 Hello, and welcome on this rainy Thursday in downtown Honolulu to Kondo Insider, our show is for association owners and board members to talk about association living and provide you a variety of educational topics. I hope you appreciate my extra effort today because I've made sure it rained so we can talk about corrosion, which usually comes from water. So we're going to get into that in a few minutes, but I invited a very good friend of mine and very competent attorney, Ken Kasdan, from Kasdan Lipsmith, here to talk about issues regarding, first of all, let's talk about construction defects. Welcome to the show. Thank you. I appreciate it, Richard. Construction defects are a very interesting area of law and it's all, as you said, new to rain. And construction defect is where you find yourself in a situation where you've bought a new house or a new building and there are problems with it. So when people say this is wrong, that's a construction defect and it's a whole area of law and it's filled with, populated with lawyers and with experts and people. At the end of the day, it's filled with people that try to fix the houses. Well, I have a good friend of mine who's a roofer and he has a motto, it's no rain, no leak. That's true. That's true. Probably true, I guess. But tell us a little bit about your firm, first of all. I mean, are you a Hawaii firm? Do you have business in Hawaii? Yes, we are a Hawaii firm. We've been practicing law here for eight years and I've been admitted to the bar for three here but that's 43 years of doing this. So we have a law firm here. We have an office here on Bishop Street with a full legal staff and I'm also affiliated with a law firm that has offices in California, Arizona and New Mexico. So we do a lot of work throughout the Western United States and I've done construction defect work in probably 50 states in different aspects. Yeah, but that being specific so we don't make anybody who-who with us, tell us kind of a couple of cases here in Hawaii that you've handled to kind of what the issues were. Well, interestingly, I'm not going to be able to tell you a single name because every case except for two of them that have confidentiality clauses because the people don't want the word out about, gee, the builder had a problem. I've done a case over at the airport, very interesting case and I'm working on another one there, it's about an aircraft hangar and you would think that's a pretty simple building to build because it's just got this big shell and lo and behold, slab is supposed to be a certain thickness and it's not. And I don't know how anyone could justify that because you're putting million-dollar airplanes, 25 million-dollar airplanes on it and some of the framing wasn't done right. The welds were spot welded as opposed to welded throughout, totally inadequate. I did a case about wells and case there. I've done a series of class actions mostly at Eva Beach and a class action through all the islands concerning inadequate foundations and hurricane straps. There are a whole lot of different types of cases here on the islands. What do you see from the association side? The most prevalent type of case you see with associations. Well, as you mentioned, with associations the most prevalent are roof leaks and then do the rains, it's window leaks and then it's problems with the foundation. So it's from the very top to the very bottom and sometimes problems in the middle with plumbing. We have that in high-rises, we have that in mid-rises and we have it in single-family homes. Well, you would think that, you know, general contractors are licensed and I'm sure some of the firms you're litigating against are large successful firms in Hawaii. How does this happen? How do these problems happen? Well, how do problems happen is some of the very biggest firms, and I don't want to indict anybody in particular in Hawaii, maybe build a thousand homes. I don't think they own a shovel. The people who are working in these big corporations are corporate executives and they're really not out there with the hammer and swinging the hammer. Perhaps they have a superintendent out in the job site, but he's oftentimes in the trail of keeping the job moving. So there are a lot of subcontractors, a lot of sub-trades, so they have to have a reliance on those people. And oftentimes they don't do their job right and sometimes they just actually don't know what they're doing. And there are design problems in the plans. Working on a case now where there's a lot of design problems. So the contractor builds it and lo and behold, it's not built right. So what do you, I think you said, let's repeat, the most prevalent claims you see with regard to Hawaii. And that would be three issues, roof leaks, window leaks, and foundation corrosion. And how about plumbing? How does that fit into it? So it would probably come up as a number four, it's not always a problem. It high-rises and mid-rises, we have most of the plumbing problems. However, if houses are built with pecs, we have problems throughout. And we can talk about pecs later if you want. Yeah, I think we're going to talk about that after the break coming up. So I know a little bit about this, but share with us when there is a problem where the board of directors assumes or anticipates there's a problem, suspects there's a problem, maybe it's the right answer. What are the steps that normally are taken to start to address that issue? Well, the first thing they need to do is, of course, hire a lawyer. And then the lawyer should turn around and the lawyer should hire a forensic expert, not just anybody, but a person who really is experienced in both the field, which would be construction. That would be either an architect or a contractor. And they should have a team of real experts behind them to get out and look at it. The first thing you do is you just ask questions. What are you concerned about? I mean, listen. The only thing people don't do is I always listen. What