Condominium Liability Reform Passes
Engrossed Substitute House Bill 1848 enacts new requirements and protections for multifamily residential housing projects. The liability insurance market in Washington is one of the worst in the nation when it comes to the cost and availability of insurance for architects, engineers and contractors.
There are two problems with the costs of multifamily housing. First, some projects are not constructed to the design specifications. As a result, they are more prone to water infiltration which leads to mold and other problems. Second, aggressive trial lawyers are shopping for clients as soon as condominium projects are completed. The resulting litigation is expensive and often leads to settlement payments, even if there is no liability for problems.
EHB 1848 first seeks to ensure that new multifamily housing projects (those with more than two units) are built to the highest standards to prevent construction defects and later problems. It requires that the building envelope of all such buildings be inspected during and after construction to ensure compliance with the architectural documents. Also, it expands the role of architects to review and stamp any change orders or other changes to the design documents approved for code compliance. It also places restrictions on converting buildings into condominiums, to ensure they do not have construction flaws prior to being occupied as residences.
The other problem facing architects, developers and contractors is that nearly every completed condominium project is the subject of a lawsuit. Aggressive trial lawyers use predatory practices to round up preemptive lawsuits as soon as people move into a condominium or similar project. The goal of these suits seldom is to fix any problems, but rather to garner large financial settlements, of which the lawyers take a big percentage.
To curb the drive for lawsuits, the bill requires such projects to go to either arbitration or mediation prior to going to court. This process encourages litigants to seek solutions to problems with the building, rather than expensive and lengthy litigation.
Architects will have a new role in this process as well. EHB 1848 sets up the authority for either side to hire an impartial architect or other qualified person to inspect the building and provide a report to the litigant. The inspector may also make recommendations as to how any identified problems should be addressed. While this inspection report is not binding on the litigants, the inspector can be used as an expert witness in court and his findings will have legal weight.
It will take time for the provisions of EHB 1848 to permeate the design and construction industry enough to bring insurers back to the Washington liability market. In the short term, however, it should help to improve the quality of multifamily housing projects by having architects play a larger role in their development