Ohio has four cities in the nation’s top-20 hottest housing markets—more than any state—according to the latest Realtor.com rankings. These rankings are based on how quickly homes sell and how frequently real estate listings are viewed on Realtor.com. Ohio is not just a hot real estate market for single-family housing; construction of new condos and multifamily housing is heating up as well. The Ohio real estate market is growing rapidly because home prices in Ohio are relatively low compared to the national average and because Ohio’s economy “has never performed better.” This had led to an influx of new home buyers from expensive coastal metros, like California, New York, and Washington, D.C.
Because “Ohio homes don’t last long on the shelf,” many home buyers in Ohio are pressured into hasty real estate decisions. Home buyers that have purchased a house or condo that was constructed defectively have legal rights under Ohio law, but they may need to act quickly—particularly if the house or condo was not newly constructed.
Bringing a Construction Defect Claim
Ohio law allows homeowners to bring negligence actions against developers for damage to their real property as a result of defective construction. This is the most common type of action brought against developers and builders relating to the defective construction of houses and condos.
The Ohio Condominium Act creates relationships, rights, and remedies governing condos and other types of multifamily housing in Ohio. The Act specifically includes the right to sue condominium developers for violating its provisions. The Act, for example, imposes liability for a multifamily housing developer’s failure to disclose certain information concerning the development to prospective purchasers—regardless of whether this nondisclosure was intentional or inadvertent.
When do claims need to be filed?
Generally, homeowners and homeowners associations may bring claims against developers and builders for negligent construction causing damage to real property within four years after the “damage to the property…is first discovered, or through the exercise of reasonable diligence…should have been discovered….”
However, if the defect was discovered between eight and ten years after construction was ‘substantially’ completed, claims for negligent construction must then be brought within two years from the date the defect was discovered (or should have been discovered through reasonable diligence). If the defect is not discovered until ten years or later from the date the construction was substantially completed, these negligent construction claims would be barred under Ohio’s Statute of Repose, which bars any action for negligent construction based on defects that were not discovered within the first ten years following substantial completion of construction.
This does not mean that a negligent construction claim cannot be filed more than ten years from the date of substantial completion of construction though. A claim could technically be filed up until the twelfth anniversary of the date of substantial completion as long as the defects were discovered before the tenth year and the claims are then filed within two years from the date the defects were discovered.
The date of “substantial completion” of construction is defined in the Statute of Repose:
‘[S]ubstantial completion’ means the date the improvement to real property is first used by the owner or tenant of the real property or where the real property is available for use after having the improvement completed in accordance with the contract…whichever occurs first.
Generally, the date of substantial completion for a single-family home will be the date a certificate of occupancy is issued. However, in multifamily housing cases brought by a homeowners association, the question of when the project was substantially completed can be much more complicated, as the court will examine circumstances such as the construction professional’s ongoing “control over the improvement, the ability to make determinations with respect to the improvement,” etc. Given these factors, some courts may determine that the project was not completed until the developer turned over control of the homeowner association to the homeowners, as developers maintain control over and a “responsibility to maintain” the common elements of the multifamily housing project until this time.
Even where a construction defect action is barred by the Statute of Repose, homeowners in multifamily housing projects may still be permitted to bring claims against the developer under the Ohio Condominium Act. As mentioned above, this Act requires developers to provide purchasers with a detailed statement of matters affecting the development; including, for example, the applicable warranties, a two-year projection of expenses needed to operate the common areas, the “significant provisions for management” of the development, and copies of any contracts affecting the management along with their financial effect. The developer must also provide at least a two-year warrant covering defects in workmanship or materials on basic items serving the common areas and at least a one-year warranty on elements pertaining to each particular unit. Claims for breaches of these statutory requirements may be brought against developers who covert rental units into condominiums.
Claims for violation of the Ohio Condominium Act must be brought within six years of “when the violation of the statute occurs.” For example, claims against a developer for failure to provide the disclosures required by the Act must be brought by a homeowners association within six years of the date the misleading disclosures statements were provided. Similarly, if a developer fails to honor one of the warranties required by the statute, an action for breach of the applicable statutory warranty would presumably need to be brought within six years from the date that the developer failed to make the repairs required under this warranty.
The Notice-of-Claim Process
In actions brought by a homeowner (or a homeowners association) against a residential contractor (including builders, developers, and design professionals) for defective construction of a house or condo, the owner must provide written notice of the defects to the contractor at least 60 days prior to filing these claims. This ‘Notice of Claim’ statement (the NOC) must include the following information:
- An itemized list of defects with descriptions of each defect;
- Any documentation concerning the defects prepared by a person who inspected the building for the owner; and
- Contact information for both the owner and the contractor and the address of the building that is the subject of the claims.
The construction professionals/developers receiving the NOC are then obligated to provide the owner with a good-faith written response within 21 days from the date the NOC was mailed. In this response, the contractor must either (1) offer to inspect the residential building; (2) offer to settle the claim without an inspection; or (3) indicate that it is disputing the claim.
If the contractor fails to provide such a response, the owner may then file claims against the contractor without further notice. If the contractor does respond, the owner must then either accept the contractor’s offer or provide the contractor with the reasons the offer is being rejected within 14 days offer. Once the owner has done so, the owner may proceed with litigation.
Burg Simpson’s construction defect and product liability attorneys have handled numerous cases for their clients, including individual homeowners as well as various community associations, and have a proven track record to represent your interests and guide you through the process. We have offices in Ohio and several other states, and our attorneys handle cases throughout the country. If your home or community association is less than 10 years old and is experiencing issues, whether it is water intrusion, roof leaks, foundation movement or cracking, stucco cracking, siding or trim deterioration, sidewalk cracking or spalling, grading and drainage issues, fire sprinkler leaks, or other issues, please contact us for a free consultation to discuss your situation and options to represent you through the process.