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The SCA Homeowners’ Meetings on Construction Defects by Attorneys
Roger Grant and Paul Terry
The Question of the Day. Are Pulte's ongoing efforts to repair age-old tile flooring issues being driven by legal actions that are currently being addressed by attorney Paul Terry?
Two very important Town Hall meetings were held on 29 October on the issue of homeowners’ construction defects. The meetings were adeptly hosted by board member Barry Friedman, who I understand may have his own construction issues with the Developer. In attendance to discuss the issues were attorneys Roger Grant and Paul Terry.
Roger Grant represents the firm the association retained to pursue a range of construction defect issues involving the association, including association buildings, the gated community of Pinnacle, the Villa Neighborhoods and block walls that adjoin association-owned common element property or a golf course. That firm is Feinberg Grant Mayfield Kaneda & Litt. That law firm has made a decision not to accept individual construction defect claims by Sun City homeowners.
As a reminder, the scope of Sun City’s jurisdiction over block wall defects is quite limited. For example, a significant portion of Sun City’s block walls adorn the streets of Sun City Anthem Drive and Anthem Parkway. It’s my understanding that the maintenance of those block walls does not fall under the jurisdiction of Sun City, but under the jurisdiction of the Anthem Council, a consortium of the five separate communities making up Anthem as defined by the Anthem Master Plan. A primary mission of the Council is to maintain the water falls entry features, the street median strips and the adjoining common element properties along those two major streets.
To my knowledge, the Anthem Council has not taken up the construction defect issue, leaving the testing of those block walls in limbo while at the same time running the clock on the timely filing of a claim under Chapter 40 and the running of the statute of limitations. Since Sun City’s annual contribution to the Council coffers is considerable, roughly 50%, there is a need for our board to take all necessary steps to assure that the Council is actively pursuing this defect matter. Anything we can do to motivate the Council into timely action may help to reduce our burden of meeting the Council’s budgetary requirements, assuming that their block walls exhibit the same type of defect problems that testing has shown on Sun City walls.
On the other hand, Paul Terry was present to discuss homeowner concerns. Mr. Terry, who was accompanied by Nancy Queen, the firm's paralegal, represents the firm of Angius & Terry, a firm that specializes in construction defect law. They currently represent a number of Sun City Anthem homeowners in pending construction defect actions under NRS Chapter 40, or more specifically in the section starting at NRS 40.600, Actions Resulting from Constructional Defect.
Sun City Issues Impacting on Homeowner Block Walls.
Although Roger Grant was present primarily to clarify the differences between the scope of his firm’s responsibility (common element and association issues), his disclosures concerning defects already uncovered in block walls raised a number of concerns for Sun City homeowners.
In Sun City, our block walls are typically retaining wall structures that are constructed using the cut and fill method, illustrated at left, with the elevated or upper home supported by fill dirt, shown as hatched lines, while the lower home sits in the cut section.
For our purposes, our retaining walls can be viewed as having three parts: 1) a concrete foundation, which is unseen and below grade level; 2) that portion of the wall which is below the upper home’s grade level; this portion takes the stress of holding back the height and weight of the dirt the retaining wall supports; and 3) that top portion of the wall which lies above the upper home’s grade level; this is the portion of the wall that the homeowner can see from the rear of their home, and together with the iron fence on top of the wall, keeps one from falling into their neighbor’s yard or common element property below.
It might be nice to assume that of the three parts noted above, the only portion susceptible to a potential defect in workmanship might be the final phase of the wall, that portion of the wall which lies above the upper grade level. However, Roger Grant disclosed that testing found voids in reinforcing rebar in walls below the upper home’s grade level, where stress on the wall would be the greatest. In addition, Grant volunteered that their testing also established code violations in the construction of the wall’s concrete foundations. Mr. Grant did not disclose how critical or safety affecting these defects and omissions are.
When asked about the percent of block walls with defects, comparing the portions of walls with defects to the total length of walls tested, Mr. Grant was less forthcoming. He said that testing was ongoing, near completion, and should be concluded by mid-November. He said he would have the answers to such questions for us at the November board meeting. He did suggest that the dollar amount of correcting the defects will be substantial.
To Repair or Not to Repair, That is the Question.
Mr. Grant discussed the construction defect and settlement process. He said that typically, at least in the case of Pulte and based on their prior experience with the company, Pulte will make no repairs to mitigate any of the construction defects. In lieu of making any repair, there will be a cash settlement. Such settlements are typically paid by insurance carriers, like AIG where the $85 billion bailout was apparently not enough, based on the agreed upon or negotiated cost of needed repairs. Added to that amount is an amount to cover attorney fees.
What Happens to the Settlement Money?
What happens after the parties reach an agreement is less clear. Although the block walls needing repair apparently sit on the homeowner’s private property, as Pulte has advised, the money to correct the noted defects will not go the homeowner or, for that matter, even to correct the defect. The settlement money will go to the Association.
