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KM1
(Texas)

Posts:15

05/08/2008 4:29 PM
Please, if anyone can offer advice on any aspect here whatsoever, I would appreciate it immensely. Our townhome community which started builds in 2005 have several buildings experiencing foundation problems. I am the president of the association and am overwhelmed and distraught with trying to determine how to best help while protecting the remaining properties. One building slab cracked down the center and the developer had concrete pilings put underneath. The building adjacent has signs of foundation damage due to my knowing of two individual units with floor cracks extending from their entrance to exit (garage). I have observed another unit outside with horizontal cracks through the exterior, and the entire roof appears to be seperating from the structure. I was just advised today that another home may have foundation issues and several plumbers and engineers (from developer) have been on our property to look at this building. We will all be stuck with mandatory binding arbitration, which I hear the developer can just drag on forever until the individual has no more money to spare. Our board is already struggling with money issues stemming from the housing market downslide. We could only implement stricter rules governing collections. Our $100 a month assessments cover management company, insurance, and water - about 75% of our total costs. I don't want to send the neighborhood into further panic about the other homes, because everyone already wants to sell due to all the renters that have had to move in! Now another building has foundation problems, so that is five more homeowners wanting to sell as fast as they can. How much of this must we disclose to the insurance companies and how will that affect our costs? Is their any hope for our neighborhood now? I am so overwhelmed, so any advice is appreciated. Thank you!

JosephW
(Michigan)

Posts:735

05/08/2008 5:28 PM
First, these are serious problems and there's not going to be a low-cost way out it. If the association is under owner control (and it sounds like it is), then you're going to need your own engineers and a good attorney. The developer's engineers will be working for and protecting the developer's interests. I don't think insurance is going to enter into it, but there may be a whole raft of legal problems if people sell without disclosing the structural problems. First find a good association attorney who will tell you the steps you need to take to protect the association and yourself. Read articles on "Fiduciary responsibility" (http://www.communityassociations.net/board_responsibilities.html) so you understand why you and the board will have to do those things. Next, you're going to have to bring the community into this and try and work together to find solutions, even if some of them are short-term band-aids. Trying to handle everything by yourself or with just a few people will overwhelm you. It sounds like everyone's investment is at stake, so it should be everyone's concern and they need to participate. Get some committees going to work on the problems. Make sure the management company is working for you and has no ties to the developer. Work with them to get the management costs to the lowest possible number that will still provide basic services. If they are any good, they'll understand your problems and work with you to solve them. If they won't come around, find another company. I'm sure there will be more suggestions, but the key is that you don't have to and shouldn't try to handle everything yourself, especially when it involves things beyond your expertise. Joe

Joseph West Official HOATalk.com Sponsor Community Associations Network, LLC www.CommunityAssociations.net *See legal notice below (end of page) or go to www.hoatalk.com/legal

KarenS11
(Florida)

Posts:132

05/08/2008 6:09 PM
What is the statute of limitations on going back against the developer in Texas?

KM1
(Texas)

Posts:15

05/08/2008 8:03 PM
Good question - been looking at http://tlo2.tlc.state.tx.us/statutes/pr.toc.htm and my head is swimming. If I understand correctly the Residential Construction law is the same as the Texas Residential Constuction Commission (TRCC) guide on Warranties and Performance Standards (layman terms I can understand) which states under Time Limits for Reporting "For a defect to be covered, it must be reported to the builder/remodeler within two years of the date it was first discovered, but in no even more than 30 days after the applicable warranty period expires or ten years after the original warranty took effect." That being so, I hope that means we're still within timeline. Not that the TRCC is very helpful in that it is comprised mostly of builders, as implemented by Governor Perry of TX, aka brother of Perry Homes! Hah. Surprise surprise!

KM1
(Texas)

Posts:15

05/08/2008 8:05 PM
Thanks, JosephW, I will be sure to look closely at this!

MaryA1
(Arizona)

Posts:1893

05/08/2008 8:07 PM
KM, Does TX have any statutes concerning construction defects? I believe this is the area this would fall under. You may want to check with the registrar of contractors or the attorney general's office for more info on this. You can also look in the phone book for an attorney who specialized in construction defect litigation. I don't know what the statute of limitations is for construction defect litigation. If this is a problem throughout the assn, the board needs to become involved in settling the problem.

