Construction Defect Warranty Law in Maryland
“There are four (4) Separate and Distinct Statutory Construction Defect Warranties that Apply to Condominiums in Maryland”
By Nicholas D. Cowie, Maryland and Washington DC Condominium Attorney
Maryland has four separate and distinct statutory warranties applicable to construction defects that occur in the construction of a residential condominiums.
- Title 10 Implied Warranty
- Title 10 Express Warranty
- Title 11 Unit Warranty
- Title 11 Common Element Warranty
Title 10 warranties consist of an implied warranty and an express warranty that apply to all new residential construction, including residential condominiums. Title 11 warranties only apply only to residential condominiums and consist of a unit warranty and a common element warranty. These four construction defect warranties (discussed below) are contained in Title 10 and 11 of the Maryland Annotated Code, Real Property Article (“RP”). Generally, warranty claims can an be asserted against a condominium developer by a condominium association, individually in its own name or in a representative capacity on behalf of unit owners.
A. TITLE 10 CONSTRUCTION DEFECT WARRANTIES
(Implied & Express)
Two of the four statutory warranties are contained in Title 10 of the Real Property Article. These are: (1) an express warranty created by RP §10-202; and (2) an implied warranty created by RP §10-203. These two construction defect warranties (express an implied) are collectively referred to as “Title 10 warranties.”
Title 10 warranties are broad in scope and apply generally to all new residential construction, including single family homes, townhomes, and condominiums of all types (e.g., high-rise condominiums, mid-rise condominiums, garden style condominiums and townhouses condominiums). Title 10 construction defect warranties apply to “improvements,” defined as:
“every newly constructed private dwelling unit, and fixture and structure which is made a part of a newly constructed private dwelling unit at the time of construction by any building contractor or subcontractor.”
RP §10-201 (b). In Starfish Condominium Ass’n v. Yorkridge Service Corp., 295 Md. 693, 703 (1983) the Court of Appeals held that the units and common elements of a condominium constitute “improvements” to which Title 10 warranties apply. “Improvements” are not limited to building structures, but also include site improvements, such as retaining walls. Andrulis v. Levin Constr. Corp., 331 Md. 354 (1993).
1. Title 10 Implied Warranties
The Title 10 implied warranties apply to “vendors” and provide that newly constructed residential improvements, including a condominium, will be constructed to the following standards:
“(1) Free from faulty materials;
(2) Constructed according to sound engineering standards;
(3) Constructed in a workmanlike manner; and
(4) Fit for habitation.”
RP §10-203(a). Under the Title 10 construction defect warranties, these four (4) standards are “implied” in the sale of a residential home as a matter of law to protect purchasers of newly constructed residences in the state of Maryland. This includes residential condominium units and common element. Therefore, because these standards are implied, they are deemed by law to have been made by a condominium developer in the sale of a new condominium, even though there was no intent to make any warranty and even though these standards are not written into a contract or otherwise expressed to purchasers of condominiums when the sale was made.
The Title 10 Implied warranties also include what is known as an “Implied warranty of fitness for a particular purpose,” meaning that if the purchaser of a condominium, expressly or by implication, makes known to the condominium developer that they have a particular purpose for which the condominium property is required, and it appears that the purchaser relies on the vendor’s skill and judgment in choosing the condominium to meet this particular purpose, there is an implied warranty that the condominium is reasonably fit for the particular purpose.
2. Title 10 Express Warranties
Traditionally, the terms “express warranty” refers to written promises contained in a contract or deed. RP § 10-202 creates an expanded statutory “express warranty” that is created when a vendor or developer of a condominium provides any of the following and written statements or depictions to purchasers of condominium:
“(1) any written affirmation of fact or promise which relates to the improvement and is made part of the basis of the bargain between the vendor and the purchaser”;
“(2) any written description of the improvement, including plans and specifications, which are made a part of the basis of the bargain between the vendor and the purchaser”; and
“(3) any sample or model which is made part of the basis of the bargain between the vendor and the purchaser”.
RP §10-202(a). Thus, in addition to written promises contained in contracts, express warranties may arise from sales brochures, public offering statements, newspaper advertisements, model homes, drawings and other written, pictorial or physical descriptions. These express construction defect warranties are breached if the new condominium and common elements fails to conform to the written affirmation, promise or description, or fails to “substantially” conform to a model or sample. RP §10-202(a).
It is not necessary to use formal words such as “warranty” or “guarantee” to create an express warranty. RP §10-202(b). However, mere representations of value, opinion or commendation of the improvement will not create a warranty. RP §10-202(b). The representations must be conveyed as statements of fact.
