Don’t Sleep on Your Rights: Virginia Condominiums and Statutory Warranty Claims on Structural Defects

Brendan is a shareholder of Chadwick, Washington, Moriarty, Elmore & Bunn, P.C. and has been practicing community association law since 1993. He counsels the firm’s clients on the broad range of community association law issues and is also an experienced litigator. Brendan has been an active member of the Washington Metropolitan Chapter of CAI since 1993, served on the Board of Directors from 2000-2006, was elected President of the Chapter in 2005, and was inducted into the Chapter’s Hall of Fame in 2007. Brendan is a member of the College of Community Association Lawyers (CCAL) and is currently serving on the CCAL’s Board of Governors. Olga is an associate attorney with the law firm of Chadwick, Washington, Moriarty, Elmore & Bunn P.C. Her practice is devoted to community association representation, including such matters of covenant interpretation and enforcement, contract law and collections. She is an active member of WMCCAI’s Quorum Editorial Committee.

Newly constructed residential buildings can be extremely attractive to purchasers in their apparent promise to be repair-free for years to come. Given this expectation, it can be extremely disheartening and aggravating for new unit owners to discover leaking roofs or malfunctioning HVAC systems or any number of structural problems just a year or two into ownership in the condominium. These issues can often be traced to defects in the original design or construction, which arguably should be addressed by the builder/developer under the construction warranty.

For an association board of directors, a structural warranty defect presents a serious issue because under the condominium instruments, the association is typically responsible for performing and financing the ongoing maintenance and/or repair of the common elements.

Therefore, it is critical for condominium boards to be aware of the statutory warranty on the common elements under the Virginia Condominium Act to avoid being “stuck” with massive repairs for remedial work that should have been done by their condominium developer.

What is the Warranty?

Section 55.1-1955 of the Virginia Condominium Act (“Act”) establishes a warranty for the construction of the individual units, as well as the condominium common elements. The statute provides that the declarant must warrant and guarantee each unit against structural defects and further provide that the units are fit for habitation and were constructed in a workmanlike manner. As to the common elements, the Act provides that the declarant shall warrant and guarantee all of the common elements against “structural defects.”

What is a “Structural Defect”?

That Act defines “structural defects” as “those defects in components which reduce the stability or safety of the structure below accepted standards or restrict the normal intended use of all or part of the structure which require repair, renovation, restoration or replacement.” This definition is fairly broad, and there are few Virginia court decisions that construe the language. In practice, association attorneys typically argue for a broad reading of this term to best serve their condominium clients.

Requirement of Written Notice of Structural Defects

The first step for any condominium contemplating a structural warranty claim is to engage an engineer who can inspect the property and to identify all issues believed to be potential “structural defects” under the Act. This “Transition Study Report” becomes a staple document for the condominium in pursuit and negotiation of its claim against the developer, with the report identifying both design defects and defects in materials and construction.

The statute requires the developer to be given an opportunity to correct the alleged structural defects. A written notice must be sent to the declarant at least 6 months prior to filing a lawsuit and the notice acts to toll the statute of limitations for up to 6 months.

Time Period for Filing Suit

Generally, most structural defect disputes resolve through negotiations with the developer. However, if the attempts at negotiation fail to achieve a resolution, it may be necessary for the condominium to file a lawsuit. It is important to keep in mind that any action for breach of warranty must be commenced within five years after the commencement of the date of the warranty (while also allowing for the tolling process noted above). To determine the commencement date of the warranty, an analysis of the condominium instruments and the transfer dates for the units may be required.

Negotiations with Developer

As with most civil disputes, most warranty cases tend to be amicably resolved. This is particularly true with construction defect cases, which are usually costly due to legal and expert fees. Resolving a warranty case is often carried out through a settlement agreement providing that the developer must make certain repairs to the property, usually with the association’s engineer inspecting the repair to ensure it is appropriate and workmanlike. While most settlements involve repairs, some cases do resolve through a financial payment, with the association using the proceeds to carry out repairs without further developer involvement.

Pursuing the structural defect warranty is one of the most important tasks that confronts a new condominium board. Boards should work with their whole team – management, attorney, engineer – to ensure a thorough and deliberative process to give their community a fair and efficient result.