Turnover Traps for Community Associations: Investigate First, Release Claims Later
April 14, 2026 —
Nicholas B. Vargo - Ball Janik LLPTurnover of a community association from developer control to owner control is a uniquely vulnerable moment. Developers are increasingly presenting Florida condominium and homeowners’ associations with “standard” settlement or release agreements at turnover, often being framed as routine steps to finalize the transition of control. In reality, these agreements can have sweeping consequences, including the release of construction-defect claims before the association has conducted any meaningful independent evaluation.
The developer has years of project knowledge and access to plans, subcontractors, and internal records. The newly elected board is just beginning to organize, obtain documents, and understand the property’s condition. Many defects, especially those involving roofing, waterproofing, windows, or structural components, are latent and not yet visible. Signing a release at this stage means the association is making a binding decision under conditions of uncertainty, without full information, to release all future potential claims.
Over the last few years, there has been a rise in reports of developers offering a packaged deal: they agree to complete certain repairs, often minor punch-list or cosmetic items, and to “forgive” an alleged financial deficit (often around $50,000) supposedly owed by the association from the developer-control period. In exchange, the association is asked to sign a broad release covering all claims, including known and unknown construction defects. To a new HOA board that received their community with limited operating and reserve funds, they are left with a difficult decision to either accept the developer’s offer or assess their owners to pay this alleged debt.
These agreements are occasionally presented through community management companies, which may describe them as “standard” or "routine.” Whether due to misunderstanding or influence from the developer, management companies can unintentionally reinforce the idea that signing is expected. Any recommendation provided to HOAs about whether to sign these releases could open community management to liability down the road. The best practice for both associations and community managers is to refer any agreements to be reviewed by general counsel for the association.
The following two case studies illustrate the real-world consequences:
Case Study One: A newly transitioned board relies on its management company to negotiate with the developer-builder to resolve irrigation issues, pond concerns, and signage deficiencies, along with forgiving an asserted financial shortfall. In exchange, the board signs a broad release covering all claims, including latent defects.
Within a year, several punch-list items remain incomplete, and more serious issues arise. When the association demands completion, the developer delays, prompting the association to seek advice on how to enforce the settlement agreement. The association hires counsel to hold the developer responsible for both the previously agreed-upon items and newly identified construction defects. However, when the association brings claims against the developer, the developer points to the release of all potential construction defects in the community. Thus, the only remaining remedy is limited to enforcement of the specific punch-list terms. The community, still relatively new, has no viable claims against the developer-builder for the construction defects. With warranties expired and the release, the association must fund repairs through special assessments, despite defects that would otherwise have been actionable.
Case Study Two: A community is presented with a similar agreement as above. The management company encourages execution, suggesting it is standard and even telling the board to “name your price.” The developer also pressures the newly elected board to sign.
Instead of signing, the board consults with their attorney. Counsel advises the board not to sign the release and recommends further investigation. Engineers are retained and identify early indicators of broader issues, including stucco cracking, water intrusion, and irrigation deficiencies. Based on this information, the association declines to sign the release. Subsequent evaluation reveals potentially significant construction-defect claims, allowing the community to pursue recovery that would have been lost under the proposed agreement.
These scenarios underscore a fundamental point: signing a release at turnover is not an administrative formality—it is a major legal decision. Board members act in a fiduciary capacity on behalf of their community, and their decisions can bind all current and future owners. At turnover, an association’s right is to investigate and pursue claims. Preserving that right until a full and independent evaluation is completed is not adversarial—it is responsible governance.
Accordingly, associations should retain independent evaluations of the property and consult qualified legal counsel before signing any “standard” agreements, especially ones involving a release of future claims.
Nicholas B. Vargo is a partner in Ball Janik LLP’s Construction Practice Group. He may be reached at nvargo@balljanik.com.
Sometimes a General Damages Assessment is Enough. . .
July 06, 2026 —
Christopher G. Hill - Construction Law MusingsIt has been a while since I last posted here at
Construction Law Musings. Life, law practice, and “blogger’s block” have taken their toll on the posting schedule. Hopefully this will be one of several upcoming posts now that the litigation schedule has lightened a bit over the summer.
Today’s post is about damages. Specifically damage to a homeowner’s roof and her legal damages therefor. That last is of course a sentence that only a
construction attorney (or other litigator) could possibly craft and have it make sense. Now, on with the case. . .In
Hardesty Construction, Inc. v. Weedon, the facts are as follows:
Ms. Weedon had hail damage to the roof of her home. She hired Hardesty Construction to repair and replace the roof. After the first roof was installed and failed inspection, a second roof was installed. The issue was that the first roof had a warranty and the second roof, installed similarly to the first (and allegedly with the same construction issues according to Ms. Weedon’s expert), was not provided with the promised warranty. As one may expect, Weedon sued Hardesty and Hardesty Construction for fraudulent inducement and breach of contract. At trial, Weedon testified, without objection, that her home was worth $40,000 less because of Hardesty Construction’s work, which was based partially on quotes Weedon received to fix the roof. The Circuit Court granted Hardesty Construction’s motion to strike Weedon’s fraudulent inducement claim, but not her other claims. A jury awarded Weedon $30,253.30 on her breach of contract claim. Hardesty Construction appealed, arguing the Circuit Court erred in (a) allowing the jury to consider Weedon’s valuation testimony because it was not based on her personal knowledge and (b) denying its motion to strike based on insufficient evidence as to damages. Weedon assigned cross-error in the Circuit Court’s decision to grant the motion to strike her fraudulent inducement claim against Samual Hardesty.