are you concerned about? What do you believe is there? And then we go through the building. And oftentimes I will go through with them because I've seen this before. And we look at certain issues. Are there stains at the window corners? We see water dripping in at the roof line. Is there evidence there might have been water leaks because things are bubbling up? Looking at the foundation, there's a corrosion evident right along the foundation of the building. Some things I look for that people don't, you really can't see, which would be the yellow brass corrosion inside fittings. We kind of walk through and look at it. And the key is if the lawyer is brought on first and all the work done by the expert is an attorney work product and it's protected. If the board gets that report and goes straight to them and then a month later brings in a lawyer, that report is discoverable in a lawsuit. And you want to be able to keep some privileges. So the first thing is to do an investigation and then to make a determination of what your rights are. And what we do is we give builders a notice to say there's a problem here and there's a statute in Hawaii now and that gives the builders a notice period where they have the opportunity to inspect and an opportunity to make an offer of repair. And if they would belly up to the bar and respond with an offer to repair, a meaningful repair, there's no case. Association gets its claim taken care of. There's no issue and there's oftentimes no expense. Do you see that happen? I have seen it happen once in 43 years. I've seen a couple of times builders have come in to make an offer to repair and they've done a repair. And lo and behold, we have to sue them over the repair because the repair has now made it worse. Very rare that they'll actually go the full nine yards to actually do the repair and do it right. I'd love it if they did it right. I'd retire, but it's not going to happen. So when you look at associations in particular, I think one of the common myths I hear on the marketplace is whenever they hear construction defect, they only think of new construction like a new developer project and they're suing the developer. Isn't this applicable to, I'm going to call it remodeling or repairs on major like a whole window job? Absolutely it is. It's 10 years is the basic statute of limitations and statute of repose that you have to file a suit within. But anytime somebody comes in and takes a repair, does any work of improvement, yes that is also has to be up to the very same standards, but you can't blame them for the previous problem just for what it is that they did. And even in older buildings, let's say I live in a 60-year-old condo here. If it has construction defects, it even has a problem. It has a construction defect and it still has to be fixed. And there, so associations have to look at that and they can't just look aside because someone's going to pay for it. And if you fix it earlier, you get it remedied and you can't just say, well, I can't sue anybody over it. So the construction defect is not just an illegal claim. It's just the condition of the building and then it's a question of what the remedy is. And if the board acts within this statute period, they exercise their fiduciary duty. The worst thing is to just say, oh, I don't care about it or it's going to affect the sales in the building, we're not going to do anything. That's not the board's job because as you know, when that board works into the meeting room, they no longer just homeowners and now board members and they owe this duty to the association that everybody elected them for. So does the 10 years run from the time the construction contract is completed or the time the problems discovered? Oh, it's 10 years from when there was substantial completion of the building. You have to be really careful about that. We have a case where somebody bought a house in a large tract and he thought he had 10 years because it was within 10 years from when he closed escrow. That house sat there for two years before it was sold. So the house was actually 12 years old when we are called in. So it was past this time period. And when you define substantial completion, well, it's kind of an ambiguity. Substantial completion, substantial completion, what is it, there's lots of different ways to mark that. And so the board needs to really get into it and just say, well, it's 10 years from when this notice of completion was done, that's it. You have to be a little more careful than that. What I hear you saying is we use the word construction defect. There may be construction defects that exist, that you don't have a legal claim because the statute of imitation has expired, but you still have to fix the construction defect. Absolutely. Otherwise the building could fall down. It will fall down or leak or get mold or deteriorate or the plumbing could explode. The worst thing is you get a construction defect and a 15 year old high rise. We have a lot of those here. And you've got to take care of it. If there's a problem with the sprinklers, they've got to be done. If there's problems with the plumbing, it has to be taken care of. And that's why associations have reserves and they're supposed to be structured. Hawaii only recently brought in the concept of reserves. Co-ops here still don't have reserves. There's a lot of mid-rise, high-rise co-ops. No reserves, past the statute. What do you do? So the earlier you look at it and the more carefully you'll look at it, oftentimes it's the better. So we started with the process of began with hiring a lawyer, then a forensic analysis of the condition or the problem. What are the next steps? Well, then we do this notice of claim I mentioned. There's a specific statute here in Hawaii. It generally runs about a 90-day period. Sometimes it can be extended. Sometimes as a developer says, go pound sand. Here in Hawaii, we have a lot of that. And what happens is it gets up going quicker. Then oftentimes