| Q: |
How long does a Oregon association have in which to formally
assert a breach of statutory warranty claim? |
| A: |
For common area defects, notice of the claim must be given
to the developer within three years after sale of the first unit in a single
stage condominium. For multi-stage projects, the three years may start
to run later on a later phase. For defects in limited use common areas
or
within units themselves, notice of the claim must be given within one year
after sale of the affected unit. If timely notice of a defect is given,
the claimant
has an additional two years following the expiration
of the three year or one year period, in which to initiate formal legal
action against Declarant. |
 |
| 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. |
|
| 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. |
|
| Q: |
What are the association’s options if it is too late to make a construction defect claim under the statutory warranties provided by the Oregon Condominium Act? |
| A: |
An association may have a fraud, Unlawful Trade Practices 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 Oregon Condominium Act’s five 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. |
|
| 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 Oregon 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? |
|
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. |
|
|
Q: |
What is the difference between mediation and arbitration? |
|
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, and most associations can’t afford to pay an attorney’s hourly fees on a monthly basis for a year or more before the case is resolved. So most associations will hire an attorney on a contingent fee basis to avoid a unit owner assessment to finance the prosecution of the claim. Also, an attorney is unlikely to be willing to advance the costs of an investigation and other expenses of prosecuting the claim if the attorney is working on an hourly fee basis rather than on a contingent fee basis.
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|
Q: |
What is an association’s options if it is too late to make a construction defect claim under the statutory warranties provided by the Oregon Condominium Act? |
|
A: |
An association may have an express warranty, negligence, fraud
or unfair trade practice or breach of fiduciary duty claim against Declarant.
The time within which these claims must be made may not be governed by the
provisions of the Oregon Condominium Act. However, written notice of a claim
involving a common area defect must be given within three years from sale of
the first unit in the project (in a single
phase project), and written notice of defects in limited use common area components
and defects within a unit itself must be given to the developer within one
year after sale of the unit.
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