The Importance of Effective Communication during a Construction Defect Claim

By Ritchie Lipson, Esq.

Effective communication within a homeowners’ association is always important. Once an association brings a construction defect action against the community’s builder, communication and cooperation among the board, community association manager, and the association’s construction defect attorney become essential. With the outbreak of COVID-19, how we communicate and do business in the future, including within the context of construction defect claims, will most likely remain permanently changed.

A construction defect action by a homeowners’ association usually begins with a Notice of Commencement of Legal Proceedings under the Calderon Act (Civil Code § 6000 et seq.) by the association to the builder, which concurrently satisfies the statutory requirement for a Notice of the Claim pursuant to Senate Bill 800. However, before the association’s attorney may prepare such notice, the attorney must investigate the defects in the community and discuss the identified defects with the board and the community manager. This conversation is the key to defining the scope of the action desired by the association. Sometimes, associations are concerned only about a few key issues. Other times, the association has a plethora of concerns about the construction of its community and wish to pursue all such issues. The attorney, board members, and manager should discuss these issues and the scope of its claim before the attorney prepares and serves the requisite notice on the builder.

After the notice is served, California law provides for certain statutory time frames in which the builder can investigate the claimed defects,provide construction documents to the association, perhaps perform repairs, and provide an opportunity for the parties to mediate the dispute. During this time period, the builder will generally want to visually inspect and photograph the claimed defects. Seeing unknown people walking through the community and photographing various areas can be alarming for some residents. Thus, the construction defect attorney should develop an inspection schedule for the community and send out a representative from the attorney’s office to guide and monitor the builder’s investigators. The attorney should share the schedule with the board and manager who can provide feedback on the schedule and share the schedule with any concerned residents. Good communication between the manager, board, and members is essential at this point.

With today’s “new normal,” it is important to develop a detailed COVID-19-compliant inspection program that all experts, those for both the association and the defense, are required to follow. This protocol should be communicated to owners so that they feel safe from increased exposure, while at the same time keeping the claim moving forward.

After the inspections, the builder’s attorney may provide some feedback on the inspections to the association’s attorney. The builder’s attorney may also reveal how the builder views the case. The association’s attorney will then share this information privately with the board and manager to develop the best strategy for addressing the defects at mediation, which is required pursuant to the Calderon Act.

Calderon mediation generally occurs near the end of the 180-day window, after the parties have completed some inspections and consulted with experts. Board members may attend the mediation as the association’s elected representatives. At the mediation, the association’s construction defect attorney will provide periodic updates to the board members as to the status and progress of negotiations as advised by the mediator. If the mediation is successful, the attorney will provide an update and recommendation to the board as to a proposed settlement and will provide further information or answers to questions that board members may have. If the mediation is not successful, the attorney will provide a recommendation on how to proceed. This recommendation will include the filing of an action in Superior Court or binding arbitration. Again, effective and proactive communications between the attorney and the association client is crucial at this point in the claim.

With today’s “new normal,” it is important to develop a detailed COVID-19-compliant inspection program that all experts, those for both the association and the defense, are required to follow.

Throughout this process, the construction defect attorney, board members, and community manager must remain in regular, consistent communication to best facilitate the association’s construction defect action on behalf of all members of the community.

The diligent attorney will use a combination of methods to keep the board and manager informed and will develop a communications plan at the beginning of the legal relationship. Common methods are weekly or monthly updates sent via email to the manager and board members, regular attendance at board meetings (both in executive and regular sessions, as appropriate), and frequent written updates suitable for sharing with all members during key periods in the process.

It seems we have now become comfortable on how to handle meetings via Zoom or some other delivery service. This type of online setting allows boards and owners to ask questions and participate from their own home without any additional risks of exposure to the coronavirus. It has also been our experience that attendance has improved online versus the in-person meetings we conducted pre-pandemic.

Ritchie Lipson, Esq. is Director of Client Relations for Kasdan Turner Thomson Booth LLP. For the past 20 years, Lipson has worked with commercial investors, municipalities, school districts, homeowner associations and residential property owners, to assist in the fair resolution of their claims for defective construction.