the CCNR, the declarations require that there be a mediation. So oftentimes there's a mediation. Then there's either a trial or an arbitration. And then there's get the money and fix it. And sometimes it settles at the mediation. Sometimes not. If you get an arbitration or a trial, it starts to get rolling and people discover it. And then you can have a mediation in that. Mediation is a formally structured settlement process where a neutral third party comes in and tries to go between the sides to take care of these disputes. It's a fairly recent concept and it's nationwide now. So we talked about the 10-year statute of limitations. So let's just say an association discovers a problem. Does the notice comply with the 10 years or you have to complete the whole mediation with the 10 years? No, it's the notice stops the statute and complies with the 10 years. But to be extra careful of what I do is I file that notice and I file a lawsuit and then I just stay the lawsuit to make sure I've got a claim within that 10-year period. Because it's not just filing the lawsuit. You have to file a lawsuit in a court of competent jurisdiction. So you have to file it in the right place. And for those who, our audience, don't understand what stay means. It means we're gonna just sit on it. We're gonna just sit down. We're gonna not do any work. We're not gonna spend any money. We're not gonna get everybody excited. We're gonna try to resolve the process through this initial claim period before everybody starts hiring more experts than they need. And so these claims by the association are what I'm gonna call affirmative claim whether the plaintiff going against someone else. That's not paid by their insurance company. By the association's insurance company? Yes. Generally not. Because the insurance policy covers damage that was caused by an accident or an incident. And this is caused by the defect and construction by someone else. Sometimes if there's a construction defect and it causes damage, the insurance will cover the damage that it caused, for instance, the flooding. But it won't fix the defect. And oftentimes in my suits, we're not yet at the point where it's caused massive damage. So it's usually the developers insurance that pays. Okay, well, what we're gonna do right now is we're gonna take a short break. And because I took all this extra effort to make sure we had rain, so we could talk about corrosion, we're gonna come back in one minute and talk about some more specific examples of corrosion and piping and things along that line. So we'll be right back in one minute. Aloha. This is Think Tech Hawaii, raising public awareness. I'm getting older. Do I need to worry about falling? Yes, you do. Each year, one in four people, 65 and older, will experience a fall, and many will be serious. The majority of falls happen at home, so remove things that could make you trip and install handrails to keep you steady. To learn more about the steps you can take to help prevent a fall, please talk to your doctor. You can also visit aarpfoundation.org or Medicaremadeclear.com slash falls. This message was brought to you by UnitedHealthcare and AARP Foundation. Aloha. I'm Tim Apachella. I'm here with... Cynthia Sinclair. And this is Trump week. It's gonna appear every Friday at 11 a.m. between Jay Fidel, Cynthia and myself. We talked about Trump, the activities and the news stories for that week as it pertains to the Trump administration. We hope you tune in and watch the fun. Aloha. See you then. They smile. Welcome back to Condo Insider. We're sitting here with my buddy, Ken Kasdan, talking about construction defects. But I started the show by talking about what I consider one of the major issues in Hawaii and that's corrosion. So what's that all about? Well, corrosion is simply a process that occurs with metals. Corrosion is actually a natural process because when you have a metal that's combined with other items, it wants to restore itself back to its natural elements. So corrosion is a deterioration of metals, oftentimes iron. And it's a process where once it starts, it doesn't stop. So you have to deal with it. You have to address it. So and here in a tropical climate, this is the place with warmth, with humidity, with surrounded by 2,500 miles of water, as we know all around us, full of chlorides that accelerate corrosion. It's a problem here and it has to be addressed. Well, the one thing I've heard a lot about, you know, when I hear the word corrosion, particularly with high-rises is spalling. You know, with the rebar, which is the support mechanism for the concrete above-grade slab. It gets water into it and it rusts and expands. And you see that as a problem nationwide. It's a problem nationwide and it's a problem in climates where we have a lot of water, where we have the rain, groundwater, chlorides. And it's a problem in some areas more than others. It's a problem also where people don't really understand it well enough. And once the rebar and the rebar are supposed to be protected by the concrete forever based upon the pH of the concrete, but if you put the rebar in the wrong place, it's going to corrode. You look at all the benches in the parks and you see all these strips. That's the rebar corroding. Go to my office building. I didn't build it. The benches are corroded. Because the rebar is corroded. Because nobody thought these slats have steel in it, what's going to protect them? It's a problem throughout. And the only purpose of the rebar is to give the concrete strength to hold up the building. So I guess we need it. Yes, remember, and I'm going to give you a number, which probably is because of my old age, is probably not very accurate. But I remember we were talking about rebar within concrete slabs. And I believe one of my experts once said that the densest concrete is measured by like 253 angstroms, which is 1.53 thousandths of an inch. And water will still get into the concrete and get to the rebar and cause it