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Condo liability law loosened

DULUTH — A homeowners association is suing the developer, builder and manager of the Superior Vista condominiums, among others, claiming the Mesaba Avenue complex was not properly built and ought to be repaired under warranty.

"Many areas of the building were not built to applicable building code, industry standard and/or engineering specifications ... all of which is allowing for excessive water intrusion, deterioration and decay," reads the suit by the Superior Vista Homeowners Association filed in St. Louis County District Court last fall.

It's exactly the kind of suit that some say has discouraged new condo development in recent years, and one that could become less common due to a change in state law that passed the Legislature earlier this year.

"The number of townhomes and condos being built have dramatically dropped, in part because of this legal landscape," said David Siegel, executive director of the Builders Association of the Twin Cities. "If the liability is so great, and the costs are so great, we're just going to stay away."

Legislation pushed by Siegel's group aims to slow down the liability lawsuits by requiring homeowner association membership to vote on such suits; require a maintenance record kept by the association; and mandate mediation before a suit is launched.

"We needed to put guardrails in," Siegel said. "We don't want to take away the ability to remedy the problems, but there are less expensive solutions that can solve the problems."

Since a condo building boom in Duluth a decade ago, new multi-family development in the city has shifted to market-rate apartments in recent years. Siegel is confident the new laws will help boost condo building in Minnesota, which never recovered from the recession the way single-family homes and apartment complexes did.

"Cities, Realtors, seniors, millennials are all saying: Can you build more of these please?" Siegel said. "I do honestly believe it's going to help grow the attached townhome and condo market — that's generally the most affordable product in the marketplace. And we have an affordability problem in our state."

Though the real estate community, builders and cities teamed up on the legislation, some worry about the effect it will have on existing condo owners.

An original sponsor of the bill, DFL Rep. Ray Dehn of Minneapolis, ended up voting against it and told MinnPost last month: "The question is at what point do you tell certain condo owners they'll lose some rights."

Meanwhile, lawsuits like Superior Vista's will continue.

The 45-unit condo complex at 1126 Mesaba Ave. opened to residents in late 2006; the lawsuit was filed in August last year. State law generally allows up to 10 years to bring building defect lawsuits against developers and construction companies.

Though specific monetary damages sought were not yet available, the suit alleges more than $50,000 in the cost of repairs, home value decline, breaches of contract and negligence.

"To date, and despite demand, defendants have not offered to repair the building or the units," the suit says.

Named in the suit as defendants are Superior Vista Condominiums LLC, Kraus-Anderson Construction, Oneida Realty and several manufacturers and subcontractors.

"The association has documented damages and documented construction issues that need to be fixed," said Brenda Sauro, a lawyer for the plaintiffs. "And I think the fight among the defendants is the scope of that fix, how much it's going to cost and who is responsible."

A jury trial has been scheduled for January.

Brooks Johnson

Brooks is an investigative/enterprise reporter and business columnist at the Duluth News Tribune.

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