In 2004, a legislative task force comprised of industry attorneys and experts created what is now RCW 64.55, which generally requires design documents and third party inspections focusing upon the building envelope prior to obtaining a permit for a multi-unit building. It also sets forth an alternative dispute resolution process for construction defect cases.
Building Envelope Inspections for Conversions
One aspect of the new statute requires that developers who convert buildings (such as apartments) to condominiums hire a qualified, independent party to inspect the building envelope prior to selling units. The law applies to all conversions for which a Public Offering Statement (sales documentation required in the sale of a condominium) was delivered after August 1, 2005. Because of the delayed applicability of the statute, we are just now beginning to see condominium conversions where the developer was required to, but did not, conduct the building envelope inspection.
The point of the inspection requirement is to make sure that people buying units in older buildings converted to condos have a realistic picture of the condition of the building envelope, which cannot generally be seen by buyers and problems which are rarely identified by home inspectors because the problems lie beneath the surface.
Remedy
The statute provides that failure to do a building envelope inspection entitles the association to “actual damages” or an amount equal to three percent of the purchase price of each unit (10 percent if the failure to do so is found to be malicious). For example, a building with 50 units with an average purchase price of $300,000, would be entitled to at least $450,000.
An Association may elect to pursue its “actual damages” which may be the cost to repair the building if there are substantial building envelope problems that would have been disclosed in a building envelope inspection. To our knowledge, no court has yet ruled on what the measure of actual damage would be since this area of the law is relatively new.
