A PowerPoint presentation to Utah Community Association managers on construction defe

1. A Brief Overview Construction Defect Law in Utah There's more at www.utahcondolaw.com

2. Economic Loss Doctrine Comes to Utah Prohibits, for all practical purposes, claims against builders by condominium owners “[A] condominium homeowners' association typically oversees the management, maintenance, and operation of the units. The potential buyer can contact this association, which is equipped to know of, respond to, and guard against defects in the complex. We are unconvinced that a condominium buyer is analogous to "a relatively powerless lessee." There's more at www.utahcondolaw.com American Towers v. CCI Mechanical, 930 P.2d 1132 (Utah 1996)

3. Economic Loss Doctrine Does not Apply in Circumstances Involving an “Independent Duty” “The proper focus in an analysis under the economic loss rule is on the source of the duties alleged to have been breached. Thus, our formulation of the economic loss rule is that a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.” There's more at www.utahcondolaw.com Hermansen v. Tasulis, 2002 UT 52

4. (1) Except as provided in Subsection (2), an action for defective design or construction is limited to breach of the contract, whether written or otherwise, including both express and implied warranties. (2) An action for defective design or construction may include damage to other property or physical personal injury if the damage or injury is caused by the defective design or construction. (3) For purposes of Subsection (2), property damage does not include: (a) the failure of construction to function as designed; or (b) diminution of the value of the constructed property because of the defective design or construction. (4) Except as provided in Subsections (2) and (6), an action for defective design or construction may be brought only by a person in privity of contract with the original contractor, architect, engineer, or the real estate developer. (5) If a person in privity of contract sues for defective design or construction under this section, nothing in this section precludes the person from bringing, in the same suit, another cause of action to which the person is entitled based on an intentional or willful breach of a duty existing in law. (6) Nothing in this section precludes a person from assigning a right under a contract to another person, including to a subsequent owner or a homeowners association. There's more at www.utahcondolaw.com 78B-4-513. Cause of Action for Defective Construction

5. Until the developer relinquishes control of the association to the members, the developer owes the following duties to the association and its members: (1) to use reasonable care and prudence in managing and maintaining the common property; (2) to establish a sound fiscal basis [***24] for the association by imposing and collecting assessments and establishing reserves for the maintenance and replacement of common property; … (6) to disclose all material facts and circumstances affecting the condition of the property that the association is responsible for maintaining; and There's more at www.utahcondolaw.com Key Points from the Restatement

6. Economic Loss Doctrine Re-affirmed in Utah No Duty to Build Without Negligence No Duty to Comply With Building Codes Adoption of Implied Duty of Workmanlike Construction Adoption of Restatement, Property (Servitudes), Section 6.20 There's more at www.utahcondolaw.com Davencourt v. Davencourt, 2009 UT 65

7. A Brief Overview The Legal Theories There's more at www.utahcondolaw.com

8. Until the developer relinquishes control of the association to the members, the developer owes the following duties to the association and its members: (1) to use reasonable care and prudence in managing and maintaining the common property; (2) to establish a sound fiscal basis [***24] for the association by imposing and collecting assessments and establishing reserves for the maintenance and replacement of common property; (3) to disclose the amount by which the developer is providing or subsidizing services that the association is or will be obligated to provide; (4) to maintain records and to account for the financial affairs of the association from its inception; (5) to comply with and enforce the terms of the governing documents, including design controls, land-use restrictions, and the payment of assessments; (6) to disclose all material facts and circumstances affecting the condition of the property that the association is responsible for maintaining; and (7) to disclose all material facts and circumstances affecting the financial condition of the association, including the interest of the developer and the developer's affiliates in any contract, lease, or other agreement entered into by the association. There's more at www.utahcondolaw.com Restatement Section 6.20

9. [T]o establish a breach of the implied warranty of workmanlike manner or habitability under Utah law a plaintiff must show (1) the purchase of a new residence from a defendant builder-vendor/developer-vendor; (2) the residence contained a latent defect; (3) the defect manifested itself after purchase; (4) the defect was caused by improper design, material, or workmanship; and (5) the defect created a question of safety or made the house unfit for human habitation. There's more at www.utahcondolaw.com The Implied Warranty

10. A Brief Overview The Usual Defenses There's more at www.utahcondolaw.com

12. It was the architect

13. It was the engineer

14. It was the framing subcontractor

15. It was the mechanical contractor

16. It was…There's more at www.utahcondolaw.com “It’s Not my Fault”

18. They didn’t complain soon enough

19. They didn’t complain loud enough

20. They didn’t complain often enough

21. They didn’t contract for roofs that don’t leak

22. (there’s an extra cost for that…)There's more at www.utahcondolaw.com It’s the Owner’s Fault

24. They didn’t complain soon enough

25. They didn’t complain loud enough

26. They didn’t complain often enough

27. They didn’t maintain the roofs leak

28. (of course I won’t pay more for that…)There's more at www.utahcondolaw.com It’s the Community Manager’s Fault

29. The wind blew too much It rained too much It was too hot It was too cold It was too hot and rainy It was too cold and snowy There's more at www.utahcondolaw.com It’s God’s Fault

30. There's more at www.utahcondolaw.com Even if it Was my Fault, Someone Else Made it Worse!

31. A Brief Overview What To Do, andWhat Not to Do There's more at www.utahcondolaw.com

32. Complain loudly and ofthen Memorialize complaints Mitigate damages Make repairs Quit There's more at www.utahcondolaw.com What to Do

33. Don’t ignore Don’t defer Don’t rely on oral promises Don’t trust anyone (other than the lawyers – those on your side) Don’t quit There's more at www.utahcondolaw.com What Not to Do