BradP
(Kansas)

Posts:1742

05/08/2008 8:15 PM
KM: I would get yourself a good attorney...if the damage is that severe the develope and builder are not going to want to fix it because they will lose money. You are going to need someone with experience dealing with this stuff...This is my opinion.

EllenS1
(Florida)

Posts:328

05/10/2008 6:04 PM
I'm sorry to hear of all your problems and whatever you do it will be not be cheap. A starting place might be to go to the City and get copies of permits during construction and see who signed off on the foundations being ok. If you find the City inspectors did not do their job I would think it worth the cost of seeking the advice of an attorney who specializes in this sort of thing. You'd have to weigh the cost of doing this versus your property values going downhill.

KM1
(Texas)

Posts:15

05/11/2008 7:51 AM
I have been digging up information for awhile, and did look at city permits on file. Here the city will accept a letter from a Professional Engineer saying the foundation is approved, in lieu of getting an inspection from the city. Of course that is what the developer opted to do. I had a couple of appointments to talk to lawyers for a free consultation. Did some research to talk with those that had specific experience with construction defects and developer transition (we had other problems throughout common areas). I had an expert witness report from an engineer, along with a $3M dollar estimate (for what that was worth), but for these type of cases, the lawyers told me they would not work on contingency. I can't imagine blindly starting any proceedings paying up to $400/hr against one of the top-three home builders in the U.S. I'm not sure there is any way to estimate what a potential final cost to us could be? Paying $10K to just get a draft engineer report really hurt and basically got us nowhere. The developer just got their engineer to write up rebuttals that are over my head. One lawyer didn't feel the association should go forward for all the findings, but rather those affected specifically by the foundation issues should pull together resources. Unique problems are posed there when you have an affected townhouse but not everyone in that unit wants to give money or put up a fight.

GlenL
(Ohio)

Posts:1304

05/11/2008 10:22 AM
I would seriously look at going after the engineer. He signed a legal document that the foundations were up to code. There obviously is a problem and that's who I would include in any lawsuit along with the contractor that poured the slabs and the company that provided the concrete. Have you shown the home builders engineers rebuttals to the engineer you hired?

MaryA1
(Arizona)

Posts:1893

05/11/2008 12:39 PM
I believe in some areas of the country the soil contributes to these type problems. I don't know that you can just blame the engineer or the contractor who poured the slabs. However, I believe you still may have cause for a construction defect lawsuit. You need a good attorney who specializes in this area of the law. Also, if the problem is prevalent throughout the development it is the resp. of the assn not each individual h/o who's unit is affected. AZ has laws concerning construction defect litigation. You might want to check to see if TX does also.

BradP
(Kansas)

Posts:1742

05/12/2008 11:44 AM
KM: I think it is time for a rountable discussion within your community to get some feedback. It is quite obvious this won't be an easy fix, but the real answer you need to get from your board and your community is if they will support any proceedings against the builder and/or engineer or if they feel it is better to leave it alone. I think the reaction of the attorneys is telling, they obviously don't think it is a slam dunk, so the reality of losing a lot of money exploring this shouldn't be something that is not seriously thought of.

PaulaM
(Florida)

Posts:7

05/12/2008 12:00 PM
You have a number of different problems, I have been involved in similar issues during my career. First spent the money to get a top notch Forensic Engineer. NOTE the type of Engineer. Have them do destructive analysis on the concrete. My expert states vs Your expert states is common in the business world let the courts decide. Soil types are not relevant Regardless of the soil which should have had the proper compaction the slabs should have had pour samples taken by some engineering testing firm. Find out if they did ! That may resolve the issue. The concrete may have been a bad mix. Did the county approve the type, grade and strength of the concrete? As for only the affected units taking actions, the Association may act on behalf of the units owners affected as well those that have the potential of similar problems. Like anything else you only get what you pay for. Get a Darn good lawyer who specialized in construction defects and go from there. Support this attorney with the Forensic Engineer's report and test results. Bring in the media, TV, Radio, etc WHAT do you have to loose Once the developer sees you not joking he may reconsider, BAD pr will have an impact on their future sales.

EllenS1
(Florida)

Posts:328

05/12/2008 2:17 PM
This is just a thought but have you thought about going to your local tv news to tell your story? If this developer is not out of business, this may get a rise out of them.

