United States: Pre-Litigation Requirements For Condo Associations

When general contractors, subcontractors, and design professionals face claims or lawsuits arising from original construction or remediation of condominium projects, one of the most important—and also sometimes one of the most difficult tasks—has always been to catalog, usually by unit number, every item of claimed damage by Plaintiff. This can be a challenge when individual unit owners do not personally live in the units and rent them to others. Owners must advise the condo association about their damages. The association may or may not compile the damage information. Often times, this work is not performed until after suit has been filed, which means that defense counsel's ability to evaluate the claim quickly may be hampered.

In Texas litigation, the burden to assemble all of the individual condominium unit damage information was recently shifted to the condo association, for projects consisting of eight or more units. In late 2015, the Texas legislature enacted Section 82.119 of the Texas Property Code, which itemizes the requirements a condo association must meet before filing suit. Under the law, a condominium association (comprised of at least eight units) which is interested in filing a lawsuit or initiating arbitration proceedings related to either the construction or design of a condo unit or common elements, must take certain specific steps before it can enact legal proceedings. Section 82.119 specifically provides:

(a)        This section does not apply to an association with less than eight units.

(b)        In addition to any preconditions...in the declaration, an association, before filing suit or initiating...arbitration...to resolve a claim pertaining to the construction or design of a unit or the common elements, must:

(1)        obtain an inspection and a written independent third-party report from a licensed professional engineer that:

(A)       identifies the specific units or common elements subject to the claim;

(B)        describes the present physical condition of the units or common elements subject to the claim; and

(C)       describes any modifications, maintenance, or repairs to the units or common elements performed by the unit owners or the association; and

(2)        obtain approval from...more than 50 percent of the total votes allocated under the declaration...at a regular, annual, or special meeting...

(c)        The association must provide written notice of the inspection...to each party subject to a claim [at least 10 days] before the...inspection occurs...

(d)        Each party subject to a claim may attend the inspection...either personally or through an agent.

(e)        Before providing the notice of the meeting under Subsection (f), an association must:

(1)        ...provide the report to each unit owner and each party subject to a claim; and

(2)        allow each party subject to a claim at least 90 days after the date of completion of the report to inspect and correct any condition identified in the report.

(f)         Not later than the 30th day before...the meeting described by Subsection (b)(2) is held, the association must provide each unit owner with written notice of the date, time, and location of the meeting...

(g)        The notice required by Subsection (f) must be prepared and signed by a person who is not:

(1)        the attorney who represents or will represent the association in the claim;

(2)        a member of the law firm of the attorney who represents or will represent the association in the claim; or

(3)        employed by or otherwise affiliated with the law firm of the attorney who represents or will represent the association in the claim.

(h)        The period of limitations...for a claim described by Subsection (b) is tolled until the first anniversary of the date the procedures are initiated by the association under that subsection if the procedures are initiated during the final year of the applicable period of limitation.

Defendants benefit from this statute because, under sections (c) and (d), they are provided notice of the inspection and the opportunity to be a part of the inspection performed by the engineer. Further, before the condo association can file suit, under section (e)(2), it must allow the potential defendants "90 days after the date of completion of the report to inspect and correct any condition identified in the report." While it would be expected that there may be disagreements about the cause of the damages noted in the engineer's report, this 90 day window can provide time for a dialogue between the parties (and their consulting experts) about how to best approach the situation.

Most attorneys who routinely handle construction cases (as well as the insurer's representatives) can recount stories of cases where the cost of replacing or repairing damage related to their client's scope of work was eclipsed by litigation costs incurred in attempting to compel a counsel for the homeowner or association to articulate precisely what they claim is wrong with the property, who is alleged to be responsible, and the extent to which defects have caused damage. By requiring plaintiffs to become more organized as to their claims prior to filing suit, the law should provide defendants with an opportunity to more quickly evaluate a plaintiff's and to formulate a reasonable response. This can potentially lead to the early resolution of cases with limited issues, or for cases with more significant damages, earlier involvement of consulting experts.

What is not clear from the text of the statute is whether an insurer, who has subrogated to the rights of a condo association, must comply with these requirements. Unlike the Texas "Right to Repair" statute, section 82.119 does not say whether it applies to a party acting on behalf of a condo association. Clarification of this issue by the legislature or courts is need. In such a scenario, it is possible that a condo association may seek the recovery of its deductible or other damages which are not covered by its policy of insurance in an action which is joined with the insurer's subrogation claim. In that situation, it appears that the association, if not the insurer, must comply with the requirements of the statute.

In addition to the requirements noted in section 82.119, both a condo association and an insurer seeking a subrogation recovery must still comply with the Residential Construction Liability Act (Chapter 27 of the Texas Property Code). There is also nothing in section 82.119 that waives a plaintiff's requirement of attaching a Certificate of Merit to its petition when filing suit against design professionals. Section 150.002 of the Texas Civil Practice and Remedies Code, which articulates the requirements of the Certificate of Merit, also provides a procedure pursuant to which a defendant may seek dismissal of the case due to the plaintiff's failure to file a Certificate. Section 82.119 does not contain a similar remedy for a defendant. The question remains, therefore, as to how a defendant should advise the court of a condo association's failure to comply with the section's pre-filing requirements.

As with any new piece of legislation, it will be up to the courts to interpret the implementation of this new law. As of the writing of this article, there are no reported cases on this issue. We will continue to monitor the application of this statute and any relevant cases and will report on them in future issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions