Building insights in under 1 minute
So, your building has a claim against the builder for construction defect or bad workmanship. Let's talk about how a settlement is achieved or a trial is won, and why you need a good expert to explain the problem and solution to a mediator, jury, or group of out-of-town adjusters. As someone who has served as expert witness in over 60 cases, here's my breakdown:
For background, any type of claim, whether it gets resolved in mediation (95% of construction defects cases are resolved before trial), or in a trial follows this structure. The plaintiff is typically the Association or homeowner, and the defendant is typically the developer or contractor, and it is best practice to have an expert witness skilled in this area to assist with the facts. You'll typically have a scoping expert (usually an engineer, architect, or building consultant), and a pricing expert (usually another contractor experienced in repairing this type of work). This is to avoid the potential conflict of just a "pricer," telling you what you should replace, because they get paid to replace it, or just an engineer who is relying on a textbook for pricing and has no real-world experience fixing these buildings—most courts view this as a conflict of interest, or lack of day-to-day expertise. This is why you need both a consultant and a contractor if your claim is going through a settlement process.
There are three parts to an Expert's Meeting in a mediation or trial with a group of decision makers:
- Agreement between experts: All good settlement talks have an "expert's meeting" or "joint inspection" process so that common ground can be found. Do the opposing experts agree on anything? It's common for the plaintiff list to be longer and more complete than the defense's list. The plaintiff expert has been asked to "determine what is wrong with my building so we can get it fixed." The plaintiff's list has 10 things wrong, and the defense agrees with 6 of those items. Now we have some common agreements and can focus our arguments on the remaining 4 items. In litigation, the agreement portions can be checked off through the legal process so that only the disagreement sections will be discussed during expensive trial time.
- Disputes on either scope or price: Both experts have a scope, or recipe, on how to fix the issues. The dispute is often over a complex repair that one side presents, while the other side describes a more efficient method that would take less time and cost less to achieve the same result. The pricing argument is based on reasonable market rates but also sequencing and scheduling timeframes. It is often the case that the defense contractor will price the plaintiff's scope as a double check against the plaintiff's contractor price, and vice versa. The market rates are usually revealed through comparison, or additional discovery, so why is the defendant's contractor pricing normally $4/sf on this item, but in this case, their price is only $2/sf? Was it a mistake or intentional? Once price and scope items are reviewed, the decision makers can decide. Insider Tip: I have seen many Mediators and Judges break down an unscrupulous defense contractor, asking them to sign a repair agreement right now at their low price. When the excuses and squirming stop, the jurors have already made up their minds that this low price is not reality.
- Is there money? Most of these cases are settled through some type of insurance policy, and the rest through entity assets. If there isn't coverage or cash available, it makes it very difficult to obtain the funds needed. You can win a "judgment" but good luck collecting on it if there is no money. This is why it is extremely important to:
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- Work with an attorney and expert who understands insurance coverage and construction defect cases. We can tell you about the top firms in each city, because unfortunately we help a lot of boards with these claims of bad workmanship and have worked with some of the best and worst attorneys.
- Have a good contract in place, which also means plans and specs prepared by an engineer or architect, that specify the standards to which the construction will be performed, and that their insurance coverage limits and riders are appropriate for the work. It is also important to have someone on your side watching the repair process to make sure it's carried out according to plan.
- Work only with reputable contractors that first do a good job and have a good reputation of no claims, and second have financial wherewithal to still be in business in a few years to cover warranty or work that goes bad (no one is perfect). Insider Tip: Most insurance companies have questions on their annual renewal contractor policies that ask if the contractor does roofing, envelope, or work on condos - if the contractor doesn't check the boxes, they won't have coverage for these claims. Ask for this clarification up front during contract negotiations and check with the contractor registration board to see if the owner has a bad habit of setting up new LLCs for new contractor entities every couple of years. Yes, good contractors will cost more, but it's worth not going through a claims process to begin with. We will introduce you to the top firms and you can pick the one you feel most comfortable with.
This might have taken more than a minute, but it's well worth your time.