Murtha Means More

Construction Law Group News - January 2013

January 30, 2013

By: Lauren R. MacLellan

Yet Another Reason That Condo Work is Risky for MA Contractors - Wyman v. Ayer Properties LLC

Last month, the Massachusetts Appeals Court further eroded legal protections for contractors seeking to defend themselves against claims by condominium associations and condominium unit owners. Before this decision, contractors and other construction professionals (like architects) often used a legal defense known as the economic loss doctrine as a shield against negligence and strict liability claims by third parties, that is, parties with whom they had no contract. The defense limited the types of claims that could be made against such construction professionals, and limited the money damages that could be sought when such claims were made in court. In some cases third parties could not bring such claims at all; in others, the damages were limited to the cost to repair property damaged by the defective work, as opposed to the cost to repair the defective work itself. For example, if water coming through improperly installed siding damaged a building’s framing, it was often the case that the association could recover only the cost to fix the framing, not the cost to fix the defective siding.

This decision, Wyman v. Ayer Properties, LLC, 83 Mass. App. Ct. 21 (2012), makes it much easier for a condo association, which in the case of new construction typically has no contract with the general contractor, to recover for defective work - and to recover much larger amounts. In addition, the amounts that condo associations can recover are much less predictable, because the general contractor has no opportunity to protect itself with negotiated contract provisions, as it does with developers.

The erosion of the economic loss defense is yet another reason for contractors and other construction professionals to proceed with caution where condominium construction is involved. Although the Massachusetts condo market is currently expanding, construction professionals would be well advised to assess the risks involved before taking such work.

If you have any questions regarding this information or would like to discuss further, feel free to contact any of the attorneys in our Construction Law Group.

For a printable version of this Client Alert, please click on the pdf below.

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