A familiar scene unfolds at many association meetings. Disgruntled unit owners come to the meeting, complaining of leaks, roof problems, mold and myriad of other issues. Some owners demand that the building and the leaks be completely repaired immediately. Others say that the association cannot afford to do significant repairs, and that special assessments will bankrupt them. Others say that the developer should be held responsible to fix these problems. The developer no longer returns the association’s phone calls, emails or faxes, and despite the Board’s invitation, has chosen not to attend a meeting in months. Board members are rightfully frustrated and confused about how to best fulfill their duties to the Association and the owners. Advice pours in from all sides. Seemingly conflicting information is received by different members of the Board. The Board is bombarded with questions and “facts” from owners about how to proceed. Below are some helpful responses to some of the most common of those “facts”:
“We should file a Homeowners Warranty Claim right away!”
No, you shouldn’t. A New Home Warranty claim is rarely a good idea for several reasons. First, after two years from the date the building was built, the warranty only provides coverage for major structural defects. The building must be near collapse. Second, once the warranty claim is filed, the association is precluded from ever filing a lawsuit on that issue. This is the case even if the claim is never heard by the arbitrator and is denied for any reason, including late filing. The process is over and the association gets nothing. Third, the warranty process takes control out of the association’s hands. The arbitrator will decide on the scope of the repair, who does that repair and the cost at which the repair will be done. The association has little, if any, control over the resolution of the claim after a claim is filed. An arbitrator makes a decision, and while the association may submit evidence and reports of experts, the information is typically limited. Moreover, if the association is not satisfied with the repairs suggested or eventually conducted, they are unable to appeal the decision in court. The decision of the arbitrator is final and more often than not, the program favors builders and contractors over the homeowners.