How to tell if you have settlement issues and what to do about it | Ep. 11

[00:00:25.530] – Matthew Holbrook

Welcome to The Uncommon Area. I’m Matthew Holbrook, and this episode is all about HOAs and settlement. Not the financial settlements that you might be looking for, but the settlement that might happen in the foundation of an HOA building. Here to talk to us about that today, is Darrell Conger, the owner of CPR Construction. Did I introduce the topic, at least, fairly?

[00:00:52.740] – Darrell Conger

Yes. That was very good. Thanks for having me.

[00:00:55.160] – Matthew Holbrook

You’re the owner of CPR. As a company you hold a B license or a general contractor’s license. But I understand that you’re also one of the few companies to have an A license.

[00:01:08.850] – Darrell Conger

Yes.

[00:01:08.850] – Matthew Holbrook

What does that mean and why do I care?

[00:01:11.870] – Darrell Conger

It’s actually somewhat unique distinction. It’s a geotech and engineering contractor’s license basically high rise buildings, bridges, dams, those are built by A engineering contractors. So it’s pretty high level. I ended up having to get it because I was working on several geotech projects that required it and not having it, I was excluded from the project just having a B. The geotech firms that I was working with helped me and qualified me so I could take the test. Then going back to school was nice and fun.

[00:01:54.140] – Matthew Holbrook

Yeah, I bet. That positions you to be able to talk about the subject. When we talk about settlement and a building settling—I think this might be an obvious question—but what are the concerns if that starts to happen? Then we’ll come back to, what do we do about it, and how do we recognize it and so forth.

[00:02:15.210] – Darrell Conger

Well, if it’s a single storey-house, or a two or three storey-building, condo building, usually it’s just cracked drywall and raised concrete or cracked concrete or stuff like that, or steps and decks that are off unlevel. In a high rise situation, it can be extreme. It can affect the top floor by 10 feet or something like that. So it could be really extreme.

[00:02:42.810] – Darrell Conger

The stuff I’ve dealt with has all been the latter, the former, I should say, and fairly minor in the sense of, it’s not going to fall down or do anything like that. But structurally, the buildings are still sound. They’re just four inches out, cracked concrete. Cracked tiles.

[00:03:03.030] – Matthew Holbrook

So you have some significant aesthetic, if not utility, around finishings?

[00:03:09.510] – Darrell Conger

Yes, absolutely. It can break the utility pipes, the sewer lines. It can even break copper pipes, bend them out and break them. It’s a unique situation, especially in Southern California, we have expansive soils here, and when they get wet, they expand, and when they get dry, they shrink. So it’s like building a house on a sponge; the house goes up and down, the building goes up and down, and that’s usually what causes it.

[00:03:38.940] – Matthew Holbrook

Is there a particular age of a community or of a building when this is more likely to show up, or can it happen at any time?

[00:03:46.550] – Darrell Conger

Definitely. Basically prior to the ’90s, maybe 2000s, the geotech requirements and grading requirements were definitely more lax than they are today. They were able to build directly on the expansive soil, and they didn’t have to do deepened footings and the things they do today for that kind of stuff.

[00:04:13.560] – Matthew Holbrook

So it’s less likely to happen on newer construction?

[00:04:18.410] – Darrell Conger

Well, yes. Newer construction, 2000 plus is definitely less likely. It still does happen, but it’s usually not just the soil. It’s usually some construction defect that somebody didn’t do right, and then that usually causes it.

[00:04:38.260] – Matthew Holbrook

For a community that was built, let’s say in the early ’90s, if it hasn’t shown any of those types of indications today, would it be fair to assume that it’s probably good and that’s not something to worry about? Or is it something that can still show up later?

[00:04:56.740] – Darrell Conger

Excellent point. I would say it takes time for these things to show up. They show up within 10 years, and if not addressed. Then within 20-30 years, they’re really chronic, and that’s when it gets really expensive for the HOA. So yes, if it was built in the there ’90s nothing by now, 2020, 20 22, pretty safe bet nothing negative is going to happen and you’re good to go.

[00:05:21.220] – Matthew Holbrook

What are those early indicators that might show up that a board or a manager might need to pay attention to?

[00:05:31.290] – Darrell Conger

It’s not subtle. You walk into somebody’s house and the doors don’t close and they rub, and there are cracks in the drywall, and you put a golf ball down on the floor and it rolls to the corner or across the countertop. Those are really obvious things. I’ve been in homes where you put a glass of water on the countertop and it’s off by half an inch. Water finds its level. So there’s just easy, simple ways you can tell. When it’s early on, those are the subtlest things, and then they just get worse over time.