B. TITLE 11 CONSTRUCTION DEFECT WARRANTIES
(Unit & Common Element)
The other two warranties applicable to the sale of condominiums are created by Title 11 of the Real Property Article (also known as the “Maryland Condominium Act”). These two condominium construction defect warranties consist of: (1) an implied warranty on the units contained in RP §11-131(c); and (2) an implied warranty on the common elements contained in RP §11-131(d). These two implied warranties (unit and common element) are collectively referred to as “Title 11 warranties.”
Title 11 warranties are enforceable against condominium developers and apply to newly constructed and newly converted condominiums. Unlike Title 10 warranties which warrant the condition of the improvement, Title 11 warranties also impose a statutory obligation on a developer to repair defects upon being given required notice within a specified warranty period.
1. Title 11 Unit Warranties
The implied construction defect warranties on an individual condominium unit from a developer to a unit owner is created by RP §11-131(c) of the Real Property Article creates an implied warranty on an individual condominium unit from a developer to a unit owner. Upon the transfer of title to the unit, there is deemed to be an implied warranty that:
“(1) the developer is responsible for correcting any defects in materials or workmanship in the construction of walls, ceilings, floors and heating and air conditioning systems in the unit; and
(2) that the heating and any air conditioning systems have been installed in accordance with acceptable industry standards and;
(i) that the heating system is warranted to maintain 70º (F) temperature under specified conditions; and
(ii) that the air conditioning system is warranted to maintain a 78º (F) temperature under specified conditions.”
2. Title 11 Common Element Warranties
The implied construction defect warranties applicable to the common elements of a condominium run from the developer to the condominium association, and are created by RP §11-131(d). This Title 11 common element warranty applies to “the roof, foundation, external and supporting walls, mechanical, electrical, and plumbing systems, and other structural elements.” RP §11-131(d)(1). Pursuant to the statute, a developer implicitly warrants that it is responsible for correcting any defect in materials or workmanship, and that the specified common elements are within acceptable industry standards in effect when the building was constructed. RP §11-131(d)(2).
A suit for enforcement of the “general” common element warranty can be brought only by the condominium association. RP §11-131(d)(4). However, with respect to the “limited” common elements, enforcement may be pursued by the condominium association or any individual unit owner to whose use the limited common elements are reserved. RP §11-131 (d)(4). Generally, the limited common elements are part of the general common elements but are restricted to the exclusive use of a limited amount of unit owners, such as an exterior balcony or patio.
C. EXPANDED COVERAGE FOR TITLE 10 WARRANTIES WHEN APPLIED TO CONDOMINIUMS
The two Title 11 implied construction defect warranties discussed above are provided “in addition” to the more general Title 10 implied warranties. See, RP §11-131(c), (d)(1) ;The Milton Company v. Council of Unit Owners Bentley Place Condominium, 121 Md. App. 100, 114 (1998) (Title 11 remedies for breach of warranties are in addition to, not in place of, existing Title 10 warranty remedies) aff’d, 354 Md. 264, 282-86 (1999). The Maryland Condominium Act expressly broadens the application of Title 10 warranties when they are applied to condominiums: (1) by extending Title 10 warranty liability to condominium “developers” who might not otherwise fit the definition of Title 10 “vendors”, and (2) by extending Title 10 warranty coverage to older buildings which have been “newly converted” into condominiums. Details below.
Title 10 Warranties Apply to Condominium Developers: RP §11-131(b)(1) states: “[the Title 10 warranties] . . . apply to all sales by developers under” Title 11 of the Real Property Article. Thus, RP 11-131(b)(1) expands Title 10 warranty coverage by expressly of making Title 10 warranties applicable to condominium “developers” and not just “vendors. ” Without RP §11-131(b) some developers might escape Title 10 warranty obligations by arguing they were not “vendors”. Compare definition of a “vendor” in RP §10-201(e) with definition of “developer” in RP §11-101(g).
Title 10 Warranties Apply to Newly Converted Condominiums: Title 10 warranties only apply to “improvements” which are defined as being a “newly constructed … dwelling unit….” RP §10-201(b) (emphasis added). Thus, Title 10 warranties alone would not apply to an older building converted into a condominium. The legislature specifically addressed this issue in RP 11-131(b)(1): “for the purpose of this article, a newly constructed dwelling unit means a newly constructed or newly converted condominium unit and . . . appurtenant common areas [emphasis added].” The effect of this language is to expand the definition of Title 10 “improvements” in cases involving condominiums.
