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Housing

Construction Defect Litigation Research and Advocacy

Multi-family housing development helps achieve several smart growth goals: providing more housing options for the region's residents, reducing the need to use vacant undeveloped lands, and improving the prospects for walkability and transit access.

Many feel that the surge of condominium construction defect litigation (CDL) in the last 20 years has significantly reduced condominium construction, and therefore reduced the availability of affordable housing.

The greatest initial challenge to any dialogue about CDL is defining the problem. Builders see the litigation itself as the problem, as it either increases their insurance rates or renders insurance impossible to obtain. But, for homeowners and consumer advocates, the extent of CDL's negative impact on affordable housing availability, the defects themselves, and the resolution of the defects are all aspects of the problem.

Another important point of contention is whether frivolous litigation (as builders argue) or shoddy construction (as plaintiff's attorneys argue) is the prime driver of the proliferation of construction defect suits.

Both sides agree that the most important effect of CDL is on two aspects of the insurance market:

  • Availability
    CDL makes insurance difficult or impossible for interested builders to obtain for condominium construction, substantially reducing the construction of multi-family ownership housing.

  • Cost
    CDL makes building and insurance more expensive; therefore, fewer condominiums are built, and those that are built are more expensive.

In July 2001, SANDAG published a white paper on CDL titled Condominium Construction Defect Litigation and Affordable Housing: The Anatomy of a Problem, with Strategies for a Solution. In August 2001, SANDAG held a CDL workshop featuring a panel of experts on the issue including builders, plaintiff's attorneys, and consumer advocates.