Column; Reducing liability in condominium conversion

Bremer_LeAnne

In the case of Marina Condominium Homeowner Association v. Stratford at Marina LLC, decided by Division I of the Washington Court of Appeals, the original developer built an apartment building in 1962. Later, a subsequent owner undertook a conversion of the apartment building into a condominium in 2005, when the market supported the conversion. Two years later, the homeowners association sued the developer who converted the apartment building alleging a myriad of defects. The association claimed, among other things, that the owner undertaking the conversion breached the statutory implied warranty of quality construction. The association detailed 16 defects based on violations of building codes and construction standards, such as problems with windows and sliding glass doors. While the conversion owner undertook some work on plumbing, light fixtures, cabinets, appliances and drywall during the conversion process, the association’s claims instead detailed problems with the original construction and installation in 1962.

Based on the facts of the case, the court of appeals summarily concluded that because the association’s claims did not allege defects with the work the conversion owner undertook, there was no breach of the implied warranty of quality. The court ruled an owner doing a conversion condominium is not responsible for the quality of the original construction unless the defects related to the improvements the conversion owner made. If the conversion owner, for instance, replaced the original windows and improperly installed them, the owner could be liable for that work. But if the conversion owner’s work was completely unrelated to the alleged construction defects, there is no liability under the implied warranty provisions in the condominium statute. The conversion owner is not automatically warranting the work of the original developer.

For owners considering a condominium conversion, lessons learned from Marina include carefully documenting the improvements and repairs made to the apartment building during the conversion process with invoices, work orders and detailed but limited scopes of work. Owners should also assess and document the present condition of the structural, electrical and mechanical systems of the building, as well as the condition of the building enclosure to determine if it can withstand moisture intrusion. While these reports are separately required under the condominium statute as part of the notice required to be given to potential buyers of condominium units, detailed documentation could also protect the conversion owner from potential claims.

LeAnne Bremer is a partner at the regional law firm Miller Nash. Working out of the company’s Vancouver office, she focuses her practice on land use law, real estate and government affairs. LeAnne can be reached at 360.619.7002.

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