Condominiums and Litigation

Condominiums and townhomes are types of residential properties where ownership involves not only a particular housing unit, but also shared ownership of common areas. These communities and residential developments are governed by homeowner associations, which are official legal entities created to maintain the common areas shared by condominium unit owners. With the exception of the recent downturn of the housing market, condominium ownership in this country has grown steadily since the early 1960’s. An aggressive spike in related litigation has accompanied this growth in condominium sales.

Increased Lawsuits

Many condominium projects have resulted in some legal claim or another, and many have ended up in sizable lawsuits. One study of insurance statistics for designers found that professional fees for condominium projects represented 5 percent of all fees, and claims from the projects associated with those fees represented 20 percent of all claims. A similar study performed on contractors found similar numbers of lawsuits related to condominium work.

Major Allegations

Certain allegations in condominium-related litigation have emerged as most common. These are ones related to the design and construction of the properties. Waterproofing has been the most prevalent, with items such as windows, siding and decks included. Other commonly sued-over items include HVAC systems, foundations and roofing. Inadequate soundproofing is also a common allegation in this type of litigation.

Why Does This Happen?

There are several reasons why condominiums are subject to more litigation than other types of property. First, many are developed by shell corporations that exist only for the life of the project and are then dissolved. Since the developers have no long-term stake in the development, quality is often not prioritized.

Second, many of the problems that occur involve the common areas overseen by homeowner associations. HOA boards are often stretched thin with limited resources and can often be less attentive to problems than individual owners would like. Multiple ownership can result in multiplied lawsuits. For example, when damage affects both individual and shared property both individual owners and associations may initiate litigation against developers.

Third, many condominium projects involve transforming existing apartment buildings, and the design and quality criteria for apartments are typically different from that of condominiums.
There is also an emotional factor. When people purchase condominiums, they experience pride of ownership. With this comes a higher expectation. Condo owners expect higher quality and lower maintenance requirements and are often disappointed if this is not the case.

Advice to Condominium Buyers

Instead of examining only the individual unit you are considering buying, consider hiring a professional inspector to inspect the entire building. You should also investigate the reputation of the developer. Are they local or from out of state? Do they have ties to the community? Also, look into whether there are currently any existing lawsuits – either on the part of owners or the homeowner association. It is also wise to check if there is any pending litigation against the homeowner association by any of the individual owners or any other parties.

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