Developer Defects and Conversions

When a newly developed condominium or housing project is completed, buyers expect quality construction that meets industry standards. However, defects in construction and financial mismanagement during the developer-to-homeowner transition can lead to legal disputes. In California, real estate laws provide protections for homeowners dealing with construction defects and financial disagreements. As an experienced real estate lawyer, Borna is here to help homeowners and homeowners’ associations (HOAs) navigate these challenges.

Construction Defects in Common Areas

One of the most common issues in newly developed communities is defects in common areas. These areas include lobbies, hallways, roofing, plumbing, electrical systems, and amenities such as pools and elevators. Defects in these spaces can range from minor aesthetic flaws to major structural failures that pose safety risks and require costly repairs.

In California, developers have a legal duty to construct properties that comply with building codes and industry standards. If defects are discovered, HOAs and homeowners may have legal recourse under the state’s construction defect laws. The California Right to Repair Act (SB 800) outlines the obligations of developers and provides homeowners with the right to seek repairs or compensation for defective construction. Borna can assist homeowners and HOAs in identifying construction defects, filing claims against developers, and negotiating settlements or pursuing litigation when necessary.

Disputes Over Reserve Funds

Another critical issue during the transition from developer control to homeowner control is the management of reserve funds. Reserve funds are intended to cover future repairs and maintenance of common areas. Developers typically manage these funds before handing over control to the HOA. However, disputes often arise when homeowners discover that reserve accounts are underfunded or mismanaged.

California law requires developers to prepare a financial report and disclose reserve fund information before transitioning control to the HOA. If a developer fails to maintain adequate reserves or misappropriates funds, homeowners may have legal grounds to demand an accounting or pursue legal action. Borna can assist HOAs in auditing financial records, negotiating with developers, and filing