If you have decided that the condominium lifestyle is for you, and have
purchased a sparkling new unit in a recently constructed complex you probably
take comfort in the fact that Maryland law provides for a three-year warranty on
major components of the common elements.
However, you may not be aware that when you purchased your unit, the
three-year warranty was probably already running, and, in fact, may even have
expired. That is because the common element warranty does not begin to run when
you settle on your unit, but instead commences when the first unit sold in the
complex settles.
As a result, where the size of the condominium or the slowness of the market
results in the project taking a period of years before all units are sold, it is
possible that many purchasers may take title when the three-year common element
warranty has nearly, if not already, expired.
Condominiums are, of course, a unique form of real property ownership, in
which the purchaser buys a unit that he owns just as he would own an individual
home. Additionally, the condominium purchaser also obtains an undivided
ownership interest in the common elements of the complex, which she owns in
common with all of the other unit owners.
By virtue of this ownership interest, all unit owners are responsible for the
maintenance, upkeep, and, if necessary, repair of the common element components.
The extent of their responsibility is established by a percentage share
allocated in the condominium documents, which usually is a function of the size
of their individual unit.
The important fact to remember, however, is that every unit owner has an
ownership interest, and corresponding responsibility, for all of the common
elements throughout all of the complex. That applies no matter how many
buildings might be involved, or how far removed the common elements may be from
any individual unit.
For that reason, it is significant that the Maryland Condominium Act
establishes a three-year common element warranty. This makes the
developer responsible for correcting any defect in materials or workmanship in
the roof, foundation, external and supporting walls, mechanical,
electrical and plumbing systems and any other structural elements of the
condominium. It also must warrant that those components are
within acceptable industry standards when the building was constructed.
This is in addition to a warranty on components of the individual unit, as
well as other statutory warranties that apply to all new housing, including
condominiums. The warranty furnishes a means by which condominium unit owners
may obtain correction of defective conditions that, because of the components
involved and the fact that the conditions may exist throughout a large complex,
could otherwise result in costly repairs.
Nevertheless, there are several aspects of the common element warranty that
are highly problematic, not the least of which is the fact that the three-year
period commences upon the first transfer of title to a unit owner.
That means that, for all but the very first purchaser of a unit in a
condominium complex, the three-year warranty is already running at the time of
each purchase, and any unit owner purchasing more than three years after the
first purchase in the complex takes an ownership interest in the common elements
after the statutory warranty has already expired.
The statute does provide that, for common elements not completed at the time
of the first sale of a unit, the warranty does not commence until
completion of that element or its availability for use by all of the unit
owners. This results in the possibility of several different three-year
periods being applicable within a given condominium.
A further complication arises from the fact that condominiums are governed by
a council of unit owners, which is the legal entity comprised of all of the
individual unit owners. Until a majority of the units in a condominium complex
are sold, the council is under the control of the developer.
Only after more than 50 percent of the units have been sold do the unit
owners themselves take control of the condominium. While the statute provides
for a one-year period after expiration of the warranty in which a claim can be
made, it also requires that notice of any defect be given to the developer
within the three-year warranty period.
As a result, the unit owners need full knowledge and understanding of
the condition of the common elements within the three-year warranty in order to
be able to provide the required notice that is a prerequisite to pursuing a
warranty claim.
For all of these reasons, unit owners need to exercise due diligence if they
intend to preserve their rights to enforce the common element warranty.
A first order of business before the warranty expires should be for the unit
owners to undertake an adequate engineering investigation of the common elements
that will identify any conditions that are not within accepted industry
standards. Such transition studies are necessary in any event so that the unit
owners can establish the proper budgets required by law for maintenance and
reserves.
When done properly, the investigation may also save the unit owners a
huge bill for repairs by alerting them to matters for which the developer should
be responsible under the warranty.