April 23, 1999 - As 60,000 people move into Southern California every month, urban
planning experts are saying the burgeoning population must be
accommodated with multi-family housing – condominiums or apartments. Not everyone can afford a single family home and as
undeveloped land becomes rare, traditional housing tracts will be just
as rare.
Builders are shying away from condominium projects, however, as
litigation over construction defects becomes increasingly common.
Attorneys specializing in these cases say if contractors built the
complexes correctly they would not get sued, but building industry
officials decry the practice.
"These lawyers know it's easy money," said Ray Pearl, spokesman
for the Building Industry Association of Southern California's
Greater Los Angeles/Ventura Chapter.
"Those new people coming to California and future home buyers
are not going to be buying condos because none will be built."
Pearl explained how expensive insurance for condos is – if a builder
can secure a policy at all. And
those companies putting up a condo complex must painstakingly
videotape every aspect of construction and maintain "binder after
binder" documenting the job, he said.
Most builders won't touch a condo project, he said, pointing to
statewide statistics showing that 117,000 building permits issued in
1987 for apartments, condos and townhouses.
In 1993, that number had dropped to 15,000.
A 1998 rebound to 32,000 permits can be attributed to new
apartment projects, he said.
Apartment houses are owned by investment companies or individuals savvy
in the real estate business. Condominium
complexes are governed by a board of directors comprised of
homeowners. "Overzealous"
lawyers are able to persuade these boards to file a lawsuit over
problems, such as leaking roofs, that really fall into the maintenance
area.
Pearl knows of one suit that claimed a complex's balconies were
cracked, but the complex did not even have balconies. The lawsuits are of the "cookie cutter" variety.
Disagreeing with Pearl's characterization is Thomas Miller, author of
the book, "California Construction Defect Litigation," and an
attorney with offices in Newport Beach and Ventura.
Miller practices in the south-western United States.
Faulty construction is real, especially in areas where building is
booming, he said. There's
a huge demand for housing in Arizona and Las Vegas and builders cut
corners to get their product on the market quickly.
"People are scrambling to get into places and builders are scrambling
to get them up," he said. "We've
been doing this for 15 years and at least one in three, if not one in
two, condo projects end up with significant construction problems.
That's a pretty scary statistic."
Why won't a builder just do the job right? It's a complex process.
There can be as many as 40 subcontractors, Miller said,
describing a scenario by which a team of unskilled workers are working
from confusing building plans with very little supervision.
"It's a time bomb ready to go off," he said.
Earlier this month, Miller's law firm secured an $8.4 million
settlement for a group of east Ventura County condo owners. On
behalf of the Shadow Ridge Homeowners Association, Miller sued Sares-Regis
Group of Irvine and the builder's insurance company.
The suit alleged the 440-unit complex in Oak Park had stucco
cracks, electrical and plumbing problems, and leaky windows, roofs and
decks.
Sares-Regis officials did not return phone calls.
Ventura insurance broker Steven Peterson said insurance companies
exclude condos from builders' policies because after they have paid
so many claims it's not good business to insure risky clients.
"Generally speaking, it's because of the product defects," he
said.
Peterson believes both sides of the controversy contribute to the rash
of condominium lawsuits. Some
projects are shoddy, some attorneys are opportunistic.
"It's a little bit of both," he said.
"My question is, aren't there inspectors signing off on the
work? Who the heck
inspects these buildings?"
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