Legal Q & A with Dan Greenstein

Dan Greenstein, Esq., Bernick, Lifson, Greenstein, Greene & Liszt, PA; writes a column in CIC Midwest News called Legal Q & A. We have excerpted portions of his column below. If you would like to submit a question for possible inclusion in his column, please email it to: information@cicmidwest.com   CIC Midwest members can read his column in every issue of CIC Midwest News, and can get copies of his past columns via email. Go to Archive Articles to see the list of topics Dan has addressed.

Minnesota’s Home Improvement Warranties: Good News? / Bad News?

by  Daniel B. Greenstein, Bernick, Lifson, Greenstein, Greene & Liszt

On August 1, 2009, a new Minnesota law took effect requiring contractors to include copies of the state's home improvement warranty statute in their contracts with consumers. Most consumers have heard of the 1-2-10 year warranty, which has existed for decades, but many consumers are unaware of the protections it affords them.  It requires contractors that provide home improvement work involving major structural changes to warrant that their work will be free from defects caused by “faulty workmanship and defective materials due to noncompliance with building standards” for one year. Work involving plumbing, electrical, heating or cooling systems must be free of defects caused by faulty installation for a period of two years, and the work must also be free of major construction defects caused by noncompliance with building standards for ten years. 

The statute has been criticized because the warranties are subject to several exclusions and exceptions and because most consumers were not told of these provisions.   Most notably, the home improvement warranty only applies if the homeowner reports damage to the contractor in writing within six months after the owner discovers or should have discovered the damage. Homeowners who thought they were protected by a warranty have discovered later that the contractor would not be required to repair poor workmanship because the homeowner waited too long to report the problems.

The new law requires contractors to provide copies of the entire statute as part of their contract for home improvement work.  The intent is to inform consumers of their rights and responsibilities under the warranty. Unfortunately, this solution has the potential to create new problems or compound the existing ones; many contractors are grumbling about now having to produce a multi-page copy of the warranty as a part of every contract.

The statute is lengthy, with several sections and subsections. When it is attached to a contract for services, which might be very detailed itself, there is the risk that consumers will not read the statute in its entirety. A consumer who reads only the first few provisions of the statute may believe he or she has more protection than the warranty actually offers. For example, the requirement that consumers inform contractors of problems within six months of discovering them is only one of sixteen warranty exclusions “buried” in the middle of the statute. Because the law requires the statute to be included as part of construction contract, home improvement contractors may find themselves in the position of explaining or interpreting the statutory warranty for consumers. The risk of misunderstanding makes this situation undesirable for both homeowners and contractors.

The new law provides consumers with information, but its value will be determined by the diligence of the individual homeowners entering home improvement contracts. The statutory warranty is only valuable if homeowners understand its limitations, as well as its protections.  Every contractor should discuss the best way to incorporate this warranty into their contract with their lawyer; every consumer contemplating major home improvements or the purchase of a new home should also sit down with their attorney to ensure they understand the workings of this law.

Dan Greenstein, Bernick, Lifson, Greenstein, Greene & Liszt

Who Can Contact the Association's Attorney?

Q: We need advice on how to create a policy about who can contact our association's attorney. Several board members, who disagree with each other, call the attorney and rack up fees. If we only allow certain people to contact the attorney, we are accused of taking "sides" on issues.  The ones who can't contact the attorney feel they are not getting the advice they need to make their case. How do other associations deal with this?

A:  Believe it or not, this is a fairly common issue in condominium and townhome associations. Often, it can be solved if the board makes a written presentation to the attorney and includes the positions and/or facts which various members of the board feel are relevant. Other times, a conference call maybe used to solve this problem; however, in my experience, a conference call tends to significantly increase the amount of time that the attorney spends on the issue and thus the costs are quickly multiplied. My suggestion is to try to fairly present the issues in an impartial manner and to include the facts or verbiage that various board members feel are important. The attorney can then respond to all questions and issues raised at once, rather than repeating the same information to each board member.

Renters in Townhome Don't Follow Association Rules 

Q: How do we deal with a renter in our townhome community who does not follow the association's rules and regulations? The owner of the unit lives out of state and is not helpful when we contact him.

A: As more and more investors purchase townhome and condominium units, this type of question is frequently being asked. Depending upon the language in your declaration, or in rules governing rentals, the owner of the unit can be fined and/or penalized for the tenant’s violations of the association’s rules and regulations. It is often helpful to have a requirement in your declaration or rules that require the governing documents of the association, including the rules and regulations, to be incorporated into the lease and attached to the lease as an exhibit. This certainly gives fair notice to the tenant of the standard of conduct required by the association and serves to protect the owner of the unit, who can evict the tenant for violating the rules.  Generally speaking, once you begin fining the owner for the tenants’ violations, the owner will take the action required to insure that the tenant complies with the association’s rules and regulations.