Vermont Legislative Update
By Hans G. Huessy, Esq.
[Published in Condo Media magazine – May 2019 Issue]
As of the writing of this article, no major changes were being considered by the Vermont Legislature with respect to Vermont’s condominium laws, Titles 27 and 27A. However, one provision enacted in 1999 may soon become a major headache for condominium owners, depriving them of their right to seek redress for hidden, undiscovered building defects.
Title 27A (the current version of Vermont’s condominium law) provides for certain implied and express warranties of quality (sections 4-113 and 4-114). These warranties are an important form of relief for condo owners in buildings that are poorly designed or constructed. The statute imposes a six-year statute of limitations on any warranty claims brought by an association or owner for a breach of those warranties (a statute of limitations places time limits on when a civil suit can be filed). This is in line with the statutes of limitations imposed on such claims for all property owners, single family structures, apartment buildings, commercial buildings, etc.
Unfortunately, Vermont’s condominium law includes a significant restriction on an association or condo owner’s right to sue for breach of warranty that is not imposed on any other property owner in the state. Under Vermont’s condo law, the six-year statute of limitations starts to run essentially upon completion of the project, regardless of when the construction defect is discovered. This effectively eliminates what is known as the Discovery Rule. The Discovery Rule stops the running of, or tolls, the statute of limitations for such claims and provides it only starts running when such a defect is discovered, or could reasonably have been discovered.
On the other hand, an owner of a single-family home, or any other structure that is not a condominium, may bring such a claim within six years of when the defect is discovered, not from the date of their purchase of the home. So if a single-family homeowner discovers a leaking roof 10 years after their home was completed, that owner is not barred from bringing a claim for the defective roof against the contractor, even though more than six years have gone by. In other words, every property owner other than condo owners continue to enjoy the benefit of the Discovery Rule.
This can be an incredible disadvantage for condo owners, and a huge benefit for condo developers, as many significant structural defects are not discovered, nor could they have been discovered, by an association until after the six-year period for filing a warranty claim has passed. This will leave condo associations holding the bag for multi-million-dollar repair projects caused entirely by the developer’s (or its contractor’s) negligence. No rationale or explanation was provided at the time for the decision to treat condo owners differently than other property owners, but unfortunately, such discrimination is generally not considered unconstitutional.
WHAT CAN AN ASSOCIATION DO TO PROTECT ITSELF?
For any project subject to Title 27A (condos in existence prior to 1999, or older condos that elected to be governed by 27A), I strongly recommend that the association conduct an extensive building inspection in the fifth year of its existence. Not a simple run-of-themill building inspection, but one broad enough to identify structural and other latent significant defects.
This may still not identify a latent problem, but it increases the chances that such a defect is timely discovered. The other step that associations can take is to jointly seek repeal of this limitation. The provision is grossly unfair and there is a good chance that if the resulting inequities are carefully explained to the Vermont Legislature, a statutory amendment eliminating this restriction may be possible.
This scenario is playing out in a case where I represent the association with respect to a 2004 condo project where the defect, a multi-million-dollar defect, was not discovered in until 2017. Therefore, Vermont condo associations should strongly consider undertaking timely, extensive building inspections and jointly consider engaging a lobbyist to seek the amendment of 27A that would put condo owners on equal footing with all Vermont property owners.
Vermont Legislative Update