For example, a developer who renovates an old apartment building and sells the renovated apartments to the public as condominium units would be engaged in the sale of a “newly converted condominium”. For purposes of Title 10 warranties, a renovated apartment building would not constitute a “newly constructed dwelling unit” and thus would not be an “improvement” to which the Title 10 implied and express warranties would apply. However, because RP §11-131(b)(1) expands the definition of “newly constructed dwelling units” to mean “newly converted condominium units and . . . appurtenant common elements”, a renovated apartment building converted to condominiums would fall within the definition of “improvements” thereby giving Title 10 warranty protection to purchasers of “newly converted condominiums.”
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NOTE REGARDING AUTHOR: Nicholas D. Cowie is a Maryland and Washington DC condominium attorney that assists condominium associations in resolving their construction defect warranty disputes with condominium developers and builders. Mr. Cowie served as trial counsel in The Milton Company v. Council of Unit Owners Bentley Place Condominium case, referenced in the above article, in which a jury returned a $6.6 million judgment in favor of a condominium association against a developer for construction defects, including a verdict in favor of the association and against the developer for breach of Title 10 implied and express warranties and breach of the Title 11 common element construction defect warranties. See article: 6.6 Million Dollar Jury Verdict for Condominium Association Plus Award of $500,000 in Attorney Fees. Mr. Cowie and Cowie Law Group attorneys Stanford Kimmel and George Bealefeld also served as legal counsel in the Eden Brook Condominium case in which a jury awarded 5.6 million dollars to an association for various claims, including breach of Title 10 implied and express warranties and breach of the Title 11 common element construction defect warranties. See article: Construction Defect Attorneys Obtain 5.6 Million Dollar Construction Defect Jury Award for Maryland Condominium.
Nicholas D. Cowie drafted and promoted the legislation that amended the Title 11 warranty statute. Mr Cowie’s legislation was ultimately passed by the Maryland General Assembly signed into law by Maryland’s Governor. The amendments drafted by Mr. Cowie and passed into law, guarantee that the warranty time periods for giving notice of defects under the Title 11 warranties can never expire earlier than two years from the date that the condominium developer turns over majority control of the condominium association to resident unit owners. Prior to this amendment many Title 11 warranty claims that a condominium associations could assert were expiring before or shortly after the developer turned over control of the association to the unit owners, leaving association’s with inadequate time to pursue construction defect warranties. In many cases, condominiums would not have sufficient time to identify and bring warranty claims to the attention of the developer within the warranty time period and before the statute of limitation is expired. See article: Amendments to the Title 11 Warranties that Extending Warranty Time Periods. Mr. Cowie also drafted and promoted the legislation, passed by the Maryland General Assembly, which prevents condominium developers from shortening the statute of limitations on construction defect warranty claims in Maryland. See article: Maryland Law Preventing Condo Developers from Shortening Statue of Limitation’s on Construction Defect Warranty Claims. Prior to this legislation, some condominium developers were inserting provisions in their contracts which shortened the statute of limitation’s to one year, causing many condominium construction defect warranty claims to expire years before they normally would and preventing associations from seeking redress for latent construction defects which do not immediately manifest.
Mr. Cowie established the construction law course at the University of Baltimore School of Law where he taught law school students construction law, including how to apply and utilize the Title 10 and Title 11 construction defect warranties cases where condominium development are defectively designed and/or constructed. Mr. Cowie is also the instructor for the Community associations Institute (CAI) course for community association managers and homeowners entitled: “Successful Strategies for Resolving Construction Defect Disputes with Developers.” Contact Mr. Cowie for a consultation on the condominium construction Defect Warranties in Maryland.
NOTE ON LEGAL ADVICE REGARDING APPLICATION OF CONSTRUCTION DEFECT WARRANTY LAWS: This Article should not be relied upon as a legal advice applicable to any specific case concerning condominium construction defect warranties in Maryland. The application of law regarding warranties in Maryland is a highly complex area of law and there are numerous exceptions, loopholes, strategies, and legal theories that can only be appreciated through years of experience. These variables which can affect the application of condominium construction defect warranties include the facts of each case, such as the date that a defect was discovered, the dates that each unit owner took title to their unit, the date of the transition committee turnover meeting, the governing documents, and many other factors. In addition, there are statutory deadlines for giving notice that vary by case, depending on the facts, as well as statute of limitations deadlines which also vary by case depending on the facts. Applying and rendering opinions concerning condominium construction defect warranties and planning a strategy for identifying defects and preserving warranty claims requires an analysis of the documents and facts particular to each case by an attorney who is experienced, and well-versed, in condominium construction defect law. Contact one of the experienced condominium construction defect lawyers at Cowie Law Group, P.C. for a consultation relative to your condominium’s specific situation.
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