By Ann Rankin, Attorney at Law

1. EXPECT that a lot of COMMUNICATIONS will be needed.

The Board and Manager will have to communicate with counsel to understand the process, the possible alternative approaches, and the risks and benefits of each. The Board, the Manager and counsel will have to communicate with Owners to keep them informed. Litigation must be disclosed. Owners who want to sell will have to have a way of obtaining disclosure information for prospective purchasers and lenders; a Disclosure File should be planned in advance.

2. EXPECT DELAYS, even when you have good counsel.

Courts are overcrowded. There are not enough judges. The law requires you to provide all kinds of "due process." Most large lawsuits take a year and a half to three or four years to complete.

3. EXPECT to engage EXPERTS in most cases. For example, in construction defects cases, you will usually need an Architect and a Contractor; sometimes you will also need a soils engineer, a structural engineer, a mechanical engineer, a plumbing contractor, etc. These experts must be paid by the hour.

4. EXPECT to SPEND MONEY. It takes money to get money. You may save money during litigation if the attorney will work on a contingency, but this may result in a shortfall at the end. Understand the costs going in; use reasonable cost control methods, but do not shoot yourselves in the foot by refusing to spend money for needed investigations.

5. EXPECT to have to RELEASE all claims, known and unknown, in order to get money. There are some exceptions to this, but usually, insurance companies will not part with money unless they receive a complete release. Because you need to release all claims to get money, it is important to make a thorough investigation; if you miss a defect and then sign a release, and the defect causes expensive problems, you will be out of luck!

6. EXPECT people to paw through your RECORDS. In most lawsuits involving associations, the minutes and other records are "fair game" for the other side. Remember this when you are writing the minutes. Watch out for things that might "come back to haunt you," such as entries blaming construction problems on the owners themselves. If the Board is approving questionable expenses, remind them that these minutes are available to all members, and to the other side in case of a lawsuit, and it is important that the records show the Board is acting properly; if not, personal liability and other problems may occur.

7. EXPECT DISSIDENTS: not all owners will agree with, or like, the lawsuit. For example, some owners would rather "sweep the problems under the rug" and sell their units to other unsuspecting people than to deal with, and solve, the problems. Still, the Board's fiduciary duty is to do what is right for the members, and to protect the assets--not to win a popularity contest. Prepare the Board for this as much as you can.

8. EXPECT to have to hire PROFESSIONALS, following the suit, to do value engineering and to prioritize the repairs. Associations in litigation over construction defects have no incentive to get the lowest bid, but once the suit is over and it is necessary to plan repairs, you will need working drawings and professional advice about how best to spend the money.

9. EXPECT that the case may be assigned to MEDIATION or to ALTERNATIVE DISPUTE RESOLUTION or to a SPECIAL MASTER. The Courts do not have time for complex lawsuits these days, so most judges want to ship them off to a Mediator or a Special Master. A good mediator or Special Master can streamline the case and save time and expense; a bad one can cause even more delay! Consult with counsel on the available choices and on the benefits and problems with each.

10. EXPECT that all lawsuits finally do END; in most construction defect suits, the owners obtain far more money than they spend on the lawsuit. The defendants want you to get tired and give up--but there is usually light at the end of the tunnel!

The material in this article is not a substitute for qualified legal advice about a particular issue. This article constitutes a summary only. If you have a legal issue involving these requirements, seek competent legal advice.

Law Offices of Ann Rankin, in Oakland, California, practices in the areas of common interest development law, real estate law and construction defects law.