In 2004, the Georgia Legislature passed the Right to Repair Act (O.C.G.A. § 8-2-35, et seq.) in an effort to reduce litigation and to promote alternative methods for resolving construction disputes. By its express terms, the Act only applies to a dwelling, which is defined as “a single-family house, duplex, or multifamily unit designed for residential use in which title to each individual residential unit is transferred to the owner under a condominium or cooperative system.” The Georgia Legislature amended the Right to Repair Act in 2006 after recognizing the unique maintenance responsibilities for condominium and townhome associations.
Under the current provisions, an association must first overcome three procedural hurdles in order to bring an action against a contractor to recover damages for construction defects in the common elements and/or limited common elements:
1. The association must provide written notice to the contractor.
At least 90 days before filing a lawsuit against a contractor, the association must provide the contractor with a written notice of claim of the construction defect. The notice must indicate that it is being sent pursuant to the Right to Repair Act and it must be sent by certified mail return receipt requested or by overnight delivery. Furthermore, the notice must describe the alleged defects with sufficient detail to explain the nature of the defects and the results of the defects. Lastly, the notice must provide the contractor with any evidence that depicts the nature and cause of the defects, which may include expert reports, photographs and/or videotapes.
2. The board of directors of the association must meet with the contractor in person and attempt to resolve the association’s claim.
The Act requires the board of directors to meet with the contractor in person to engage in a good faith attempt to resolve the association’s claim. This procedural step is satisfied under the Act if the board of directors has attempted to meet with the contractor and the contractor has definitively declined or ignored the requests to meet with the association.
3. The members of the association must vote and approve the proposal to bring an action against the contractor.
The members of the association must vote on the matter and must approve the commencement of an action against the contractor by a two-thirds (2/3) vote of the total membership at a meeting of the membership at which quorum is present. In addition, the Act requires that at least three (3) days prior to the membership meeting, a statutory written ballot is circulated to the members, along with a copy of the notice of claim described above and a written description of claims and the reasons the board of directors is recommending the litigation. For some associations, approval may be received through written consents in lieu of a membership meeting.Within 30 days of service of the association’s notice of claim above, the contractor is required under the Act to send a written response to the association that either acknowledges responsibility for the defect, rejects the claim or requests further information through an inspection and/or testing. The contractor’s response must also be sent by certified mail return receipt requested or by overnight delivery.
If the contractor accepts responsibility for the defect based on the notice of claim, the offer of settlement can be for money, repairs, or any combination thereof. The association then has 30 days to review and respond to the offer of settlement. If the association fails to respond, the offer will be deemed accepted. If the association rejects the offer of settlement, the association is then required to provide written notice of the rejection to the contractor, and it is required to include the reasons for rejection including, but not limited to, the details as to why the association believes the contractor’s offer is unreasonable or why the association believes that a portion of the claim was omitted from the original offer of settlement. Upon receipt of the rejection, the contractor then has 15 days to propose an alternative or supplemental offer. If settlement is reached and the contractor then fails to comply with the terms and conditions of the settlement, the association may then proceed with bringing an action without any further notice to the contractor.
If the contractor wholly rejects the association’s claim, or does not respond within 30 days, the association may proceed with bringing an action or beginning the arbitration process without further notice to the contractor, subject to the membership vote above.
Remember, this is only a brief explanation of the statutory requirements and procedures—there may be additional provisions on construction defects in the association’s governing documents. It can be extremely costly and time consuming for an association, which might only add to the burden and expense of the construction defects themselves. In most cases, the best option to pursue is a settlement with the contractor. Construction defects are an area where an association definitely wants to ensure proper guidance, so it is best to consult with your attorney before bringing a potential claim.