Condominium Conversion Lawyer, California

Trapped in a Condo Conversion Nightmare?

A team of attorneys and paralegals which is led by Clayton Anderson specializes in investigating and recovering compensation for owners trapped in the nightmare of defective condo conversions. These units are often sold as virtually new to first-time buyers, retirees, and low-income familes as affordable housing. Unfortunately, the buildings themselves are often 30 years old with leaking roofs, windows, plumbing and electrical systems that are defective. California law does not provide as much legal protection to owners of condo conversions as it should. It takes the Anderson & Kriger legal team to use its energy and innovative approaches to properly investigate and obtain the best results for the homeowner association and its members.

Clayton Anderson of Anderson & Kriger has provided legal services to the owners of condominium conversions in the 1980s and 1990s, and now during the recession of recent years. The following list provides general information about cases that we have most recently completed or which are being investigated:

12 unit new construction condominium complex in San Diego with leaking roof, leaking windows, leaking plumbing, stucco cracks, concrete cracks, retaining wall cracks and exterior doors that are out of square.
20 unit condominium complex in San Diego with leaking windows, inadequate drainage, water intrusion, mold, covered stucco screeds, stucco cracks, faulty electric, and underfunded capital reserves.
30 North Park (San Diego) condominiums in a building approximately 40 years old with window leaks, roof leaks, aluminum electrical wiring, and other defects
160 units in East San Diego in two-story buildings with defective shower conversions, window leaks, and extensive deterioration of common areas.
80 units in El Cajon in 30 year-old buildings suffering substantial roof leaks, damages to the interiors of units, defective landscaping and water feature, and miscellaneous other defects.
29 units in San Diego which are a combination of 6 original apartment units several decades old combined with the balance of new construction. Window leaks, drainage problems, and other defects being investigated.
160 units in Lemon Grove in decades old buildings with severely defective stairways to second floor units, interior flooring problems, and furnace and air conditioning issues.
18 units in San Diego with ongoing defects and deterioration of the buildings, defective drainage around the buildings, and no reserve funds to investigate or make repairs.
200 units in the Kearny Mesa area of San Diego County with window leaks, roof leaks, balcony deterioration, stucco cracking, and possible radon gas exposure to owners.
78 units in Mira Mesa, part of San Diego County, whose defects are being investigated.

All of these associations are receiving legal services on a contingency fee basis with the investigation costs being advanced by Anderson & Kriger. We have never had a case where there has not been a recovery for the association, but if that were to occur, there would be no financial obligation to the association or its owners.

Condominum Conversion Law

When Anderson & Kriger represents Condominium Conversion Homeowner Associations, the Board of Directors has often been caught in a vicious cycle of growing defective conditions in both the individual units and the common areas; a drop in dues-paying owners based on foreclosure or other issues; and often a complete lack of reserves to fund even adequate investigations as to what is going on.

Although many condominium converters are conscientious and try to do a good job, most of these conversions involve buildings that are decades old with various degrees of maintenance over the years. These condominium conversions often result in a basic fraudulent scheme to have owners pay $300,000 or $400,000 per unit when the converter has only paid maybe $50,000 to $100,000 per unit. The condo converter then puts perhaps another $25,000 per unit for painting, granite counter tops and perhaps some other minimal improvements, but does not touch the defective conditions buried within the buildings.

Common Construction Defects in Converted Buildings

Specifically, the defective conditions are often old and leaky roofs; plumbing, including water heaters and sewer pipes that have outlived their useful life; new windows, but improperly installed and leaking; plus common area problems with landscaping, fencing, pools, water features and numerous other conditions.

Under California law, converters are able to claim that they did not touch certain defective conditions and, therefore, they are not responsible. California law is deplorable in that respect, perhaps even worse than the lack of banking regulations that resulted in the home foreclosure disaster affecting the United States over the past two years.

We Begin with Expert Construction Investigation

Anderson & Kriger generally begins its representation of homeowner associations by providing expert construction investigation of all of the defects complained of, generally at no cost to the association. This is followed by a detailed review of all of the homeowner association records, including homeowner association minutes, CC&Rs, By-Laws, reserve studies, and other accounting records.

What is often revealed is that the converter initially had its own employees on the Board of Directors and those employees did not make decisions that were in the best interest of the owners. Anderson & Kriger further finds that reserve studies regarding ongoing repair and maintenance issues have been inadequately done by the converter.

Unfortunately for the owners of converted apartment buildings, the governmental supervision of the conversion process is virtually non-existent. While the Department of Real Estate requires certain documentation before giving permission to sell the units, the governmental entities responsible for monitoring the conversion often do little or nothing to guarantee quality or even confidence in the construction work. There is no governmental assistance in determining what defects should be corrected, and basically you have a condition of "lipstick being put on a pig."

For example, in one of our cases, the converter turned a project and the Board of Directors over to the new owners who generally are new homeowners with little or no experience in managing this type of building. They often have inadequate management companies, or perhaps no management company at all to guide them.

Condo Conversion Defects are Uncovered

In one situation in San Diego County, although the conversion was supposedly done under the supervision and final inspection and approval of a governmental entity, this proved not to be the case. Shortly after the Board started meeting, the fire department came to the building and demanded that a new $5,000 valve be put on a sprinkler system. Even though the Board protested that the converter should have been required to install this valve and that the fire department and the other governmental entities had approved the occupancy after the conversion, none of that was effective. The governmental entity denied ultimate responsibility and the association was forced to spend $5,000 from their very limited funds to put in the fire sprinkler valve. Of course other defective conditions soon became apparent, the Board did not have adequate reserves, and Anderson & Kriger has had to step in to provide legal services.

Part of what is often a fraudulent scheme of condominium conversion involves the setting up of a California Limited Liability Corporation (LLC) for the sole purpose of distributing all of the profits from the sale of the defective condo units and then going out of business. Even if the owners of the LLC are still around, they vigorously deny liability although they have often pocketed 100 to 200% profits on the money advanced.

Litigation Commences After In-Depth Investigation

Anderson & Kriger's job is to start litigation against the condominium converter and any subcontractors who were involved in the conversion. This is often a very time consuming and difficult process but without it the homeowner association has no ability to obtain compensation from those responsible for the defective conditions, the lack of disclosure of defects, and the lack of an adequate reserve.

Homeowner associations always have the option of special assessing the owners or seeking loans from financial institutions to do repairs. However, if the association's cash flow is inadequate for even day-to-day operations because of foreclosures and other issues, the chances of the owners paying a special assessment or a bank lending money are minimal.

These condominium conversions are most often done as the last stage in a real estate boom which California has had since the early 1990s until approximately two years ago. They are made possible by the extreme increase in property values which make a $300,000 or $400,000 condo conversion, even though it is filled with construction defects, look like a bargain. This happens at the end of every business cycle.

What also happens at the end of the cycle is that property values fall, improper mortgages go into default, and the owners of these condominium conversions are left in a disastrous situation. These owners are often young newlyweds looking for their first piece of real estate; retired people who have moved into them to simplify their lives; and numerous people at various stages of their life that are looking for value and peace of mind.

A fraudulent condo conversion provides neither value nor piece of mind and that is when Clayton Anderson, Mary Tyler or Bradley Schuber should be contacted immediately.

Contact A Condo Conversion Attorney Directly:

Call one of our condominium conversion attorneys now at 1.877.494.1046 (Southern California Residents) or 1.800.365.2075 (Northern California Residents) or send an eMail to schedule a no-cost consultation.