to rust. So you still have to put a waterproofing or some kind of protection. My numbers may be wrong, but I think the message is, even the densest of concrete is susceptible to corrosion. Even the densest, but the contractors can measure it by the water to cement ratio. Concrete's not that hard. Four components. Go buy a cake mix. It's the cement, the grape powder, aggregate, the large rock, sand, or some other fine aggregate, and water. You've got to do it in the right water. You certainly have to have the right ratio between these. And we oftentimes find that the concrete used is inadequate. If you use a concrete with a relatively low water to cement ratio, it's almost completely impervious. And you will keep that rebar intact for 100 years. But if you use other stuff, it isn't. And some of the concrete I see, you can't call it concrete. You have to call it junkrete, because it's just got so much water in. It's juiced up. It's easy and quick to lay down. It levels itself. You don't have to work on it. It comes out of the chute. Level, and it's really nice, and it looks great. And it transmits the moisture. That's why the floors are popping up at some houses. It's not just the rebar. You see those white stains throughout. That's the efflorescence caused by that moisture coming through. But to me, one of the other risks is hurricane straps. I do want to mention to you that I saw this history channel show the other day and talked about the Great Wall of China, but the grout they used in the Great Wall of China was sticky rice. I thought that was interesting that they did all these tests on sticky rice. But under the right circumstances, I guess sticky rice is better than grout. But moving on to hurricane clips, tell us about the hurricane clip issue. Well, it's directly related to the concrete that we talked about. Hurricane clips are basically, and essentially, what hauls this house down to the foundation. And they're made for hurricanes, which we have here on the islands. So a hurricane strip clip is a product that is now no longer used here, because the manufacturer finally put a notice on its website, warning, don't use this in Hawaii. Be careful. So this is a hurricane strap. This is what it looks like as it goes up another three or four feet when it goes up into the foundation. These pieces are the hurricane straps that have come out of houses here on the islands. Is this going to hold up a house? We could sit here, make a real mess out of your table, and keep breaking it up. This used to be this. It's turned into this. How did that happen? They make a stainless steel hurricane strap. But that costs more money. They make a heavy galvanized strap. But that costs more money. They make a pretty cheap, thinly galvanized strap. And that's pretty reasonable. And it goes in the concrete. And we talked about corrosion of the rebar. You have to have at least 2 and 1 half inches of cover concrete. You have that rebar in the middle. So you protect it. The hurricane strap by design starts right where it belongs. And then it ends up having two inches, inch and a half, inch, half an inch, quarter of it. No cover at all. And it comes up. And you see this all of a sudden. You get all this damage. Because they didn't provide these poor quality concrete. And what they did was they didn't provide it with enough cover or protection. So you have two formulas. What else do we need? Water. We've got water, chlorides. We've got it in the ocean air. And so this hurricane strap that used to give it a lot of strength has turned into pieces of these shards. And that's what it's turned into. And so the developers say this is one of the components. But there's more. They used to use anchor bolts. Good traditional method of keeping the house down. But that took one extra day, according to their data, to build these houses. So this manufacturer came up with another great product. This is called an MAS. So instead of an anchor bolt, they use these little straps. And they put it up. And look how easy it is. You just bend this over. And you just nail it to the framing. And off you go. You stick it in the concrete when it's moist. Again, it's going in by design where it's got good cover. And it comes out. And there's hardly any. So before and after. This is a hurricane strap. Came out of houses. Every sample you see here came out of houses here on the islands. This is what it looks like now. But this is not going to hold the house together. Most of them, when we look at them in such advanced stages, they just literally are just falling apart in your hand. These are hurricane straps. We do repair work. When we are finished, put a big bolt in the house. Goes down even further. This is just one, just so I could bring it. What's going to give you better strength? And it's because of corrosion. Because of the poor workmanship. So what sort of associations, older associations, do that have hurricane clips? Would today hire a forensic person to take a look at them? Well, you start with what we chatted initially. You either start with a lawyer, or you start with a forensic person. If you start with a lawyer, after you see that you've got a problem, and someone who knows this field, you do the analysis. You look at how it was built. I can tell you, by looking at a house, if it's got hurricane straps, if it's got clips, and if it's corroding, because you can oftentimes see, you look up on the side of your foundation, you see these spalls, where you see these rust marks. What caused that? Something caused it, and that's the metal inside. So then you look at it, you get someone knows what they're doing, and then we go out, and we actually chip it. Excavated a bit to take a look to see what it is. We sometimes remove a course or two of the siding. And when you look at what the condition is, and if the condition is this, something used to be done, and a repair. You know now, if you had a contractor developing a new property, would they be still using this type