Building Studies

Engineering studies fall into a number of categories, from general condition surveys (such as reserve studies and pre-purchase inspections) to problem-solving investigations and forensic examinations. Within those categories, there are generally three (3) levels of need.

Preliminary Study

There’s something inherently appealing about buying something brand new, but newer isn’t always better, especially in construction. A dishearteningly large portion of our work involves problems in new buildings, ranging from shoddy workmanship to new technologies that don’t live up to expectations.

One advantage to buying a unit in an older building is history. Inherent or latent defects can take time to manifest and new structures are not time-tested. There are steps that can be taken to help determine the condition of a new building, the first of which is a professional transition or warranty study.

Most states (and The District of Columbia) have in effect statutes regulating the formation and governance of community associations (condominium acts) and they typically include provisions for the correction of construction defects by the developer. That amounts to a statutory warranty, which has nothing to do with other warranties that might be offered to buyers by the developer.

Each state sets the criteria as to what constitutes a warrantable defect but they generally include any condition that reduces stability or safety below acceptable levels, restricts the intended use of a building element and/or does not comply with standards acceptable within the involved industry. Warranty periods vary by jurisdiction, usually ranging between two to three years. The acts also define periods during which lawsuits could be filed (statutes of limitations) and some limit the time an association has to notify the developer of any defects, often within the warranty period.

Before a warranty claim can be made, defects have to be identified and to the extent possible, quantified. That’s the primary purpose of a transition/warranty study. A secondary purpose can be determination of replacement reserve requirements.

Depending upon the age of the property, such a study could have been performed; however, it may not be made available to potential buyers. If the Association is embroiled in a legal action with the developer, reports might not (for strategic reasons) be made public during certain aspects of the process.

If you wish to buy into a new community and no such study has been undertaken, it would be in your best interest to propose, promote, or support one. In many cases, the burden of correcting constructions defects falls on the association if they weren’t identified within the time frames imposed by statute. Consumer protection laws in some states provide protection apart from and in addition to condominium acts, but even then, early is better.

The intent of this series is not to dissuade you from buying a condominium. All systems age and must undergo periodic repair, rehabilitation, or replacement. As long as the association has properly planned for those, the related issues amount more to inconvenience than hardship. If plans are lacking, you could be faced with having to pay for things that weren’t your fault, in the form of a special assessment or elevated assessments to pay off a loan.

Physical Inspection

When you buy a condominium you’re also buying into the building that encloses it, as well as every other building in the association and everything else intended for common (and limited common) use. You’ll be paying to operate, maintain, repair, and (when the time comes) replace them.

With that in mind, it would behoove you to inspect those elements. Detailed inspections are not practicable and space doesn’t allow for comprehensive discussions of every possible element or condition, but certain basic principles apply. In essence, if something doesn’t look right, it probably isn’t.

A simple walk through the property can be revealing. If the grounds are littered with construction materials (shingle remnants, siding, sheet metal, brick pieces, etc.) there’s reason for concern. If buildings exhibit bulges, missing cladding materials, excessive cracks, or other conditions that seem out of the ordinary, there are questions that need to be answered.

Parking garages with excessive and/or displaced cracks, exposed steel reinforcement or  broken tendons (usually characterized by “cable” loops at the undersides of slabs) will probably require some degree of rehabilitation in the near future. Gutters in garages are almost always installed to collect water from leaks through defective waterproofing systems.

One thing buyers frequently fail to consider is noise. If you inspect the unit at a time when nobody is home in neighboring units, it could be misleadingly quiet. It might annoy your realtor, but try to arrange multiple (at least two) visits during hours when the neighbors are likely to be home and active.

While detailed inspections by prospective buyers are not usually possible, detailed professional inspections have likely been performed and reports would have been generated.  In Part 2, to follow, we discuss documents you should review to help inform your decision.

There is a phrase in the lives of community associations guaranteed to make the blood run cold – Special Assessment.

Property managers and boards of directors fear it, and homeowners are usually angered by it. The most common initial reaction from those affected is to find someone to blame. It has to be the fault of management, who ignored maintenance, the board of directors who didn’t budget enough to cover routine repairs and replacements, or the consultant who recommended a needlessly expensive remediation program.

It’s not always that simple and even if it is, so what? The fact remains homeowners will have to pony up or get used to living with the leaks, rotted wood, potholed pavement or whatever conditions are involved. The second option is short-sighted and will only add to the problem, so the only real option is to develop a workable strategy and sell it to the owners.

The first step is to identify and quantify the problems and define appropriate remedies. These should be done by someone who wouldn’t financially benefit from the outcome. Qualified, trustworthy contractors could do a competent job, but could be viewed as having a vested interest and their findings could be dismissed by some for that reason. Independent consultants aren’t automatically more believable, but there’s certainly less potential for a conflict of interest.

The next (and arguably most critical) issue is effective communication. Once it’s been established that a major project is necessary, the ownership should be informed and a special meeting should be convened to present it to them. The individual(s) who investigated the problems and defined the repairs should present their findings and provide exhibits (photographs, drawings, etc.). There will be questions (often pointed) and accusations should be expected. Patience, tolerance, and understanding on the part of the targets are critical.

When possible, projects should be structured to minimize financial hardship. In some cases, projects could be phased over a number of years, allowing for assessments to be paid in installments over that period. If a project doesn’t lend itself to a phased approach, it could be advantageous to obtain a loan, which would also permit payment in installments.

Reserve studies by competent professionals will help prevent the need for special assessments, but if they aren’t done early and often, or if funding recommendations are ignored, the potential could be high. Even with conscientious inspections major problems (such as latent defects) can develop without visible symptoms many years after construction.