Future Apartment-to-Condominium Conversion May Not Be a Way to Escape From Construction Defect Suits in Washington

Future Apartment-to-Condominium Conversion May Not Be a Way to Escape From Construction Defect Suits in Washington

If you have traveled to Seattle in the last few years, you may have noticed the number of cranes.  Other than the large number of buildings under construction for Amazon and other technology companies, many of the buildings seen under construction are multi-unit, high-rise apartments.  A decade or more ago, one would have expected many of these to be condominium buildings.  However, between then and now, Washington went through a period of heavy construction litigation involving many condominium projects.  The Washington Condominium Act, which was meant to ensure quality buildings, caused an increase in construction defect litigation and, correspondingly, the cost to build condominiums.  So, today, developers avoid condominiums and instead build apartments, which are not subject to the Act.  Developers may see this as a way to wait out condominium defect litigation and then convert the apartments to condominiums down the road.  However, the waiting game may not foreclose condominium defect litigation.

The Condominium Act includes requirements which apply if the developer, at some point in time, decides to convert an apartment building to a condominium.  These requirements are set out by RCW 64.34.440 and include requirements such as reporting to tenants about the conversion, relocation assistance, an offer of sale to current tenants, and public offering statements.  Included in the public offering statement, similar to those required for new condominium builds, is an inspection report that describes (1) the present condition of all structural components and mechanical and electrical installations; (2) the results of an inspection of the building enclosure by a qualified building enclosure inspector evaluating the preset condition of the building enclosure; and (3) a list of any outstanding notices of uncured violations of building code or other municipal regulations, together with the estimated cost of curing those violations.  The developer also has to warrant for one year against defects due to workmanship or materials for making repairs.

This sounds like there is a limitation on when an action may be brought for condominium defects.  However, the Act states an action for a breach of express and implied warranties of quality must be brought within in four years of accrual of the action.  The accrual date begins running, with some exceptions, when the first condominium unit is sold.  It appears many construction contractors, architects, building envelope professionals and the like may one day be brought into delayed construction defect litigation.  Since the date of conversions may be in the future, document retention becomes that much more important to help with defending these “claims in waiting”.

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