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Condo Associations and the Common Interest in Construction Defects

September 1, 2010 — Original report by David Swedlson on the HOA Law Blog

David Swedlson, writing in his blog, recounts the decision in Calemin v. Jared Court Homeowners Association, Inc. Mr. Swedlson appeared as an expert witness in the case.

The Calemines bought a unit in the condominium complex in 2002. Twenty years before, the condominum association had sued the developer over water intrusion issues. The case was settled for $335,000 and the association used the funds to repair and waterproof the affected areas of the homes.

Subsequently, the association sued the contractor who performed the repairs, settling for $565,000. The HOA’s consultant estimated that it would cost approximately $1 million to stop the water intrusion. A third contractor was hired to repair foundations with the remainder of the settlement used for other common area repairs. This contractor did not guarantee that his repairs would solve the water intrusion issues.

Work on this final series of repairs was still ongoing until 2004. In 2005, the Calemine’s had water intrusion in to their bonus room and garage. The bonus room became unusable due to moisture. The Calemine’s insurance company rejected their claim as the water intrusion had come from the common area.

After the Calemine’s first problem with water intrusion, the condominium board issued a letter summarizing the water intrusion issue, noting that while roof and foundation leaks would be addressed, they could not promise to prevent all leaks. The Calemines subsequently sued the association for nuisance and breach of contract.

In the end, the trial court ruled in favor of the association, finding that the Calemines failed to offer evidence of damage to support their claims. The Calemines appealed the decision but the California Court of Appeals ruled that a prior California Supreme Court decision, Lamden, allowed condo associations to work in the common interest, even if this conflicted with the interest of any of its members.

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Condo Associations and the Common Interest in Construction Defects