Buying property can pose some risks

<p>PRESS DEMOCRAT: Buying a new commercial building does not ensure a business won't face potentially costly problems with a building's design or construction. Can you explain this?</p><p>BERRY: Let me start by saying that most commercial buildings are properly designed and constructed. Here is a common situation. A commercial tenant looks to own a building, as opposed to paying someone else rent. The decision is either to hire a designer/contractor team to build a dream building, or buy an existing building. If the decision is to buy an existing building, it is often attractive to buy a newer one. New or relatively new buildings have advantages including lower operating costs, which are driven by energy efficient building techniques and lower initial maintenance costs. A rare, but devastating, problem occurs when a newer building begins to exhibit problems. These could be roof or window leaks or unusual cracking patterns in interior walls. As the owner, you are responsible for identifying the problem and fixing it.</p><p>PRESS DEMOCRAT: How large a problem are construction defects in Sonoma County's newer commercial buildings?</p><p>BERRY: We represent many local owners regarding newer defective buildings. We are seeing marginally fewer problem buildings. However, design professionals keep designing "architecturally dramatic" commercial buildings, which include visually unique features that are prone to water leaks and other problems. Few folks want to design or own a simple rectangular building with ordinary windows, a standard pitched roof, gutters, and eves. What makes the cover of the architectural magazines are the buildings that make you say, "I have never seen that," and ask, "How did they do that?"</p><p>PRESS DEMOCRAT: Please provide some examples of the most common problems found in commercial buildings?</p><p>BERRY: Water leaks are by far the single biggest problem. Nothing comes close. The common source of water leaks is through walls, as opposed to the roof. Penetrations through the walls -- windows, doors, and mechanical system piping -- require detailed work around the opening to ensure that rain or other water traveling down the wall is directed around the penetration. The more penetrations per wall, the more likely a problem may occur. Atypically shaped windows are notorious for leaks. Other problems include subsidence, where the foundation settles and causes the flooring and walls to crack.</p><p>PRESS DEMOCRAT: How should a building owner diagnose a problem?</p><p>BERRY: This is not an easy question to answer. It is like asking when you should become concerned about a medical condition. When should you see a doctor? With a building, the apparent commonsense response is to do the least invasive fix and see if it works. However, if you have a major problem that you try to fix with a minimal repair, you may have made the problem much worse.</p><p>PRESS DEMOCRAT: What is the threshold separating a minimal and a major problem?</p><p>BERRY: It is initially hard to tell the difference between the two. Construction experts tear apart buildings to find the source of a problem. In my experience, many apparently innocuous problems have been the tip of construction defect icebergs. It is tough to say whether a problem is big or small, without having an expert look at the building plans and tearing open the building. Let me put this into perspective. The cost to fix a major problem can be staggering, and could easily exceed the initial cost of construction. My advice is to follow the ounce of prevention is worth a pound of cure analysis. When in doubt, call in the experts.</p><p>PRESS DEMOCRAT: Construction warranties cover what problems and typically are in effect for how long?</p><p>BERRY: Typical warranties cover problems caused by construction errors and last from one to two years from the building's completion. Almost all contractors expect minor errors, and quickly fix them, once the owner calls it to their attention. Although obvious, it is important to understand that the contractor almost always fixes warranty claims without payment from anyone. Given that reality, problems occur when the contractor comes to the site and realizes that the error is major and will be expensive to fix. Even if covered by the warranty, some contractors stop returning calls because they cannot afford to fix the mistake. Some contractors try to fix a major problem with a small fix. If the contractor notifies its insurance company instead of putting a bandage on a major problem, the insurance company will encourage you to get your own experts and resolve the problem.</p><p>PRESS DEMOCRAT: If a building owner decides to file a lawsuit, what are the time limits and major issues set out under California law? After all, buildings do not last forever.</p><p>BERRY: There are two major time limits every owner of a newer commercial building must understand. Any California lawsuit regarding design or construction errors generally must be filed within ten years of the building's substantial completion. That is the outside limit for such claims. However, there is a shorter limit that also applies. You generally must file a lawsuit no more than three or four years after you discover, or should have discovered, the problem. Delay in this situation could make a valid claim worthless.</p><p>PRESS DEMOCRAT: What does it mean for a building owner to reasonably have known there was a problem and when an investigation should be done?</p><p>BERRY: Thousands of pages have been written about whether a person's conduct in a certain situation was "reasonable." The short but largely unhelpful answer is that the statute of limitations clock begins ticking when the building owner discovers both the problem (i.e., leaking) and its cause, or could have discovered them through reasonable diligence. That gets me back to my ounce of prevention/pound of cure analysis. If you do not know if a problem is big or small, it is probably safer to assume it is big, until the experts tell you otherwise. Guessing small, and being wrong, could lead to a statute of limitations problem that might bar a claim.</p><p>PRESS DEMOCRAT: How often are cases mediated?</p><p>BERRY: Almost always. Mediation is basically shuttle diplomacy, where a neutral third party tries to get the disputing parties to settle the case amicably. Most construction defect cases settle through mediation after a lawsuit is filed, which stops the statute of limitations clock from continuing to tick. Like all disputes, the key to settlement is each side understanding the other side's position, and the likely results at a trial. With that knowledge, a mediator can typically prod the parties to a fair resolution. From the building owner's perspective, the important point is to resolve the case for an amount that will enable you to fix the building.</p><p>This interview was conducted via e-mail by Staff Writer Michael Coit, who can be reached at 521-5470 or mike.coit@</p><p>pressdemocrat.com.</p>