of hurricane clip? Are they going for the galvanized or stainless? They're not using this in Hawaii. They're now finally not using this hurricane strip. Hawaii, they're finally not using this clip, because they know that it's going to turn out to be this bad. So in Hawaii, they've gone back to the good old standard anchor bolt. And that anchor bolt's going to stay there, and it's going to take an extra day to build the house. It's going to be in the middle of the concrete. So if it's in the middle, it's going to be protected. And off we go. And they'll have other types of hardware, but also never stuff that comes out of the side like that. So the other thing we talked about earlier in the show, and I've heard a lot of cases on this matter, and I don't know how to call it except for the PECS lawsuit, which is probably unfair to PECS because there's other products beside PECS that has plumbing issues. Tell us a little bit about the plumbing problem that we hear a lot about. There's a lot of problems with the plumbing. PECS is a type of plastic pipe, and it gets connected. Of course, I happen to have it here. There's nothing wrong generally with the PECS with the plastic pipe. You don't have to use torches. You don't have to solder it. It's quicker to put in. You can get around bends to a limited extent. So the plastic pipe comes up, but you can't attach plastic pipe to metal fittings in the house. So you have to have transitions and connectors. So they have these connectors, and they made it out of the wrong kind of material. It's made out of something called yellow brass. Yellow brass has been known since about 1860 to have a history of corroding. In 1906, they pretty much stopped using it. So this is a fitting. The PECS is the tube that goes over it. Here's our PECS. It fits over it, and it's fine. But when this thing corrodes, it starts to leak and come out. If you look inside this piece, you'll actually see that there's corrosion material right inside. Now, is that all the corrosion material that came out, and oftentimes there's some lead in it? No. This is all that's remaining on it. The rest of it went in the stream of water. Now, where did that water go? Some of it, we're filtering by drinking it, and that's just not right. So here's the yellow brass connector. Before, when it went in, nice looking good. And then it's in service. If it's yellow brass, it's bad. You can buy something called red brass. It's more money, and it will last forever. And they also make some transitions now out of plastic. Look at the occlusion in this. We sometimes get cold out, because I don't have any water. I don't have any water pressure. And I just ask, is the house PECS, or if it is. We have it in single-family homes. We have it in mid-rise high-rises, and we have it in mid-rise high-rise, single-family homes, commercial. A lot of commercials go into copper, straight copper. Copper used to be the standard of care. We're coming back to it now. PECS is all right, as long as you use the right connectors. No. Obviously, the yellow brass is the wrong connector, and the red brass is the right connector. You see that the industry realizes that now, and are now more commonly using red brass, or that the cheap's still the way to go, and people try to skimp on it. If you walk into some of these home improvement stores, you say, I need a new PECS connector. Very often, they're going to have cheap yellow brass coming out of China. But the manufacturers of all the primary systems now will not use the yellow brass. They got it. They finally figured it out, among other reasons, because it has lead in it. It doesn't meet the lead criteria. So now they're using red brass. It's the standard. It's good. It's going to last. I took testimony back in the East Coast once in one of these companies. I said, how could you have done this? Don't you understand? The person that specified the yellow brass never had a formal education in metallurgy, or even in the construction trades. She was specifying in gymnasium and things like that. So how did you do this? And the answer was, well, you don't understand. We're a plastic pipe company. But we don't know about the metal. And they should have known about it. Now they're making red brass, and it's better. But they didn't think it all the way through. We have all kinds of connectors and valves and fittings in the house. And they're yellow brass, and they're corroded. Well, because we're at the end of our show, tell us, kind of like your summary of your recommendation to associations that suspect they have defect problems, what they should do. An association should hire a lawyer and ask the lawyers, do we have claims? Are we within the statute? And then say, let's get a forensic expert. They should have experts walk through the building. Tell them what you think is wrong and then the experts should go through, because they know what to look for if they're forensic experts. And let them go through, and they'll give an impartial evaluation. These are people who are not going to be fixing the house. So they have no stake in whether or not there are defects or not, and then get their opinion, and then they can get analyzed by the board. And it's a condition survey. We do it all the time. My firm does it for, even for no charge for association, so they at least know what it is. And just, what do I have in my building and what do I need to do? That's the first step. Well, let me thank you for being here today. I have a hundred more questions, but we're unfortunately out of time. I learned a lot, which I didn't know about the, particularly the hurricane clips and the history of this. I want to thank you for being here. I'd like to say to our viewing audience, we're on every Thursday live from three to 3.30 on association issues. As you said last week, we're right in the middle of the legislature. All sorts of interesting, maybe crazy things are happening. So we'll see you all next week, Thursday at three o'clock. Aloha.