Home defects may get scrutiny

Homeowners, builders and legislators react to The Oregonian's series, and a task force may be the result

Tuesday, June 21, 2005
The Oregonian
By Jeff Manning

No one had to tell Kathleen Keryan that moisture problems have been eating away at newer homes and condos. Keryan and the 10 other owners of St. Andrews Condominiums in Southwest Portland know firsthand.

Their condos, just 3 years old, need an estimated $1 million in repairs.

"It's more than money," Keryan said. "It's the pain and the anguish and the disappointment you have knowing that something you bought in good faith is defective."

Keryan was one of more than 100 people who contacted The Oregonian after a two-part series ending Monday that said moisture damage threatened homes across the Northwest. A convergence of changing construction practices, suspect building materials and shoddy work is driving the problems, as is the housing boom.

Lawsuits and damages are costing homeowners, insurers and builders hundreds of millions of dollars in Oregon and billions nationwide, The Oregonian found. Developers and builders, who've seen big increases in the liability insurance policies they are required by law to carry, want to limit homeowners' rights to sue for repairs.

The series prompted reaction Monday at the Oregon Construction Contractors Board and the Legislature, where a lobbyist for the Oregon Home Builders Association said the group plans to introduce a bill to investigate what is contributing to the defect claims, including scrutiny of construction practices and quality.

In Salem, Sen. Frank Morse, R-Albany, called for a "comprehensive review" of state building codes. In some cases, building experts told The Oregonian, energy efficiency requirements in the code force builders to make buildings so airtight that they become vulnerable to damage from rot and mold if moisture gets inside a wall.

"I can certainly understand how you can build a building too tight," Morse said. "You do have shoddy construction -- that's not acceptable. You do have materials that fail -- that's not acceptable."

Sen. Ginny Burdick, D-Portland, said one of the main bills sought by Oregon Home Builders appears unlikely to pass. House Bill 3158 would roll back from 10 years to six the period after a home's completion in which a property owner can sue for construction defects. Burdick called the bill "unfair to consumers."

The measure cleared the House in May and is before the Senate Judiciary Committee, which Burdick leads.

At the contractors' board, administrator Craig Smith said his organization will try to learn more about the building failures and review the experiences of British Columbia, which aggressively regulated contractors and bailed out homeowners after a wave of moisture-related condominium failures in the late 1990s.

"That's going to be the mission of this agency for the next year, to find the causes behind the failures," Smith said. "Is it materials? Is it bad construction? Is it bad workers? We don't know."

The contractors' board bills itself as the agency that "protects consumers by regulating construction contracting businesses." But many homeowners have found the agency's process for investigating and resolving disputes to be of little help. For one thing, the board acts only on claims filed within a year of completion.

The Oregonian's investigation found that damage is often hidden inside walls and can take years to become apparent. When it does, costly structural repairs can be required. Even in cases in which homeowners sue and a cash settlement is reached with a builder's insurance company, they can end up paying large sums out of pocket.

The Home Builders Association has argued that much of the problem comes from lawyers who prey on homeowners' fears and exaggerate damage claims.

But Scott Barrie, the association's lobbyist, said Monday that his group will ask for introduction of a bill to create a task force involving the contractors' board, the Oregon Insurance Division and the state Building Codes division to study causes of the problem. The task force also would study how to make sure builders have affordable insurance.

"Our goal is to get at the crux of the problem, be it insurance or changing the way homes are built or changing the way homes are inspected," Barrie said.

Keryan said the St. Andrews homeowners' association has hired a lawyer. She took a dim view of the builders' attempts to pass a law restricting the right to sue.

"If the Legislature goes along with that, it's criminal," she said.