Making Lemonade from Condos that are “Lemons”
The scenario is more common than you think. You’re condo shopping and find one that takes your breath away. It has the large, sun-splashed kitchen with granite countertops, a double oven and Sub-Zero refrigerator. The master bedroom has a cathedral ceiling and the master bath has a Jacuzzi. There’s a large family room with a stone hearth fireplace. The hardwood floors have a shine that’s intoxicating. It’s the total package. You fall in love, make an offer that’s accepted, and move in. You’re in love with your home.
Then you quickly see the bloom come off the rose.
Large cracks appear in the walls. Those beautiful floors are buckling. You see leaks appear on the ceiling. The windows are drafty. It might even get worse.
In their zeal to maximize profits, builders often take shortcuts, quickly lose attention to detail, and use substandard materials. The end result is a home that has much luster but brittle “bones”.
The questions people who are placed in such horrible circumstances are common:
(a) Who can I sue?
(b) What are my chances of recovering the lost value in my home?
1. WHO CAN I SUE?
In any situation such as this, there are up to five people or entities that could be sued. They are as follows:
a. The builder or developer of the condominium. They could be under many legal theories. The largest impediments to suing a builder/developer are limited warranties that provide coverage for defects for only one year after purchase; problems with the condo that are not so life threatening that they implicate the “implied warranty of habitability, which cannot be curtailed by a limited warranty but which only applies to health or safety issues; and, of course, the ability to collect any judgment from the developer, which might have liquidated the assets of the company that developed the condo following the sale of the final unit (the developer himself can be held personally responsible, but the legal burden to prove such responsibility is greater.
b. The developer’s real estate agent. Sometimes real estate agents make statements in marketing materials about new construction that are gross exaggerations or outright falsehoods. In other instances an agent knows that the builder has a terrible reputation and has been sued repeatedly on other projects, but fails to disclose that to a prospective buyer. Any of these misstatements or omissions can lead to liability to under what is known as Chapter 93A, the Massachusetts Consumer Protection Act, which prohibits “unfair and deceptive practices” by businesses against consumers. The law provides for up to three times damages, together with attorney’s fees.
c. The architect for the project. Builders generally hire architects to design and oversee the construction of multi-unit construction projects. Architects are required to supervise construction and certify that the project was built according to the plans and specifications. An architect that incorrectly makes such a certification may be legally responsible to persons who buy their units, but only if they relied upon the architect;’s certification as given to the municipality.
d. The home inspector. Although purchasers of a new home often (and mistakenly) elect not to have a home inspection prior to signing a purchase and sale agreement, those who do hire an inspector may be able to sue the inspector for failing to detect on inspection certain defects that an inspector conducting “reasonable care” would have detected. Home inspectors in Massachusetts are required to carry errors and omissions insurance.
e. The condominium trustees. Condo trustees control the “common areas” of the condominium. Some of the defects from new construction may be in these common areas; these include heating or air conditioning problems, ceiling leaks, or problems with windows or floors. While the trustees have discretion in determining the repairs that can be made, they do have an obligation to make repairs which, if not made, would affect the health or safety of a unit owner.
2. WHAT ARE MY CHANCES OF RECOVERY?
This is, of course, the $64,000 question when it comes to this case or any case. There are any number of factors that go into determining your chances of recovery, including the personality and financial condition of the developer, and obviously the perception by the defendants of your likelihood of success on your claim against that particular defendant. Your chances of recovery overall are enhanced by early action; I’ve seen far too many people wait until a developer has “folded its tent” before deciding to sue.
If defects appear, they should be immediately documented through photos and even video. You should also consider hiring a “forensic building inspector” who can examine your condo and provide a comprehensive assessment of the defects and their likely causes.
Massachusetts real estate litigation attorney Alan Fanger is an experienced real estate litigation lawyer. He serves the entire Greater Boston and Boston metrowest region including Norfolk County, Suffolk County, Middlesex County and the communities of Arlington, Boston, Braintree, Brookline, Cambridge, Canton, Concord, Dedham, Dover, Framingham, Lexington, Milton, Natick, Needham, Newton, Norwood, Quincy, Sherborn, Sudbury, Waltham, Wayland, Wellesley, and Weston, Massachusetts