Deconstructing Construction Defects

8 ISSUE TWO 2021 | ECHO journal

CONSTRUCTION DEFECTS

DECONSTRUCTING

BY J. SPENCER EDGETT, ESQ.

ECHO journal | ISSUE TWO 2021 9

This “real world” example demonstrates the need for homeowners to retain a professional forensic consultant to perform an evaluation of their homes (especially newer buildings that may be approaching the 10-year deadline to initiate a claim) as the trained eye of a professional may identify a problem that would not be readily apparent to a layperson.

At some locations, the extent of hidden damage uncovered was so severe that entire sections of wall sheathing and framing had rotted and decayed, thus requiring replacement. Luckily, the issue was caught in time and a monetary settlement was reached with the developer and its insurance carriers that provided the necessary funds for repairs and avoided a special assessment of the membership, estimated to be $40,000 – $50,000 per unit!

Further investigation revealed that the oozing black liquid was asphaltic residue from self-adhering flashing materials which were in direct contact with an incompatible sealant used to waterproof the window assemblies within the wall. The incompatibility of the flashing material and sealant caused a chemical reaction that degraded the flashing material, which reduced its waterproofing capabilities and caused water intrusion in and around the windows.

In the picturesque San Francisco Bay Area lies a 100+ unit condominium community. Most of the homeowners were very happy with their home purchase and enjoyed the many facilities their community offered. Sure, there were some fixes that needed to be made but no one expected to find hidden construction defects. While there were not many complaints of leaking windows, a few owners noticed and reported what appeared to be a black liquid oozing from the heads and corners of a handful of windows.

A Real-World HOA Experience

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In California, the majority of construction defect claims for original residential construction are governed by the Right to Repair Act (Cal. Civil Code §§ 895-945.5) also commonly referred to as SB 800. The statutory framework of SB 800 defines what constitutes an actionable construction defect pursuant to enumerated ‘functionality standards’ for various components of construction. A violation of the functionality standards is actionable under the law and provides homeowners or community associations (hereinafter both referred to as ‘Homeowner(s)’) with a right to monetary compensation for the cost of repair and related damages. Homeowners are also entitled to recover reasonable investigative costs for each established violation. SB 800 additionally requires the parties to participate in a pre-litigation procedure designed to facilitate resolution and allow

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Windows with a ‘fogged’ appearance could indicate a failure of the Insulated Glass Unit (“IGU”) due to a breach of the seal which has allowed moisture to enter the space between the panes of glass and/or corrosion of the low-E coating on the glass.

Foundation cracks, drywall cracks and windows or doors that are difficult to open or close are potential signs of building movement that could suggest a problem with expansion, compaction or settlement of the soil beneath the structure.

The presence of efflorescence is often indicative of unintended or trapped water within the building systems. Efflorescence is a white powdery deposit of salts often left behind by water on the surface of stucco, concrete, brick or stone.

Many construction defects are not readily apparent (referred to as ‘latent’ defects) and are not discoverable without performing intrusive testing or investigation, i.e., the removal of exterior cladding or trim. However, there are some ‘tell-tale’ signs that construction defects may exist and thus warrant further investigation.

DETERMINING IF POTENTIAL CONSTRUCTION DEFECTS EXIST

ROOFS Roofs, roofing systems, chimney caps, and ventilation components shall not allow water to enter the structure or to pass beyond, around, or through the designed or actual moisture barriers, including, without limitation, internal barriers located within the systems themselves. (Cal. Civ. Code Section 896(a)(4))

WINDOWS AND PATIO/DECK DOORS Windows, patio doors, deck doors, and their systems shall not allow water to pass beyond, around, or through the window, patio door, or deck door or its designed or actual moisture barriers, including internal barriers within the systems themselves [and] shall not allow excessive condensation to enter the structure and cause damage to another component. (Cal. Civ. Code Section 896(a)(2) and (3))

With respect to water issues, SB 800 includes, among others, the following functionality standards: EXTERIOR DOORS A door shall not allow unintended water to pass beyond, around, or through the door or its designed or actual moisture barriers, if any. (Cal. Civ. Code Section 896(a)(1))

SB 800 Functionality Standards

the developer/builder to offer and implement repairs and/or pay monetary compensation to resolve the claim. If construction defects are not discovered early and resolved by way of a claim made to the developer/builder, they can be financially devastating to homeowners, who will be forced to expend substantial funds on unplanned repairs.

Deconstructing Construction Defects Continued from page 9

ECHO journal | ISSUE TWO 2021 11

Any significant separations in lap siding at the siding butt joints or siding-totrim junctures, as well as siding that is delaminating, buckling, cracking or has a wavy appearance are all signs that the siding was not installed properly, whether due to inadequate/incorrect fastening, failure to leave proper gaps to allow for thermal expansion and contraction, or possible water intrusion.

Stucco cracks are typical after construction due to the curing process of the plaster and normal expansion or contraction; however, cracks that are significant or excessive in number, width or length could indicate a problem with the system resulting from improper installation, failed flashing conditions or the use of poorly mixed stucco plaster.

Windows with a ‘fogged’ appearance could indicate a failure of the Insulated Glass Unit (“IGU”) due to a breach of the seal which has allowed moisture to enter the space between the panes of glass and/or corrosion of the low-E coating on

Many construction defects are not readily apparent (referred to as ‘latent’ defects) and are not discoverable without performing intrusive testing or investigation, i.e., the removal of exterior cladding or trim. However, there are some ‘tell-tale’ signs that construction defects may exist and thus warrant further investigation.

