| Q: |
How long does a Washington association have in which to formally assert a breach of statutory warranty claim? |
| A: |
In the case of a single phase condominium, normally four years from sale of the first unit. For multi-phase condominiums, that four year statute may start to run on a later date for units in a later phase. |
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| Q: |
What if Declarant goes out of business? |
| A: |
The fact that a Declarant may have gone out of business does
not necessarily affect the obligation of a Declarant’s liability insurers to
resolve a construction defect claim made against their insureds. |
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| Q: |
Does the statute of limitations run on the making of a claim even if the association’s board does not know it has a claim? |
| A: |
Yes. The statute runs regardless of whether the board knows of any claims. That is why an association should authorize a construction quality evaluation of its condominium complex before the association’s warranty rights under the Condominium Act have run out.
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| Q: |
What is the association’s options if it is too late to make
a construction defect claim under the statutory warranties provided by the
Washington Condominium Act? |
| A: |
An association may have an express warranty or a fraud, Consumer Protection Act or breach of fiduciary duty claim against Declarant. An association may also have other claims against a Declarant that may not be subject to the Washington Condominium Act’s four year statute of limitations on Condominium Act warranty claims. Whether an association has such other claims would depend on the facts as they relate to the specific association in question. |
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| Q: |
In a defect case, who pays the association’s attorney fees? |
| A: |
The association does. However, if the claim is based on
the statutory warranties of construction quality under the Washington Condominium
Act, in most settlements, Declarant will agree to pay some, most or all of
the attorney fees incurred by the association. This is because if the claim
were to proceed to trial, in most statutory warranty cases the court would
issue an attorney fee award in favor of the association. |
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Q: |
How are most claims resolved? |
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A: |
Most claims are resolved through a mediation process. This process involves the use of a retired judge or an attorney who specializes in the dispute resolution process to act as a “facilitator” to help the parties eliminate or narrow their disagreements, and to settle the claim. |
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Q: |
What is the difference between mediation and arbitration? |
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A: |
In a mediation, the mediator helps the parties to settle the claim, but has no power to resolve the claim. In an arbitration, the arbitrator acts like a judge and decides the case. |
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Q: |
Is an association better off hiring an attorney on an hourly or contingent fee basis? |
| A: |
In the long run it is often less expensive for an association
to hire an attorney on an hourly basis. However, typically it takes over a
year to resolve a claim. So without a unit owner assessment most associations
can’t afford to pay the consultant costs and hourly attorney fees that
will be incurred in the investigation and prosecution of the association's
claims.
So most associations will hire an attorney on a contingent fee basis to avoid
a unit owner assessment to finance the attorney fees and consultant costs incurred
in the investigation and prosecution of the claim.
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