Appeals Court Opens the Door to Construction Defect Claims by Condominium Associations

CondominiumFor 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.

For questions on construction or condominium issues, please contact David McCay, an experienced Massachusetts real estate litigator at Mirick O’Connell at (508) 791-8500.

About David McCay

Dave is a partner in the firm’s litigation and land use groups where he assists clients in the resolution of complex real estate, environmental and business disputes. He also represents property owners and developers in local land use permitting matters. Dave is active in the Boroughs+ region serving as the Chair of the Southborough Economic Development Committee and as immediate Past Chair of the Marlborough Regional Chamber of Commerce. He is also a member of the Board of Directors of the 495/MetroWest Partnership, the Advisory Board of the MetroWest Economic Research Center at Framingham State University, and the Marlborough Economic Development Corporation. Dave lives in Southborough with his wife and two sons.
This entry was posted in Construction, Contracts and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s