EllenS1
(Florida)

Posts:328

05/12/2008 2:19 PM
I agree. There must be some sort of regulatory agency for engineers, even in Texas.

MaryA1
(Arizona)

Posts:1893

05/12/2008 2:52 PM
Paula, I agree with all that you have said except for your thoughts regarding soil. There are some types of soil that can, and do, cause these types of problems. Here in AZ there have been many cases.

KM1
(Texas)

Posts:15

05/12/2008 7:24 PM
BradP, I think you are probably right. I think my game plan will be to first notify ALL owners of each affected unit as noted in our engineering report. I don't want them to find out at the same time as those without damage, and I would like to meet with them for the opportunity to discuss prior to holding a special meeting for all residents. I'm sure there will be a lot of disagreement for all concerned with property values, but ignoring the problem isn't really helping. I also agree as you stated, that the attorney reaction is telling. I thought a $3M estimate from a P.E. would be motivating in some sense, but apparently it was not. After spending the 10K on the DRAFT report, then meeting with a couple of well-researched attorneys, things are at a standstill. I suppose at this point I just need to make sure the residents know what the situation is, and take the pressure off trying to make these decisions myself.

KM1
(Texas)

Posts:15

05/12/2008 7:43 PM
This whole ordeal has been pretty scary at how helpless we are. I have found that getting info from the city (Development Services) is interesting. I was able to get soil docs, but not sure of the relevancy. I practically begged them for help on finding out habitability of one building, but they do not want to get involved and tell us we need to get a lawyer. Think writing a councilman is helpful? One of the builder's rebuttals was that compaction tests were made, and to specification of the engineer. Of course we can't obtain those docs, because the developer will not allow them to release them to us. I contacted a tv lawyer host who is also Legal Professor at a state university. After reviewing my complaint the staff (law students) contacted me to advise we had so many problems that we better get a lawyer. At that time last year, we had little information and additional problems with the management company as well. Perhaps I should reengage and focus now on foundation only with the results? Also, I wrote the president of Homeowners for Better Building, with no response. The million dollar question now is - what do we want in return? Don't think they will be buying our homes back. In fact, I have been watching this top-three builder, and they have actually pulled out of some properties/states. Ouch! Thanks to everyone for their support! I feel all alone here, because even our own board is reluctant to take this on. I really am on my own here. Now if anyone can advise what I should do about the builder's employees living here that will report back to them anything we discuss at our meetings? Kind of takes away our "surprise" factor, huh?

GlenL
(Ohio)

Posts:1304

05/12/2008 8:51 PM
Posted By KM1 on 05/12/2008 7:43 PM Thanks to everyone for their support! I feel all alone here, because even our own board is reluctant to take this on. I really am on my own here. Now if anyone can advise what I should do about the builder's employees living here that will report back to them anything we discuss at our meetings? Kind of takes away our "surprise" factor, huh? KM if you read my posts here I'm very pro BOD transparency. That said, BOD conversations with the attorney and any correspondence are privileged (at least here in OH) and do not have to be shared with the H/O's. Even in states with open meeting laws, this is one type of business that can be conducted in executive session without the H/O's present. And the BOD is not required to turn over any information about an ongoing case.

GlenL
(Ohio)

Posts:1304

05/12/2008 8:59 PM
Posted By MaryA1 on 05/12/2008 2:52 PM Paula, I agree with all that you have said except for your thoughts regarding soil. There are some types of soil that can, and do, cause these types of problems. Here in AZ there have been many cases. We had a drought here last year and that caused the soil around a building that had been built in the early 90's to shrink causing part of the foundation to drop causing damage to it. A wet winter and spring and it's almost back to normal. We're still having some piers placed to prevent it from occurring again.

MaryA1
(Arizona)

Posts:1893

05/13/2008 8:14 AM
Glen, The biggest problem here -- and throughout the Southwest -- is caliche soil. Caliche is a layer of soil in which the soil particles have been cemented together by lime. You sometimes need a jackhammer to get through it! I read an article which said: ". . .problems can arise if the building's foundation is constructed partially on caliche and partially on softer or more compressible soils, because differential settlement can occur. Builders who are aware of the difference in soils before building can use several methods to reduce potential for future soil-related damage." KM is in Texas -- the Southwest! Don't know if caliche is a problem there, but perhaps it could be. Sure is worth looking into.

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