HOW TO RECOVER DAMAGES FOR

       If you are like thousands of Southern California homeowners who discovered
construction defects in their homes during repairs after the January, 1994 earthquake, or whether
the advent of fall means rain in your home, not just on your home, you may need information
about recovering damages for construction defects. While the field of construction defect
lawsuits is complex, the following will provide a good overview of the subject.

       Q.      What is a construction defect?

       A.      Construction defects fall into two main areas: materials and installation. A defect
               exists when materials, or the installation of building materials, fails to meet the
               requirements of the building code, fails to meet the standard of care utilized by
               good quality contractors in the same locale, or fails to meet the manufacturers
               recommendations and specifications for a particular use.

       Q.      What are the most common construction defects?

       A.      Improper installation of windows and doors, leading to water leaks, improper
               installation of plywood shear walls, leading to inadequate resistance to earthquake
               forces, improper installation of roof systems, leading to water leaks, improper
               installation of plumbing systems, leading to premature failure of those systems,
               and improper installation of fire resistive materials, leading to dangerous
               conditions which promote the spread of fire throughout the building structure.

       Q.      How do I prove that a construction defect exists?

       A.      Construction defects are proven in two ways: by the gathering of evidence and
               from an analysis of that evidence by experts. The evidence is gathered by
               observations made by qualified experts, and sometimes through a process called
               "destructive testing" where surfaces such as drywall or stucco are removed to
               expose the construction underneath. The experts then analyze the conditions and
               compare those conditions to the building codes, the standard of care and the
               recommendations and specifications of manufacturers to determine if a defect

       Q.      What am I required to prove to recover damages?

       A.      In the case of multi-family housing, the rules governing products liability applies.
               That rule, which is called "strict liability" only requires you to prove that a defect
               exists, and to demonstrate the reasonable cost of repair. In other cases, you may
     be required to prove that the builder or developer was negligent in the work on the

Q.   What can I recover if I prove that a defect exists?

A.   Generally speaking you are entitled to recover the cost of repairing the defect, plus
     expenses for relocation during the repair process if it is necessary for you move
     out of your home. If you do not wish to make the repairs, you may be able to
     claim an alternative to the cost of repair, which would be the diminution in value
     to your property as a result of the defects. Experts will calculate both the cost of
     repair and the diminution in value.

Q.   Who is responsible to pay for construction defects?

A.    The answer depends on who built your home. If you live in a condominium
     project, the developer is the most likely responsible party. If you own a custom
     built home, the general contractor or the developer are likely parties. If you
     believe that the seller of the residence knew or should have known of the
     construction defects, you may have some recourse against the seller.

Q.   How long do I have to bring a lawsuit?

A.   You have different time limits depending on whether the defect is "latent" or
     "patent." A patent defect is a defect which can be discovered by the average
     person by using the senses of sight, feel, smell or hearing. Examples would
     include water leaks or structures which are settling or cracking. Latent defects are
     defect which cannot be discovered without inspections. Examples would include
     improper construction of the wood framing, which is covered by stucco. If the
     defect is latent, you have 10 years from the earlier of: date of final inspection, date
     of recordation of the notice of completion, date of use of the project, or one year
     after termination of work on the project. If the defect is patent, you have 3 years
     from the date of discovery of the defect.

Q.   What happens if I decide to recover my damages?

A.   There are several alternatives. You might wish to approach the developer or
     general contractor and attempt to have repairs made by them. If the developer or
     general contractor refuses, you might try to mediate the dispute (meet with a
     mediator in an attempt to resolve the dispute without a third party making a
     judgment on the merits of the dispute). You may be able to arbitrate the dispute.
     If those alternatives fail, you must file a lawsuit. When you file a lawsuit, the
     property will be inspected by experts from both sides of the case, who will form
     conclusions about the extent of the defects, the method of repair, and the
     appropriate cost of repair. If the lawsuit cannot be settled, it may proceed to trial.
     Generally speaking, repair of the defects must await the resolution of the lawsuit.
       Q.      How are most construction defect lawsuits resolved?

       A.      Most construction defect lawsuits are settled after the lawsuit is filed, usually
               during a process of mediation. There are a number of highly experienced
               mediators who specialize in the resolution of construction defect lawsuits. These
               mediators work with the attorneys, the insurance companies, and the experts to
               determine the extent and cost of repair to arrive at a settlement.

       Q.      How do I pay for the expenses of the lawsuit?

       A.      Many of the attorneys who specialize in construction defect litigation represent
               homeowners and homeowner associations on a contingency basis. Under this
               arrangement, the attorney will take a portion of the proceeds, but you will not
               have to pay unless you win. It is usually the case, however, that the homeowner
               or homeowner association pays for the costs of the experts and the other out of
               pocket expenses of the litigation. In the case of homeowner associations, for
               condominium construction defect litigation, it is possible to obtain loans or to
               acquire funds for these costs of litigation through special assessments.

       Q.      Won't a lawsuit make it more difficult to sell my property?

       A.      You have a legal obligation to disclose all defects of which you are aware or
               which you suspect to exist, whether or not you file a lawsuit. Once you suspect
               that the defects exist, it is probably to your advantage to obtain redress and
               proceed with repairs. In the case of condominium associations, the board of
               directors has a legal obligation to seek damages for defects in the common areas
               of the project (or additional areas which the associations is obligated to maintain),
               so there may be little choice but to pursue the developer or the general contractor.

       Q.      Who should I hire to represent me?

       A.      You should retain the services of an attorney who specializes in construction
               defect litigation. In the case of defects in a condominium project, the attorney
               should also have experience representing condominium associations.
               Construction litigation is extremely technical, and requires special expertise.

         In considering whether to pursue those responsible for construction defects, keep in mind
that if you are aware of defects, and do nothing about them, the developer or general contractor
may well argue that you failed to mitigate your damages, and this may make your lawsuit more
difficult to pursue. Therefore, if you believe that your home has construction defects, you should
act promptly to have those defects investigated and to seek redress.

       Robert S. Mann is the Managing Partner of Colton Mann Partnership, a law firm in
Century City. He specializes in construction defect litigation.

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