Washington & Oregon Construction Defect Lawyer & Attorney : Barker Martin Law Firm : HOA's, Condos : Seattle, Portland

Recently, I have been contacted by several Oregon condominium association board members and individual homeowners whose conversion condominiums are experiencing serious construction defects and substantial repair costs.  Some of these owners and board members have stated they don't believe they have any legal claims because the developer sold the condominium unit "as-is."

Oregon law, as in many states, provides statutory warranties or disclosure requirements for initial condominium purchasers--for both new condos and conversion condos:  

  *  A Declarant of a newly constructed condominium shall expressly warrant against defects in the plumbing, electrical, mechanical, structural, and all other components of the newly constructed units and common elements.  The applicable statute is ORS 100.185.

  *  A Declarant of a conversion condominium must provide a statement of the "present condition of all structural components and major mechanical and utility installations in the condominium, including the approximate date of construction and a reasonable estimate of the remaining useful life of, at a minimum, the roof, siding, plumbing, electrical, HVAC system, asphalt, sidewalks and decks."  The disclosure also must include a statement of whether the assessment of conditions was prepared by a licensed engineer, architect or home inspector.  The applicable statute is ORS 100.655(h).

Thus, there is no such thing as an "as-is" new condominium unit sold in Oregon.  Although Declarants may sell a conversion condominium unit without a warranty, or "as-is," that does not necessarily mean an owner or association foregoes all legal rights in the event construction defects or prior damages exist.  An owner or association may have claims for lack of proper disclosure in the Condominium Disclosure Statement, regardless of whether an "as-is" statement was included in the Condominium Disclosure Statement and/or Purchase and Sale Agreement.

Lastly, although there are no reported Oregon appellate decisions directly on point, courts in other states (including neighboring Washington) have rejected a Declarant's attempts to disclaim warranty and disclosure obligations through a general "as-is" statement.

If you have specific questions regarding your condominium's warranties or disclosures, feel free to contact the Portland or Bend offices of Barker Martin, P.S.  

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There is a common misconception among builders and buyers of condominium conversions that builders who convert apartments into condos are only liable for “what they touch” or the parts of the condominium that they actually improve. This is not correct. In fact, there are a number of avenues for recovery when a conversion condominium experiences leaks or other problems relating to original construction defects even when the converter did not touch that part of the building. Among these is a claim against the converter under the implied warranty of suitability, which is just now getting some focus in the industry. 

In addition to the well-known warranties of quality for work actually done by a builder converting a building into condos, the Condo Act also provides that the creator of the condominium warrants that “a unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type.” This is called the implied warranty of suitability or fitness. Unlike the implied warranties of quality, this warranty applies to units and common elements, regardless of whether the developer did any work on those elements. 

It is unsettled what “suitable for ordinary uses” means because there is no further definition of the term in the statute, nor are there any published legal opinions relating to this matter in the context of conversion condominiums. It may be that this warranty equates with a warranty of habitability, meaning the building is so unsafe as to be virtually uninhabitable under certain circumstances. But it may mean just what it says – that the building is “unsuitable” for its ordinary uses rather than uninhabitable. We have and will continue to argue that a building that leaks is unsuitable for use as someone’s home. To our knowledge, this theory has not been tested in the courts, but we expect to see breach of this warranty pleaded in the near future, especially where, for example, a 75-year-old apartment has been converted for current use as condos with little to no renovation.

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