DETERMINING IF POTENTIAL CONSTRUCTION DEFECTS EXIST

Continued on page 12

Prior to filing an action for violations of the functionality standards, the parties are required to participate in a prelitigation process designed to resolve the dispute. The SB 800 statute provides a default procedure to be followed; however, a builder may attempt to enforce its own alternative contractual prelitigation procedure typically set forth in either the Covenants, Conditions and Restrictions (“CC&Rs”) and/or individual purchase and sale agreements with individual homeowners. The default SB 800 procedure requires, among other things, the homeowner to provide notice of the claimed violations of functionality standards to the builder and allows for the builder to inspect the conditions, make an offer to repair and participate in mediation. Depending on the complexity of the issues, this

SB 800 Prelitigation Procedure

EXTERIOR CLADDING Stucco, exterior siding, exterior walls . . . shall be installed in such a way so as not to allow unintended water to pass into the structure or to pass beyond, around, or through the designed or actual moisture barriers of the system, including any internal barriers located within the system itself [and] shall not allow excessive condensation to enter the structure and cause damage to another component. (Cal. Civ. Code Section 896(a)(10) and (11))

DECKS Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow water to pass into the adjacent structure [or] allow unintended water to pass within the systems themselves and cause damage to the systems. (Cal. Civ. Code Section 896(a)(5) and (6))

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• Dryer duct installation and termination pursuant to manufacturer installation requirements (from close of escrow). (Cal. Civ. Code Section 896(g)(14).)

• Untreated wood posts in contact with soil causing unreasonable decay (from close of escrow). (Cal. Civ. Code Section 896(g)(8).)

Two-Year Limitations Period

representation is made, or if the representation is less than one year, the period shall be no less than one year. (Cal. Civ. Code Section 896(g)(3).)

• Irrigation systems and drainage (from close of escrow). (Cal. Civ. Code Section 896(g)(7).) • Noise transmission for attached units (from original occupancy of adjacent unit). (Cal. Civ. Code Section 896(g)(6).) • Manufactured products, including but not limited to windows, doors, roofs, plumbing products and fixtures, fireplaces, electrical fixtures, HVAC units, countertops, cabinets, paint, and appliances that are completely manufactured off-site. If no useful life

One-Year Limitations Period

deadlines to initiate a claim within SB 800 for specific components including the following:

The absolute deadline to initiate a claim is ten years from substantial completion of the improvement but not later than the recordation of a valid notice of completion (Cal. Civ. Code Section 941). This applies to ‘latent defects,’ i.e., defects that are not readily apparent upon reasonable investigation. However, there is a shorter three (3) year period in which to bring a claim once the defect is discovered (Cal. Code of Civ. Proc. Section 338). In addition, there are mandated

Time Frame to Bring a Claim (Statute of Limitations and Repose)

process can last from 6 to 12 months (or longer).

Deconstructing Construction Defects Continued from page 11

J. Spencer Edgett, Esq. is a partner with Chapman & Intrieri, LLP and has represented community associations for more than 15 years, both as general counsel and in pursuing claims against developers and contractors for construction defects. Chapman & Intrieri has offices throughout California, providing practical and cost-effective legal solutions designed to meet our clients’ objectives and exceed their expectations.

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If the issues are minor, homeowners may be able to resolve them with the developer/ builder through their warranty or customer service department. However, if there are more significant/major issues, i.e., typically anything involving water intrusion through the building envelope, window failures, systemic plumbing or electrical problems or site soil settlement, then homeowners should engage competent construction defect counsel for assistance. In addition, homeowners should have an independent forensic consultant evaluate the conditions, which should be coordinated through legal counsel. Many times, the developer/builder will offer to inspect the conditions or even pay for a ‘neutral’ thirdparty evaluation. Homeowners should be wary of allowing the developer/builder to direct or conduct the investigation as they have competing financial interests which do not typically align with the best interests of the homeowners.

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of repairs (if any), the statute of limitations is tolled/extended (Cal. Civ. Code Section 927).

• Paint and stain causing deterioration of building surfaces (from close of escrow). (Cal. Civ. Code Section 896(g)(10).) If the statute of limitations period has otherwise run during the process, then from the time the homeowner provides the SB 800 Notice to the builder through 100 days after completion

Five Year Limitations Period

displacement in exterior pathways, driveways, hardscape, sidewalls, sidewalks, and patios (from close of escrow). (Cal. Civ. Code Section 896(g)(1).) • Corrosion to untreated steel fences and adjacent components (from close of escrow). (Cal. Civ. Code Section 896(g)(9).)

• Plumbing and Sewers installed to operate properly and not materially impair the use of the structure (from close of escrow). (Cal. Civ. Code Section 896(e).) • Electrical Systems installed to operate properly and not materially impair the use of the structure (from close of escrow). (Cal. Civ. Code Section 896(f).) • Excessive cracks or significant vertical

Four Year Limitations Period

• Landscaping systems installed as to survive for not less than one year (from close of escrow). (Cal. Civ. Code Section 896(g)(12).)

Deconstructing Construction Defects Continued from page 12