Pessimism Pays in Apartment Building Risk Analysis Are You Prepared for the Worst-Case Scenario of Loss

Pessimism Pays in Apartment Building Risk Analysis. Are You Prepared for the Worst-Case Scenario of Loss and Liability?

BY ALI SAHABI

The best way to prepare for disaster is to ask, “What’s the worst thing that could happen?”

Start by assessing damage from past earthquakes, identifying the nearmisses, and searching out the best ways to counteract those possibilities before they strike.

You may also want to magnify the past damage experience ten fold. It could easily happen because damage caused by earthquakes can be catastrophic, both in human and financial impacts.

It’s important to note that many factors go into evaluating earthquake risks. Not only do you have to calculate earthquake risk based on proximity to faults — there are other strong considerations as well, including the condition of the soil under your apartment building, your building’s construction type, the materials used to build it, and the year it was built.

It’s also important to weigh your personal risks, should your building suffer from earthquake damage. What kinds of liabilities could you face? If your building is red-tagged, can you afford to rebuild while continuing to pay the existing mortgage on the property with no revenue coming in?

Building owners and managers are constantly on guard when it comes to liability issues. That’s one of the reasons why risk management is such a rapidly growing field. We are vigilant about identifying potential fall and slip hazards. We are careful to install fire sprinkler systems, to inspect balconies, fence off swimming pools and do our best to predict and prevent incidents before they happen.

But many are unaware of the great risks they face based on problems with the structural integrity of their building itself.

Earthquake Liability

A two-year study funded by the National Science Foundation’s Earthquake Hazard Reduction Program determined building owners can be held liable for death, damage and injury caused by an earthquake.

This finding stemmed from a precedent-setting case in Paso Robles, where, during an earthquake in 2003, two employees of a clothing store were crushed to death by falling bricks and plaster as they ran out of a building. The structure had been ordered by the city to be seismically retrofitted, but the deadline to do it had not yet passed.

The families of the women sued the property owners and won. A jury awarded them $2 million, finding that the property owners were negligent because they knew the building had the potential to be unsafe in an earthquake but did nothing about it. A state appeals court upheld the verdict in 2010.

It didn’t matter that the quake might previously have been considered an “act of God” or that the building technically complied with city codes because the deadline for the retrofit had not yet passed. The jury determined that the simple fact of the owner knowing a building is unsafe and not taking action is grounds enough to assign liablility for negligence.

According to the NSFE, liability is left to a jury to decide, based on: • How much the owner knew about the building defects • How much he or she knew or should have known about how retrofits could correct structural weaknesses

• Whether the owner had set in motion a plan to correct the unsafe conditions

Vulnerable Building Types

Growing awareness about earthquake risks has identified five types of building structures determined to be most vulnerable to seismic damage: • Soft-story structures built before 1978

• Unreinforced masonry built before 1975

• Concrete tilt-up built before 1994 • Non-ductile concrete built before 1977

• Steel moment frame built before 1996

The United States Geological Survey estimates that some 300,000 structures would be damaged in a 7.8 earthquake along the San Andreas fault in Southern

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