Read the full story...Reprinted courtesy of
The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
GRSM Attorneys Named Finalists in 2026 Women, Influence & Power in Law Awards
March 10, 2026 —
Gordon Rees Scully MansukhaniGordon Rees Scully Mansukhani attorneys have been shortlisted as finalists for Corporate Counsel’s 2026 Women, Influence & Power in Law (WIPL) Awards, which honor women leaders who have demonstrated a commitment to advancing the empowerment of women in the legal profession.
In the Law Firm Internal Collaborative Leadership category, Stephanie Jones was recognized for her exceptional ability to foster collaboration, mentor talent, and align colleagues across GRSM. Jones has consistently demonstrated leadership rooted in trust, inclusion, and shared purpose, qualities that have strengthened the firm during a period of extraordinary growth. Her impact on the firm’s culture and success will continue as she steps into her role as Chief Operating Partner in June 2026, where she will further build on her leadership in fostering teamwork, mentorship, and alignment across the firm’s national platform.
Read the full story...Reprinted courtesy of
Gordon Rees Scully Mansukhani
Construction Companies Are Nearly Seven Times Safer With These Best Practices
June 15, 2026 —
ABC - Construction ExecutiveWASHINGTON, May 4—Associated Builders and Contractors released its
2026 Health and Safety Performance Report, an annual guide to health and safety best practices on construction jobsites. The 2026 report shows the positive effects of participating in
ABC’s STEP® Health and Safety Management System, which enables top-performing ABC members to achieve incident rates 686% safer than the U.S. Bureau of Labor Statistics construction industry average, reducing total recordable incident rates by 85%.
Established in 1989, STEP is a proven system that provides contractors and suppliers with a
robust, no-cost framework for measuring health and safety data and benchmarking with peers in the industry. This self-assessment tool helps participants identify real opportunities for scalable growth in their health and safety programs to lower their total recordable incident rates and become an employer of choice in a competitive labor market.
Reprinted courtesy of
ABC, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Read the full story...
Protect Your Projects By Identifying and Controlling Hidden Contract Risks
March 10, 2026 —
Larry Borda & Daniel Lund III - JD SupraIn a recent webinar entitled “
Spreading the Risk and Avoiding Killer Contract Clauses,” Phelps lawyers Daniel Lund and Larry Borda examined contractual provisions that most often expose construction professionals to unexpected financial and legal risk. While construction contracts may appear routine, each contract serves as the primary mechanism for managing, allocating, and mitigating risk among parties involved in complex projects—often valued in the hundreds of millions or billions of dollars. When parties fail to fully understand the terms they sign, costly and avoidable consequences frequently follow.
Contracts as Risk-Transfer Instruments
Construction contracts are the primary method for transferring risk. While contracts authorize work and define scope, they also allocate responsibility for the risks inherent in construction projects. Some may imagine a world where a one-page agreement and a set of plans would suffice. In reality, modern construction requires detailed agreements—particularly provisions designed to anticipate problems, distribute burdens and reduce disputes.
Reprinted courtesy of
Larry Borda, Phelps and
Daniel Lund III, Phelps
Mr. Borda may be contacted at larry.borda@phelps.com
Mr. Lund may be contacted at daniel.lund@phelps.com
Read the full story...
Land Use Team Wins Appeal for Affordable Senior Housing Development in San Francisco
February 23, 2026 —
SheppardSheppard successfully defended client Mitchelville Real Estate Group and its non-profit development partner Bernal Heights Housing Corporation in an appeal of a 70-unit, 100% affordable senior housing development at 3333 Mission Street in San Francisco’s Bernal Heights neighborhood. The team secured approval of the project, representing the developer on complex land use issues including split zoning, SB 35, the State Density Bonus Law, the Housing Crisis Act, tribal cultural resources and the Subdivision Map Act. Although the ministerially approved parcel map for the project utilized SB 35, it was appealed to the San Francisco Board of Supervisors and unanimously rejected. Sheppard’s real estate transactional team also assisted with the acquisition of the property.
Read the full story...Reprinted courtesy of
Sheppard
Reminder: FOLLOW Your Well Drafted Contract Provisions
February 17, 2026 —
Christopher G. Hill - Construction Law MusingsI have early and very often stated that your
contract is the basis for everything relating to your construction project. Everything from “
no damages for delay” clauses to
attorney fees to
indemnity are found in those documents. A well drafted construction contract
sets the expectations for the project clearly and, aside from just making it easier on everyone for a successful project, will ease things
should there be any dispute later.
However, all of the great drafting and pre-construction negotiation in the world won’t do you a bit of good if you don’t follow those provisions. I can’t count the number of times that a contractor or subcontractor has read and even understood the construction documents but then put the contract in the drawer and didn’t look at it again. Your experienced construction attorney, while helpful at the drafting and negotiation stages and beyond, cannot help do the work. Your lawyer can help you negotiate and
highlight the notice provisions of the contract but cannot provide that notice to the Owner or General Contractor when you have a claim. In short, the best contract in the world is
only as good as those that are following it.
Read the full story...Reprinted courtesy of
The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
No Bad Faith Despite Insurer’s Appraisal Award Exceeding Initial Payment
August 03, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court granted the insurer’s motion for summary judgment, finding no bad faith despite the appraisal award exceeding the amount the insurer initially paid. Jazi Kat 4659 Rockridge LLC, et al. v. Travelers Cas. Ins. Co. of Am., et al., 2026 U.S. Dist. LEXIS 105634 (D. Ariz. May 13, 2026).
Plaintiffs sued Travelers for breach of contract and bad faith, alleging that Travelers failed to pay money plaintiffs were owed under the policy. Plaintiffs held a commercial property policy for two properties. A fire destroyed one of the properties. Travelers adjusted the claim and issued two payments. Plaintiffs disagreed with the amount of the payments and demanded an appraisal. Travelers agreed to the appraisal.
Read the full story...Reprinted courtesy of
Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
