By Cathy Murillo 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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