The board will then decide what to do with the funds.
However, no one is expecting the board to actually use the funds to repair the defects that were disclosed, unless the board is convinced that the agreed upon defect is critical and, or safety affecting and repair is warranted, i.e., necessary to protect the interests of the association. In other words, the most likely scenario is that board will decide to accept the risk of doing nothing, awaiting for future events to determine the need to make any required repairs. The expectation, of course, is that nothing untoward will happen in the future to create a need for a repair. If the defective block wall is still standing after 10 years, most will agree that the wall will still be standing after 20 years, etc.
Attorney Paul Terry: “Time is Running Out for Homeowners.”
The time for homeowners to take an action to mitigate construction defects is literally running out, and, for many homeowners, has already run out, so said Paul Terry, the second legal expert to speak. Mr. Terry said that his firm, Angius & Terry, currently represents 375 Sun City homeowners in Chapter 40 claims against the developer. He went on the say that of those, 150 have had their defects repaired while 23 owners have settled, which I assume means they have received monetary compensation. Another 65 are in active mediation. The remaining 100+ claims are in some stage of Chapter 40 development.
The Concrete Slab Issue.
One of the principal issues being addressed by the Terry law firm is the concrete slab issue, potentially affecting about 3,000 homeowners who had purchased a Phase 1 model home. These homes were constructed in the 1998-2002 period, although some were constructed in 2003. These Phase 1 model homes were constructed without any reinforcing iron rebar, I understand in compliance with the then City code requirements.
The presence of Rebar, installed on all Phase 2 homes as shown in the picture at left, would have aided in securing the home’s concrete slab in place while also mitigating against the formation of settlement cracks sufficient to cause tile cracking issues.
Without the presence of rebar and yielding to ground settlement and other processes, the concrete slab may exhibit cracks. If the cracking is sufficiently large, the bond between the tile and the slab will be broken. Tile grout may crumble and the tile may exhibit cracking. It is well known that whenever tile is bonded to concrete, movement in the concrete will cause cracks to occur in the tile layer. Another potential cause of slab crack expansion is the issue of concrete curing. Concrete naturally forms cracks as it shrinks during the curing process. According to one source, “even small shrinkage cracks in concrete can be dimensionally active where continued curing of the slab will cause these cracks to expand or propagate.”
Can Homeowners Test for the Absence of Tile Bonding?
Homeowners can easily perform their own test for the absence of tile bonding. The first test is a visual inspection to determine the presence of any readily observable problems. These include:
The Hollow Tile Test. In addition, the homeowner can test for proper tile bonding. This test is easy to perform as it allows homeowners to essentially look under the tile and “listen” to determine if the tile is properly bonded. A hollow sounding tile (a tile that is not properly bonded) can easily be detected by tapping with one’s knuckles or by running over the tile surface with a small metal object such as a key, coin or the plastic handle of a screwdriver. If you hear a dense sound, the tiles are generally solid. However, if the sound is hollow, this is due to a breakdown in the adhesive bond between tile and the concrete slab. The presence of hollow sounding tiles is typically an indication of movement in the slab, however slight that movement might be.
Pulte on Repairing Floor Tile Problems.
Pulte is currently repairing tile grout, cracking and improper bonding issues in Sun City. This is true even in homes well beyond the Dell Webb Home Warranty period for Quality Standards, which is two years from the date of closing. In fact, I believe it is fair to say that Pulte will repair tile flooring problems in any Phase 1 home regardless of the date of closing.
Contacting Pulte. If you believe you have a tile issue of the type mentioned above, call Pulte’s Customer Relations office at 914-4800 (good in 2008) and for 2009-10, call 1-800-664-3089. Pulte will tell you the status of the current program for addressing this flooring issue. If their repair program is still in effect, they will give you the telephone number of the manager who is in charge of your area. Call that person and he will put you on their tile contact schedule. Later you will receive a call setting up a time to visit your home and inspect the floor.
Be Prepared. Prior to the date of inspection, you should attempt to physically identify the tile-related issues of concern, perhaps with a small piece of masking or colored tape. It would be even more helpful if you would perform the homeowner tests I have noted above since their inspection of the floor may not be all that thorough.
The Visit. On the day of the visit to inspect the floor, two persons will come to your home. One will be a Pulte Customer Relations manager and the other will be a representative from the tile company that will perform the repair. If the owners have done their homework, all should go smoothly.
The Closing Conference. At the end of the inspection, and in contrast to prior Customer Relations practices, Pulte’s manager will assume a more active role in the inspection process. The homeowner will be handed a printed 3-page document with their name, closing date, lot number and street address filled in. That document represents what Pulte calls their Warranty and Release Agreement.
