Improving the Construction and Litigation Resolution Process: The 2005 Amendments to the Washington Condominium Act are a Win-Win for Homeowners and Developers

Authors

Mark F. O'Donnell
David E. Chawes

Abstract

On August 1, 2005, significant amendments to the Washington Condominium Act (WCA) became effective. These amendments were intended to substantially reduce water infiltration in multiunit residential buildings and to simplify the condominium construction dispute resolution process. The heart of the amendments is the implementation of alternative dispute resolution (ADR) procedures, as well as fee-shiftingprovisions which require the non-prevailing party to pay the attorney fees and costs of the prevailing party. A decade of lawsuits brought under the WCA by condominium owners associations against builders and developers, and in turn by builders against subcontractors, alleging defects in the ability of the building envelopes to resist water from entering into the structures ultimately led to appointment of a Legislative Study Committee on Water Penetration of Condominiums (Committee) in 2004. The Committee was charged with presenting recommendations to address and hopefully solve water intrusion problems that resulted in a proliferation of lawsuits. The litigation led to a crisis in the construction industry, forcing many developers, builders and contractors out of business because of lack of affordable insurance. Indeed, many insurers left the Washington construction market. To address this crisis and attempt to reverse this trend, the 2005 amendments provide a dual-track approach by (1) improving the quality of multiunit residential construction and (2) reducing litigation costs associated with complex, multi-party lawsuits involving condominiums by implementing innovative ADR processes. Specifically, these amendments are designed to increase the confidence of homeowners, developers, and insurers by:

1. Requiring the submission of detailed building enclosure plans for multiunit residential building enclosures;

2. Requiring course-of-construction building enclosure inspections by qualified independent professionals to verify substantial compliance with the plans;

3. Increasing the role of professionals in the construction and dispute resolution process;

4. Requiring in-place water testing of windows;

5. Promoting early and cost effective settlement of disputes by providing standards for arbitration and mediation as alternatives to litigation; and

6. Promoting earlier settlement of such suits by creating an attorney fee-shifting mechanism.

The significance of these amendments can be seen when compared to the previous statute. Thus, Part II of this Article presents background information on Washington condominium law and earlier attempts to address those problems. Part III presents several of the key issues that faced the Committee, and discusses how the final 2005 amendments addressed those issues. Part IV discusses several practical problems and concerns that have arisen in the course of delivering nearly a dozen presentations about the amendments to various groups such as lawyers, insurers, architects, engineers and forensic experts over the eight months since the amendments became effective. Part V concludes that the amendments are a win-win for homeowners and developers.

Recommended Citation

Mark F. O'Donnell and David E. Chawes, Improving the Construction and Litigation Resolution Process: The 2005 Amendments to the Washington Condominium Act are a Win-Win for Homeowners and Developers, 29 SEATTLE U. L. REV. 515 (2006).