Answers to Construction Defect Questions

Several residents asked questions related to the Construction Defects litigation meeting this evening. The Board of Directors, in consultation with out attorneys, have answered these questions below. We look forward to seeing all those who can attend the meeting tonight.

Questions and Answers:

How does this litigation impact the Toll transition claim that the Board has been negotiating over the past 3 years?  Does this litigation replace that effort, supplement it or get implemented separately?

The issues identified in the transition claim will be rolled into this lawsuit. The Board has been working to get Toll to settle some of the more straightforward issues from the transition claim (e.g. the under-funding of reserves and operating fund while they were in control); however, they were only willing to settle any part if we would sign a broad release of liability for any other issues (which would have included any claim related to the townhome and clubhouse construction). Thus, litigation is the only way to settle the transition issues at this point.

If we are successful in getting the appropriate amount of votes to proceed AND over time we actually win the lawsuit the fees collected will be 38%.  The leftover will be presented to the HOA.  Can there be something in your agreement with the HOA that these funds received by the HOA will be used to fix these issues presented in the Claim?  I am worried that the funds received maybe allocated for other initiatives in the community.

The current Board can pass a resolution to that effect; however, unfortunately such a resolution would not be binding on a future Board. Boards are bound by their fiduciary responsibility to the community, so clearly funds recovered via this suit are intended to be used to correct the construction defects identified and/or fund the reserves to be used for future repairs and replacements.

Can we obtain details of the litigation?  Litigation amount, fees, etc.  also, is this a blanket statement on all Townhomes or specific Townhomes that have experienced issues? 

AND

Which buildings / units are involved? Which buildings / units are not involved? Which ever is easier to answer.

The agreement with Becker and Poliakoff is available in the homeowners documents section of the lakeshore-preserve.com website (in the Contracts > Legal Contracts subfolder). Once filed, the Notice of Claim can also be provided to homeowners. Note that the exact amount of damages requested will not be determined until additional testing is conducted by the forensic engineers. (At this point they have determined that there is sufficient evidence to move forward with the suit). All of the townhome buildings are included in the claim; the level of observed issues has varied from building to building and unit to unit. (again further investigation will be done as part of the discovery). The Board will receive reports from the engineers and will share those as possible (however, as this information is part of the active litigation, not all information may be able to be shared).

How will the funds be allocated if successful?  Will the funds be part of reserves and what is the impact to future HOA dues?

The intent would be for the funds to be allocated to townhome repairs and clubhouse/common area repairs on a percentage basis. So, let's say that the forensic engineers determine that the townhome repairs will cost $1 million and the common area repairs will cost $500,000, then 2/3 of whatever the Association receives in a settlement would be allocated to townhome repairs and 1/3 to common area repairs. Ultimately the Board will make decisions about such funds would be spent, with appropriate input from our attorneys, the engineers, and the community. The impact on future HOA assessments will depend on the amount recovered in the lawsuit. Ultimately we, as an association, are responsible for the repairs and maintenance of the clubhouse and common areas, and the townhome owners are responsible for roofs and common elements of the townhome buildings. Without this lawsuit, homeowners would be responsible for the full amount of these repairs.

What happens when board member Nick moves out of the community? Is there a special election or what is process to replace him?

The Association’s governing documents (and the Florida HOA statutes) indicate that the Board of Directors can appoint a replacement to complete the term of any Director who resigns. The Board has been considering potential candidates.

Perhaps when the meeting on June 11 is broadcast questions from the room can be repeated for those virtually calling in to hear. Its very hard to hear with Paul making light of everything said and laughing through the entire meeting.

Since this is a Special Membership Meeting, not a Board of Directors meeting, remember that only those present will be able to participate in the meeting, and only in-person and official proxies count for quorum and participation in the meeting. We did utilize a different microphone and camera at the last BoD meeting/Town Hall, which most people indicated worked better than our other microphone.

Which buildings / units are involved?

To varying extent, all of the townhome buildings, as well as the clubhouse and other common areas (e.g. paver sidewalk in Sunset Park) are involved.

The Townhomes are a fee simple, not condominium, form of home ownership.  As such, why is the HoA contemplating litigation on behalf of this class of homeowners?   The HoA represents our common areas and it makes sense that our HoA legal resources to secure a settlement for transition reserves underfunding by the developer and for remediation of building defects on / in common areas.  But it seems the Townhome owners should be a separate legal class with a seperate council and process, starting with the Toll Brothers warranty arbitration process. A similar situation in Pennsylvania with faulting building envelope construction required fee simple homeowners to proceed with their own legal action, apart from the HoA. Why is the Board advocating the combination of these two seperate legal classes?  What risks does that strategy entail for Lakeshore overall?

The CCRs indicate that the Association is responsible for the repair, maintenance and replacement of the townhome roofs (as well as maintenance and painting of townhome stucco). The townhomes in Lakeshore are part of the same HOA as the single-family homes in the community. The issues cannot be litigated separately as Toll has insisted on a full release of all liabilities in order to settle any part of our transition claims.

Is July 1 a deadline of sorts.  and if so, please articulate what changes will affect our position. Thank you.

July 1 results in a change to the statute of limitations which would mean that not all of the townhome buildings would still be able to be a part of a construction defects lawsuit against Toll Brothers.

What about issues concerning the Estate or Executive homes?

The Association can only bring legal action against Toll Brothers related to things that the Association is responsible for maintaining and replacing. Since the Association has no responsibility to repair, say, the roof on a single-family home, we cannot bring a lawsuit related to such a claim.

Can a copy of the engagement letter be posted on this site or e-mailed to homeowners?  I believe I would like to vote in favor of the action, but I can't vote without seeing what we are voting for.  The engagement letter should be prepared by the attorney addressing issues such as payment terms, expectations, and conflicts of interest.

The agreement with Becker and Poliakoff is available in the homeowners documents section of the lakeshore-preserve.com website (in the Contracts > Legal Contracts subfolder).

Since the Lakeshore Preserve Declaration of Covenants in Article XX Section 3 indicates that the HOA is responsible for performing necessary maintenance such as pressure cleaning and painting of building exteriors including doors, shutters, garages etc., as a result of "Ordinary Wear and Tear" along with maintenance/repair of sidewalks, driveways and irrigation, why is the HOA getting involved in a dispute between TH fee simple property owners and the Declarant regarding construction defects? Shouldn't that be any issue between the Declarant and each TH owner. The HOA is not responsible for ensuring Declarant defects are corrected outside of defects related to common areas such as the Clubhouse. I am concerned adding this TH defect claim could adversely affect the outcome of the dispute with the Declarant regarding the common area defect claim and the Developer Close out claim.

The HOA obligation for roof replacements is clearly outlined under the Townhome Section in 3(a)(c) of the CCRs. The construction defects are causing premature roof failures. The point of the lawsuit is to hold Toll Brothers responsible for these replacements or repairs rather than the Association/homeowners.

There is visible water damage and an opening under the walkway of the exterior balcony. Did the attorney's representative view and record the damage under the balcony of my townhome when surveying the property in May? Will the damage to the exterior upper balcony be covered by this lawsuit? There is also a crack under the lower bathroom window, but that is only visible from the patio. Did the attorney's representative also look at patios or will they need to come back?

The attorney’s presentation at the Town Hall meeting in May included photos of balcony damage like you describe. These defects are part of the damage claims being presented (and will be explored further by the engineers as we move forward).