For most property owners, the legal system typically provides a remedy when developers or builders do substandard work. Most property owners can simply bring contract or tort-based claims against the contractor they retained to perform the work. Until the Massachusetts Appeals Court’s recent ruling in Wyman v. Ayer Properties, LLC, however, condominium associations often faced much greater difficulty. This was the result of the unique circumstances of condominium ownership and development, and a legal defense known as the economic loss doctrine.
When a condominium is built, typically it is the current property owner, not the condominium association, that enters into a contract with a developer or builder for the construction. If problems develop later on with the quality of the work in the common areas, the condominium association usually cannot bring a contract claim against the developer or builder because the association was not a party to the underlying contract. In addition, the economic loss doctrine often barred any tort-based claims for negligent construction or design unless the condominium association could show that the defect caused actual personal injury or property damage to the common areas or to individual units. This confluence of circumstances and legal defenses often shielded developers and builders from claims by condominium associations and left associations with no redress.
The Court’s ruling in Wyman removes that shield and provides a remedy. The Court held that:
a condominium unit owners’ association may recover damages in tort from a responsible builder-vendor for negligent design or construction of common area property in circumstances in which damages are reasonably determinable, in which the association would otherwise lack a remedy, and in which the association acts within the time allowed by the applicable statute of limitations or statute of repose.
The lesson of this case for condominium associations is straightforward: there is now a remedy where once there was none. For others, Wyman shows the Court’s reluctance to leave a wronged party without a remedy based on a technical defense. It also reveals the Court’s continuing willingness to create new law when the facts and justice require.