[00:06:05.900] – Matthew Holbrook

What do you do if a manager or a board recognizes these things, they bring in a contractor like you or somebody else, what steps are taken?

[00:06:17.550] – Darrell Conger

The first thing is to identify it. I get a lot of calls from managers that know that I know what to look for. There’s a difference between light settling and earthquake cracks or seismic cracks—is what I call them— in those same areas ’60, ’70s, ’80s, there was no shear walls. Earthquakes can cause a lot of cracking, and people think their house is settling, and it’s not. It’s just normal cracks.

[00:06:48.030] – Darrell Conger

So you got to know what to look for. But once you identify it, then you basically need to bring in a geotechnical engineer and they need to do soil samples and do a little bit more digging to find out what it is exactly and is it something that’s going to stop or is it going to be worse? If it’s going to be worse, then they usually drop a repair plan.

[00:07:11.450] – Matthew Holbrook

What are the things they would do for a repair plan?

[00:07:14.790] – Darrell Conger

They can do deepened footings, if the footings are shallow, which is usually what the case is. They’ll lift the building up three or four inches back to level and then they’ll put in a deepened footing and that will stop it. Then we make the repairs to the landscaping in the outside and the drywall. That’s remedial repairs, I would call it.

[00:07:42.610] – Matthew Holbrook

Anything that a manager or board member should be particularly doing on a regular basis to monitor this type of thing, or are these the types of things that are just going to become really obvious and they address it when it comes up?

[00:07:58.960] – Darrell Conger

It’s usually case by case. If you have a whole community, you might have ten buildings that start to exhibit these things, and it’s usually because they’re over more fill or something, and the other buildings are overcut, so it’s more stable. If they start to show signs of it, then you can call someone like myself out. They can take pictures and monitor the cracks over time, and then that will also tell you if it’s still sinking. If it’s going to get worse, then there’s no way to stop it other than make the repair.

[00:08:33.490] – Darrell Conger

It’s an unfortunate issue too, because it’s usually not a reserve item, and it’s definitely not covered by insurance because it’s geotechnical soil movement and settling. That’s usually 99.9% or 100% of the time excluded. So it ends up becoming unreserved items. So it’s very unfortunate.

[00:08:55.820] – Matthew Holbrook

Are there any other questions on this topic that I haven’t asked that I should be asking?

[00:09:05.210] – Darrell Conger

Maybe just one. It might be a little controversial, though. That is, the one thing when you get into a multi unit building and you have one or two homeowners that absolutely don’t want to play ball, and they have said, no, I’m not moving out of my unit.

[00:09:27.080] – Darrell Conger

It gets very sad very quick. The HOAs have a right to repair, obviously, and they need to. I’ve been involved in two issues where the sheriffs had to come in and extract the person and it was horrible. That’s just one very sad thing that comes with that. Managers and boards need to be prepared for that, if they come to that, because you can’t do the whole building without all the units being vacant a lot of times. It’s very sad.

[00:09:56.740] – Matthew Holbrook

That’s where I would expect that if a board and/or a manager is facing this kind of a scenario where you’re actually going to have to do these types of remedial repairs. Very early on, I would suggest that boards need to coordinate town hall meetings, invite homeowners into the process, answer questions, do tons of communication in writing, on websites, by emails, multiple town hall meetings.

[00:10:23.220] – Matthew Holbrook

Let people know exactly what needs to be done, why, what the consequences are. Probably good for just what you said, that associations should be pulling in their attorney from the very beginning so that they are outlining what the steps are. They know how to address those kinds of situations before they even come up.

[00:10:45.430] – Darrell Conger

Yes, definitely.

[00:10:46.320] – Matthew Holbrook

There’s a lot of forward planning. I think the main thing is, lots of communication, do the town hall meetings, get the contractors to the town hall meetings, answer the questions and get your attorney involved and lay out a game plan for how to address issues where maybe a homeowner or resident isn’t going to cooperate so that, you know, before that even comes up, here’s how we’re going to handle that situation.

[00:11:10.340] – Darrell Conger

Yes, that’s about it.

[00:11:12.580] – Matthew Holbrook

Well, that’s about it. But that’s a lot.

[00:11:14.910] – Darrell Conger

It is. Very eluded, yes.

[00:11:18.200] – Matthew Holbrook

Well, I hope that’s helpful. Just keep paying attention to other episodes that are coming as we address other issues.