Construction defects in common-interest communities — condominiums, townhome developments, and planned unit developments — present a distinct set of challenges. When a defect affects shared structures like roofs, foundations, parking garages, exterior walls, or drainage systems, individual homeowners typically lack the authority to pursue claims on their own. Instead, the homeowners association often bears the responsibility and the legal standing to act on behalf of the community. In Nebraska, the process of bringing an HOA construction defect claim involves unique legal, procedural, and practical considerations that every board member should understand.
Standing: Who Can Sue
Under the Nebraska Condominium Act (Neb. Rev. Stat. Sections 76-825 through 76-894) and the governing documents of most common-interest communities, the HOA has the authority to pursue claims related to defects in common elements. Common elements typically include the building envelope (roofs, exterior walls, windows), structural components (foundations, load-bearing walls, framing), site work (grading, drainage, parking areas, sidewalks), and shared mechanical systems (central HVAC, plumbing mains, electrical panels).
The association acts in a representative capacity — it pursues the claim for the benefit of all unit owners. Individual owners generally retain the right to pursue claims related to defects within their own units, but defects in common elements are the association's responsibility.
Common Defects in Multi-Unit Construction
Multi-unit residential construction is particularly susceptible to certain categories of defects. The repetitive nature of the construction — the same subcontractors performing the same work across dozens or hundreds of units — means that a single installation error is often replicated throughout the project.
Frequently encountered defects in Nebraska HOA claims include water intrusion through exterior wall systems, window installations, and roofing, post-tensioned concrete slab cracking and tendon failures in parking structures, inadequate waterproofing of below-grade elements, fire separation deficiencies between units, and site drainage problems that direct water toward rather than away from structures.
The Investigation Phase
Before an HOA can pursue a construction defect claim, it must understand the scope and nature of the defects. This requires a comprehensive investigation conducted by qualified independent experts — typically including a building envelope consultant, structural engineer, and other specialists as warranted by the conditions observed.
The investigation typically begins with a review of the original construction documents, including architectural plans, structural drawings, specifications, and building permits. The experts then conduct non-destructive and, where necessary, invasive testing of the building components. Invasive testing involves opening walls, roofs, or other assemblies at representative locations to examine concealed conditions.
The resulting report quantifies the defects, identifies their causes, and estimates the cost of repair. For large developments, repair costs can reach into the millions of dollars, making the investigation a critical investment.
The Decision to Pursue a Claim
The HOA board's decision to pursue a construction defect claim carries significant implications for the community. Board members owe fiduciary duties to the association and its members. Failing to investigate and pursue known defects — particularly those affecting the structural integrity or weather-resistance of the buildings — can expose board members to claims of breach of fiduciary duty.
At the same time, litigation is expensive, disruptive, and uncertain. The board must weigh the strength of the evidence, the estimated cost of repair, the likely cost of litigation, the builder's financial capacity to pay a judgment, and the impact on unit values and community relations.
Most associations retain legal counsel experienced in construction defect litigation to advise on these decisions. The attorney can also evaluate whether the association's governing documents contain arbitration clauses or other provisions that affect how the dispute must be resolved. For more, see Nebraska Contractor Dispute Resolution.
Funding the Claim
Construction defect litigation is expensive. Engineering investigations, expert witnesses, legal fees, and costs can run to hundreds of thousands of dollars before trial. Many HOAs fund these claims through special assessments, reserve funds, or contingency-fee arrangements with their attorneys.
Some associations carry insurance policies that cover the cost of pursuing construction defect claims, though this is not common. More frequently, the association's own property insurance may have paid for some of the damage caused by defects — in which case the insurance carrier may have subrogation rights and an interest in participating in the claim.
Statute of Limitations Concerns
Nebraska's four-year statute of limitations and ten-year statute of repose under Neb. Rev. Stat. Section 25-223 apply to HOA construction defect claims just as they do to individual homeowner claims. However, the discovery date — when the association knew or should have known about the defect — can be complicated.
A board that receives complaints about water intrusion from multiple unit owners but fails to investigate may be found to have constructive knowledge of the defect from the date the complaints were received. Conversely, latent defects concealed within the building envelope may not trigger the limitations period until they are actually discovered through inspection.
The transition period — when the developer still controls the HOA board — creates additional complications. Defects that arise during developer control may not be pursued until the homeowners take over the board, by which time significant time may have elapsed.
Resolution and Repair
The majority of HOA construction defect claims in Nebraska settle before trial. Settlements may involve monetary payments, builder-performed repairs, or a combination. The association should ensure that any settlement provides sufficient funds to complete all necessary repairs and includes appropriate oversight mechanisms if the builder is performing the work.
HOA construction defect claims are among the most complex matters in construction litigation, but they are also among the most consequential. The defects at stake affect every owner in the community, and the association's response — or failure to respond — shapes the long-term value and livability of the property.