Discussing Construction or Design Defects in HOA or Condo Meeting Minutes—Just Don’t Do it.

In almost every construction defect case, defense counsel will explore whether or not the Statute of Limitations for suit has passed. The operative statutory provision is § 95.11(3)(c), Fla. Stat. The defense will invariably argue that the plaintiff knew or reasonably should have known about the existence of a cause of action more than four years prior to the commencement of litigation. The focus of inquiry regarding at what point a plaintiff knows or should have known about the existence of a cause of action should depend on all the facts and circumstances, not just the existence of a few isolated leaks recorded in the Board’s Minutes by the condominium’s management company. However, one way for a court or arbitrator to clear a crowded calendar is to accept, at face value, Minutes describing isolated leaks as having triggered the running of the Statute of Limitations.

Typically, all the management company representative, who prepares the Minutes, is trying to do is “be transparent.” No management company wants his or her Association Board to be accused of being less than transparent about what’s really going on. That is a misplaced concern when compared to the risks of triggering the running of the Statute of Limitations. Board Minutes containing entries of a few isolated leaks are precisely what defense counsel will use to establish that more than four years have passed between the date of those Minutes and the date of commencement of litigation. When plaintiff’s counsel argues that there are factual disputes on every significant issue bearing on the accrual of the Statute of Limitations, all the defense does is publish to the Court or Arbitrator, the Association’s own Minutes. Those Board Minutes are clear, concise, and are almost always thoughtlessly approved, without any consideration of the fact that the Association may have just shot itself in both feet and possibly lost the right to bring a construction design or defect claim.

The management company representative, who drafts the Minutes, may actually know nothing about the number of leaks, their location, cause, or cure. A lack of real knowledge may likely be considered just background noise by a busy Arbitrator or Judge. The Board’s nicely typed Minutes, noting the issue was summarily “discussed and approved by the Board, is unfortunately more impressive than the actual facts. Why is that? Regrettably what actually happened is far more complicated than the simple and clear record set forth in the Minutes. A thorough deposition of the management representative’s actual lack of real knowledge of leaks may have less persuasive value than a poorly drafted set of condo meeting Minutes. The fact that the actual number of leaks, their location, cause, or cure are all unknown may well get lost in the vast hordes of documents in a multi party suit. Such Minutes become powerful defense evidence of plaintiff’s “knowledge” about the existence of a cause of action. Even more devastating for the Plaintiff occurs when the Minutes, refer to the Board’s discussion with engineers and attorneys. The well-intended plaintiff’s attorney and the engineer who does only plaintiffs work visit the project. While both, may have only been looking for work, the fact that they are discussed in the Minutes is portrayed as knowledge of the existence of a cause of action. The engineer and potential counsel may actually know nothing of substance. A five-minute walk around by the “expert” who naturally exaggerates the potential problem, but offers only to do expensive destructive testing, should never be discussed in HOA/ Condo meeting Minutes.

Let us remind ourselves, what drives lengthy Minutes is a fear about a “lack of transparency.”  Owners sometimes think that Board members are snobby and overly secretive. When new Board members join, their first instinct may be to include as much information in the Minutes as possible, so that there is complete “transparency”. Owners don’t have to know exactly what transpired at the Board meeting. They could have attended or simply asked questions. Super detailed Minutes sound like a noble goal.  Just don’t do it. Such excessive discussion in the Board’s meeting Minutes is very risky, and can unwittingly expose the Association to the loss of a cause of action.

To provide an example, let’s say someone notes in the Minutes: “There are areas on the roof door entrance threshold that permit blowing rain to enter in. This could present a water intrusion problem. Let’s get a lawyer and an engineer to look into it.” When the Board is confronted with a huge proposed contract for destructive investigation and a 40% Plaintiff’s contingent fee, the proposals are rejected because the problem has been largely resolved. Nevertheless, a defense may have been unwittingly set up. A defensive summary judgment requires only that the poorly drafted Minutes note an expert engineer’s concerns along with a tendered contingent attorney’s fee agreement.

What should be done? Leaks should become an action item for the Property Manager to address, but details do not need to be in the Minutes.  If someone were to do an actual destructive investigation years later, the old, forgotten Minutes will be used to prove that there was a serious defect that the Board neglected to address on a timely basis. The Minutes should simply be a summary of the actions taken by the Board at the meeting, nothing more or less. If, during the first few years after construction, the project experienced some isolated leaks and water intrusion issues; why note this issue in the Minutes?

If those early isolated leaks were identified and repaired, but later new and more serious water intrusion appears, the Statute of Limitations may have already been triggered by referring to the isolated leaks. If the Association thereafter hires a real engineer to prepare a comprehensive report detailing a host of latent construction defects, none of which had nothing to do with the earlier leaks; rest assured it will be argued that the HOA or Association failed to timely sue based on the forgotten, but damning, Board meeting Minutes. When the Statute of Limitations begins to run should not be at the first sign of a leak, however, minor or isolated and no matter the cause.

Some Courts and arbitrators believe, erroneously I maintain, that the Statute of Limitations begins to run at the first sign of a leak. The Statute of Limitations should begin to run when the Association became aware that it had a cause of action. The determination of when the Association knew or should have known they had a cause of action should be a factual question that should be properly resolved by an Arbitrator or jury. For that reason alone, Board meeting Minutes should be kept short and sweet. Board Minutes should never address isolated leaks which were repaired. Why? Tubs and shower pans leak, windows may be left open, window panes do break etc. Defense counsel will argue that each of these referenced leaks was part of a systemic defect in the roofing and stucco system. The fact that the Association’s engineer never identified them until years later, cannot make those thoughtlessly prepared Board Minutes go away.

Since many of the persons who read this post were or are actively involved in similar matters, please share your thoughts with me. Justice is what we should be after, not intentionally doing injustice to the owners who have not nothing to cause their loss of their biggest life savings.

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