mott, P.A. had no involvement in the case which is the subject of this article.