How HOAs Can Navigate Construction Defects Without Breaking the Bank

When a newly built or renovated community begins showing signs of problems, such as cracked walls, leaks, or structural issues, the board’s first thought is often: “Do we have a construction defect?”

In this episode of The Uncommon Area, host Matthew Holbrook sits down with Joe Smith of Burg Simpson Law Firm to demystify what “construction defects” really mean and how associations can pursue fair resolutions without unnecessary litigation.

1. What Counts as a Construction Defect?

A “construction defect” isn’t just a cosmetic flaw; it’s any design or workmanship issue that fails to meet applicable building codes, manufacturer specifications, or accepted construction standards. Some defects may be minor, but others can lead to long-term damage, safety concerns, or financial burdens for the association.

2. Litigation Isn’t the Only Option

While many boards assume that litigation is inevitable, Joe emphasizes that there are often alternative solutions. Open dialogue with the builder, mediation, or negotiated repairs can sometimes achieve better, faster outcomes than lawsuits. Associations should weigh the potential benefits of early resolution before committing to a legal path.

3. Timing Matters...A Lot

Every state has different statutes of limitation and statutes of repose that govern how long an association has to bring a claim. Missing these deadlines can mean losing the right to recover entirely. That’s why boards should proactively engage with legal counsel and qualified experts to evaluate their property well before deadlines approach.

Tolling agreements, which pause the running of these deadlines, can be useful tools, but they require cooperation from both the association and the builder. They’re not automatic, and the builder must have an incentive to agree.

4. The Reality of Litigation

If a claim does proceed, associations should be aware of both the benefits and drawbacks. Defect litigation can uncover issues that might otherwise go unnoticed, leading to better long-term repairs. However, it also brings costs, inconvenience, and potentially disruptive testing.

Fortunately, over 90% of cases settle before trial. These settlements often include funds for repairs and sometimes additional recovery for technical code violations that can offset other costs.

5. Maximizing Recovery and Protecting Your Community

Even in a successful case, boards must plan carefully to ensure repair costs are fully covered after legal fees. Often, settlements are structured to stretch funds as efficiently as possible, allowing associations to direct resources where they’re most needed.

Joe and Matthew agree: the goal isn’t  to win a case, but to restore and protect the community.

Closing Thoughts

Construction defect issues are complex, but they don’t have to be overwhelming. By engaging with experts early, understanding time limits, and exploring multiple paths to resolution, boards can protect their community’s financial health and peace of mind.

To hear the full conversation with Joe Smith, listen to this episode of The Uncommon Area, available now on all major podcast platforms.

‍