Berkeley Balcony Collapse Redux

The California State Contractors License Board announced today that it is moving to suspend or revoke Segue Construction’s contractor’s license in response to the tragic Berkeley balcony collapse in June 2015. The formal Accusation was filed November 29, 2016, and Segue now has 15 days to file a Notice of Defense.

I have handled several lawsuits against Segue and revocation of their license is probably appropriate, but it is a little like closing the barn door after the horse is already out. Segue did work all over Northern California, and lots of other contractors have constructed balconies and other building features just as deficiently, the only difference is that the failure at the building in Berkeley was much more tragic, resulting in the deaths of several college students.

Many multifamily buildings are constructed with balconies, and those usually involve cantilevered joists like those at the Library Gardens apartment project, where this tragedy occurred. Cantilevered joists extend from the inside to the outside of the building, through the building’s exterior envelope, and are notoriously difficult to make waterproof. Water intrusion and the damage it causes are almost always invisible until failure occurs. Many residential buildings include patios or walkways over living space which are also very difficult but very critical to correctly waterproof to prevent deterioration of building components below.

Water intrusion, especially into a wood framed building is insidious as it occurs inside walls and other building features slowly over time, rotting joists, framing, and shear paneling where it can’t be seen. These critical structural components must be inspected, and any damage repaired. In the case of HOAs and other common interest developments, the Board is required to conduct such inspections every three years as part of the reserve study process. 

The good news is that these inspections are relatively inexpensive but they should be conducted by a competent repair contractor, not just by the regular maintenance person. The Board’s property manager or general counsel should be able to refer their Board to several such contractors. These problems remain invisible from the outside indefinitely (unless there is a dramatic failure of building components), but start to show up inside walls and joist bays within the first 5-7 years. If discovered in the first 10 years, the builder can be forced to fund repairs.

Discovering construction defects is never welcome news, but the reality is that the Board has a fiduciary duty to the unit owners to perform repairs, and the most responsible way to fund those repairs is to force the builder to pay.  That is a much better option than spending reserves, or a special assessment.  We regularly help our clients and potential clients arrange for such inspections by reputable, experienced contractors. That is the only way to determine whether a problem exists. If the project is under 10 years old, we then work to secure funding from the builder, rather than reserves, to address the problem.

Chasing the “bad apples” out of the construction business is a step in a positive direction, but Boards and property owners should focus on ensuring that their own buildings don’t have water intrusion problems, and fixing any problems as soon as they are discovered.

Contact me for a copy of the Contractor’s State License Board filing against Segue, or with any other questions or concerns. [email protected]