Liability issue - punch list

All,
we are an owner run HOA with still homes to be built. Some of the homes being built lack significantly in quality and a typical sales person response prospective buyers get is "the HOA will pay for those repairs".
As new unit owners have 90 day and 1 year walk-through a board member suggested to hand out some type of "punch list" to those new owners. The list would include commonly known issues on new houses, urging the new owners to have the builder repair them, if necessary and not wait until the HOA pays for them.

I am wondering whether something like this would open us up for any kind of liability issues. With the builder or the new homeowners. In case something is on the list, but not wrong on their specific house for example. Or if they have an issue not mentioned on said "suggested punch list".

Any thoughts are welcome. Thanks a lot!

Apologies - I should have added that information.

We are townhouses.

We’ve had multiple things happening. Couple big ones were that the masonry below the vinyl siding wasn’t done right and with a year needed repaired. Another was that the shingles were not attached correctly to the roof and the wind blew them over. The homeowner asked the HOA to repair and we had to sue to the CC&R. That roof was 18 months old.

I would be interested to see the actual word in your CC&R. I would think the problem would fall to the homeowner/builder if the issue is a quality issue. I can see the CC&R requiring you to fix wear and tear issues but not negligence issues. We are responsible for outside lights but if someone lets their door slam into the light we fix it and bill them. I would probably want to get a legal opinion and would likely want to have an inspection done before my HOA would accept liability for the builders work. I think the builders are responsible for their workmanship for several years in PA.

I agree with SamE about getting a legal opinion, and look for attorneys that are well versed in homeowner association issues. My association's legal counsel is from a firm that handles associations only, and one of their areas is construction defects.

I usually don't like to holler for the lawyers over every little thing, but if you're seeing significant issues this early in the game, this has the potential to bankrupt a typical association that doesn't have deep pockets. IMHO, what the new developer is doing is unconscionable, and I doubt that he'll suddenly mend his ways unless forced to.

In your position, I would:

* Document everything. You'll want to show a consistent pattern of bad behavior. The board should be diligent about walk-throughs and inspection to identify potential issues as soon as possible.

* It would be helpful to get a copy of the warranty that new buyers are given. I also live in a condo/townhome community, with the association responsible for the exterior and structure of the homes (framing, foundations, roofs, etc.) Our new home warranties covered everything up to a year after closing, with some major structural components warranted to 10 years. I'm assuming the new homes in your community will have something similar.

* Assume that this will end up in court, so be careful about what you say to whom. Attorney client privilege is an important asset - you don't want to disclose things that the developer can use against you.

* Another thought: mediation. What does the law say about requiring mediation to resolve disputes like this? Unless forced into it, I'd be careful about agreeing to mediation since it tends to favor those with deep pockets over the little guy. So it would be a good idea to educate yourself.

* Check with your insurance company to see what impact this could have, if any. The last thing you want is to send your premiums through the roof, or make your HOA uninsurable altogether.

I sympathize with your predicament. We're experiencing a similar but not as severe issue, with our newer homes built during the housing downturn and for some years after. This has impacted our reserve funding needs as well as the operating budget, and it's frustrating as well as annoying.

Hi James, thanks. We are a planned community not a condominium association. So we are actually in the 5000s - but I will see if they have something with the same wording in the title.

SamE, interesting you said that. I went back and re-read the paragraph again with this in mind (thought after reading it 100 times already it wouldn't surprise me anymore). It is under the definitions section and says:

- "Controlled Facilities" means all real estate and improvements within the Planned Community which is not part of, or benefits solely, a Unit, which is not a Common Facility, but which is maintained, improved, repaired, replaced, regulated, managed, insured and/or controlled by the Association. Controlled Facilities for the units include, but are not limited to: all lawns on the Units, the roofs, gutters, downspouts, soffit, facia, siding and masonry. -

The part where is says regulated and managed makes me think, we would not even need a homeowners go ahead to send our inspection guy on the roofs to check them out after move in. Which may make all of this a lot easier!

Warrentis and an inspection by experts for construction defects if the board suspects same are, I believe separate issues.

In our Covenants under Associations Responsibilities:

f. Replacement of dwelling roofs when such need for replacement results from normal
wear and tear due to aging as determined in the sole absolute discretion of the Board.

Earlier under Associations Responsibilities there is near identical language concerning the exterior shell of each home. All have vinyl siding and brick fronts.

You might ask about roof leaks. They are the responsibility of the owner. We had to have a few go arounds on that issue with some owners.

Keep in mind, we are small, individual patio homes ranging is size from 1000 sq ft to 1400 sq ft. We also recently had a 40% dues increase as our Reserve Funds would not have been enough to cover roof replacements. Our owners took the dues raise quite well. Only had the normal CCO's (Chief Complaining Officers) call us out on it.

5411 is the planned community version of 3411 that James posted. Read carefully to see what the differences are.

Do you issue 5407 resale certificates when a unit is sold? That's where you should identify any deficiencies in the condition of the unit. See 5407(a)(10) Per 5407(b), HOA must provide to seller within 10 days of a request.