Condominiums in Texas - If You Build It, They Will Come

1. Introduction
2. Texas Uniform Condominium Act: Where it All Begins
3. The "Model" Plaintifl's Condominium Case
1. The "Who": Who Initiates the Lawsuit? The Association's Involvement
1. Under What Authority Does the Association Have the Right to Sue?
2. Limiting Board Power in the Condominium Documents 6 B. The "What": Filing the Lawsuit
3. Contract and Express Warranty Claims
4. Implied Warranty Claims
5. The Warranty of Good and Workmanlike Construction
6. The Warranty of Habitability
7. Misrepresentation Claims: Fraud; Fraud in Real Estate Transaction, Negligent Misrepresentation, DTPA
8. Negligence Claims
9. Fiduciary duty claims
4. The Association's Claims are Covered by Insurance, Aren't They?
1. Insurance
2. Surety Bonds . Will they take care of any construction defects?
5. Minimizing Risk
1. In the Condominium Documents
1. Formation of the Association is Required
2. Increased Protection for Board Members
3. Increased Standard for Liability
4. D&O Insurance
5. Indemnity and Defense of Board Members
6. Limitations on the Association's Powers
7. Mediation and Arbitration Provisions
2. Through Observance of Corporate Formalities
3. In the Selection of Construction Personnel
4. In the Construction Documents
1. Indemnity
2. Insurance
3. Bonds
4. Warranties
5. Project Correspondence
5. During the Construction Process
1. Quality Control
2. Quality Control Inspector
3. Emphasize Resolution of Problems
6. In the Sales Process
1. Marketing Materials
2. Real Estate Brokers and Agents
3. Pre-ClosingInspections
4. Condominium Purchase Agreement
5. Signatures and Exhibits
6. Post-Closing Issues
7. In Dealing with the Association
1. Documentation and Early Resolution of Construction Problems is Critical
2. Set Appropriate Reserves
3. Formal Turnover Agreement
6. Conclusion

Condominium development is skyrocketing. Pick up the businesslreal estate section of the newspaper on any given day and you will read a story about the latest mid- or high-rise condominium development in a metropolitan area. As construction activity reaches a frenzied level, so too do condominium defect claims and attendant litigation. Minimizing legal problems on a project requires focus on planning, proper decision making, and quality control before and during construction, by the developer, the contractor, and the subcontractors. Volumes could be written on the potential issues that arise in condominium development and construction. Each development is different and plaintiff attorneys seem to find new claims to assert based on the circumstances at any given project. This presentation highlights some of the most common claims arising in condominium defect litigation and offers suggestions for minimizing potential exposure to these claims.

No foolproof method exists for preventing lawsuits by condominium Unit Owners or the Associations they form. By addressing the issues raised in this presentation at the beginning of a project, one may be able to minimize some of the claims arising out of a condominium project and, in turn, maximize the profit realized by all of the parties involved in the condominium - the developer, its investors, the contractors, design professionals and ultimately, the Unit Owners themselves.

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