Many people pay more for new—or newer—commercial buildings to delay much of the upkeep required to maintain older buildings. But like new cars, some newer buildings are lemons.
Repairing a lemon building can cost more than was paid to buy it. Horror stories include run-of-the-mill repairs costing three times the initial construction cost; a $7 million estimate to repair a structure that cost $8 million to build; and an eye-popping $20 million “loss of use” claim from tenants if a building were taken out of service prior to (or during) repair.
As soon as a potential problem emerges, investors must figure out if their building is a lemon. A prompt investigation may might identify a problem as faulty design and/or construction, and require the responsible parties to pay for all or part of the repair. Unfortunately, making an accurate, early diagnosis can be difficult, since the severity of many situations may not be immediately obvious. Are several leaking windows an isolated problem or the tip of a horrible iceberg?
Avoid the fast fix
Obviously, you hope to fix the leaking windows with $5 worth of strategically placed caulk, but consider these two scenarios you could face if you try this. They both demonstrate why a seemingly common sense solution is wrong.
First, caulking a window might hide a growing problem. Inside your wall cavity, continued water intrusion might rust metal beams, decay wooden structures and soak batt insulation and interior drywall. The first manifestation of a serious problem—after your caulk job—may be water stains on interior drywall or, worse, damp interior drywall with small black dots of mold on the surface. Those black dots are like iceberg tips. Under the surface, mold could be permeating the drywall and insulation.
Second, the law often punishes people who take a measured response to such situations. Your inclination might be to employ a simple solution (like caulk), then wait and see if it works. Only if it fails will you try a more aggressive solution and, only if that fails, will you consider seeking a lawyer’s opinion about whether the building was designed or constructed incorrectly. Your effort to respond with the least invasive solution might consume years, especially since rain in our area is concentrated in the winter months.
Time is of the essence
But the law requires you to file a lawsuit, if at all, within a specified time. If you don’t file suit within 10 years of the building’s substantial completion, you’re usually forever barred from suing for design and construction defects. In addition to that limit, you generally must file a lawsuit no more than three or four years (depending on the legal theory) after you discover—or should have discovered—the problem. Delay in detection could make a valid claim worthless.
What should you do when you find leaking windows or other problems in your newer building? If you follow the ounce of prevention/pound of cure analysis, you secure the services of both construction and legal experts. Alone, neither expert can provide the help you need; it’s critical they work as a team.
The construction expert will identify the magnitude of your building’s problem and formulate a rough estimate of how much it will cost to repair. This expert typically starts by reviewing available building plans and then doing something that’s hard to watch, namely tearing apart portions of your building. At each step of the way, the expert records what he or she observes. A central question the construction expert will answer is whether or not your building’s problems are the likely result of design and/or construction errors. With that information, the lawyer will tell you whether or not you should expect the designer and/or builder to pay for all or part of your repairs.
Depending on the severity of your problem, the estimated cost to repair it and the strength of your claim against the designer and/or builder, you may decide to file a lawsuit. What happens if you decide to go this route is beyond the scope of this article.
Our legal system is designed to provide recourse if a building is a lemon. After paying a premium for a newer building, the last thing anyone wants to do is fund a repair that may exceed what was initially paid for the building (plus potential loss-of-use claims by tenants). The law requires persons who wrongly designed and/or constructed a building to pay their fair share of those costs.
Weitzenberg, Emery, and Berry are lawyers with Abbey Weitzenberg Warren & Emery in Santa Rosa, who represent building owners in claims for design and construction defects. They can be reached directly at (707) 542-5050 or via email at dberry@abbeylaw.com.
