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PROPERTY VALUES

Building-Defect Law Says Talk Before You Sue

November 05, 1995|RON GALPERIN | SPECIAL TO THE TIMES

Timing is critical in assessing a potential construction-defect case. For patent defects--those observable when construction is completed--California law sets a four-year limit from the date of substantial completion of the building or improvement for bringing suit. A lawsuit founded on a latent--or not apparent by reasonable inspection--defect must be filed within 10 years of the date of substantial completion of the construction. Whether a defect is patent or latent, though, owners must file a case within three years from the date of discovery.

If it seems as if time is running out, some property owners and managers suggest filing a lawsuit even in the initial stages of discovering problems. A surface check may provide the basis for beginning a lawsuit, said Kimberlee A. Moore, president of Exclusive Property Services, a Tarzana-based condominium-management company. If further testing reveals serious problems, the lawsuit can proceed. If the problems aren't too serious after all, she said, "you can always terminate the suit."

Moore said she's not "sue-happy" but just wants to be sure there aren't any defects that her condo owners pay for when someone else could be paying.

Fewer than 10% of all the construction-defect cases get to trial, said Ross R. Hart, a mediator and arbitrator with the American Arbitration Assn. in Los Angeles, who specializes in mediating construction-defect cases. Some litigants voluntarily agree to mediate or arbitrate; others may be ordered to by a court.

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CLARIFICATION: The Sept. 15 "Property Values" column headlined "Get Home Loan Relief With 'Short Pay' " stated that cancellation of debt is not considered taxable for non-recourse property loans. This issue has not been fully clarified by the Internal Revenue Service, however. Property owners are advised to consult an accountant and/or tax attorney before concluding a short pay or short sale.

Ron Galperin is a real estate attorney with Wolf , Rifkin & Shapiro in West Los Angeles and a syndicated real estate columnist.

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