The homeowner will be asked to read the document later at their leisure, sign the document designating their agreement, and to mail it in the provided self-addressed stamped envelope, which is addressed to the company that will perform the repair work.
What’s in that Warranty & Release Agreement? That’s a very sensitive issue. Pulte would prefer that its contents remain confidential, which I am honoring. Some homeowners, however, may discern its contents by their understanding of other issues that were raised by Paul Terry in his presentation.
Scheduling the Work. Upon receipt of the signed document, the tile company will then call the homeowner to set up a time for the work to be performed.
Potential Class Action over Concrete Slab Issues.
According to Mr. Terry, the two concrete slab problems currently being investigated are the absence of any reinforcement (rebar) in the slab, a known problem in all Phase 1 homes, and the possibility of improperly cured concrete that makes up the slab. Of potential interest to current Sun City homeowners, Mr. Terry said that his firm is currently pursuing class action status before the court. This is in addition to his firm’s Chapter 40 claims on behalf of individual homeowners.
However, according to Mr. Terry, no court decision has yet been reached on his petition for class action status. In the event class action status is approved, then all Phase 1 homeowners will automatically be considered for possible inclusion in the class. At this particular time, it makes no sense to conjecture what that might mean until a decision by the court is reached.
Is it Already Too Late to File a Claim under NRS Chapter 40?
There is a 10-year statute of limitations to file for protection under the construction defect law under NRS Chapter 40. Does that mean that homes that were completed in 1999 or 2000 are protected under the 10-year statute? Technically, yes. But frankly, that 10-year statute may pose a real, albeit a practical problem to homeowners with a home completed during this two-year time frame, 1999-2000. Homeowners interested in filing a Chapter 40 claim with a home completed in 1998 would appear to be out of luck since their home was completed more than 10 years ago.
If your home is more than 8 years old, but less than 10, you have three choices to address any construction defect issue: 1) do nothing; 2) file a personal Chapter 40 claim on your own, which is permissible; or 3) you can attempt to find a construction defect law firm that is willing to accept a claim on a home that is more than 8 years old.
But what about Paul Terry’s law firm, Agnius & Terry, since they are already handling hundreds of Sun City Chapter 40 claims? According to Paul Terry, the firm has made a business decision NOT to accept any Chapter 40 claims that are more than 8 years old. What this means is that for many Sun City homeowners, the time to file, at least with the Angius & Terry law firm, has already run out.
If your home was completed prior to 2001, that is in years of 1998, 1999, or 2000, it’s a virtual certainty that the law firm of Angius & Terry will not agree to represent you. You are out of luck! If you fall within this period and wish to pursue a Chapter 40 construction defect claim, you will have to either file a claim on your own behalf, or seek a different attorney (who may have objections on accepting claims similar to those stated by Angius & Terry).
When Does the Time of the Statue of Limitations Start Running?
Not when you might think! According to Mr. Terry, the time starts on the date the home was “substantially completed,” which is sometime before the date the first homeowner took possession or closed escrow. This date may be important in the case of homeowners who had purchased a spec unit or an already completed home that came available from Del Webb/Pulte for whatever reason. That date may be months or a year or more prior to the date the homeowner closed escrow on the home. In the earlier years, it was Del Webb’s practice to fill out unsold lots in tracts with homes that they built on speculation that the homes would eventually sell to prospective homeowners, frequently at a discount.
Certificate of Occupancy.
For each home constructed, there is what is called a Certificate of Occupancy issued by the City of Henderson. That Certificate has the date the home was “substantially completed” and that is the date that governs when the statute begins to run.
Certificate of Occupancy information is available from the City’s Records department. For most homeowners within that 8-year period Terry’s firm will accept, there is no need to have that information on the date since it should be reasonably clear to the homeowner when their home was substantially completed just prior to the close of escrow.
Contacting the City’s Records Office. However, if you are in doubt about whether your home is within the 8-year period accepted by Angius & Terry, you can obtain the date on the Certificate of Occupancy over the phone by calling Moe Dorsey in the City’s Records Office at 267-3707. Provide Mr. Dorsey with the location of your home and he will look it up and tell you the date of completion.
What if Your Home was Completed in 2001?
For homes that were completed in 2001, time is of the essence as the 8-year time clock set by Angius & Terry will start running beginning in January 2009. If you have any questions about your rights, you may wish to contact this law firm. Their address and telephone information is below:
ANGIUS & TERRY LLP
1120 N. Town Center Drive, Suite 260
Las Vegas, NV 89144
Telephone: (702) 990-2017 Contact Person: Nancy Queen
Other Law Firms.
Since Paul Terry was the only attorney present at the meeting agreeing to represent Sun City homeowners, we have no information nor are we in a position to provide information on whether there are any other firms who are willing to represent homeowners in a construction defect filing under NRS 40.600.
Ronald Johnson, 9 November 2008, rev. 10 Nov.