Dive Brief:
- The top court in Massachusetts has ruled that condominium associations should not have to prove economic loss in cases they bring against contractors for sub-par work.
- The decision by the Supreme Judicial Court involved Ayer properties in Lowell and upheld a claim for $300,000 in compensatory damages.
- Condos, the judges ruled, are not structured in a way that makes sense for the economic-loss rule because it is the individual owners that contract with the developer or builder and pay for construction, but defective work can affect common areas owned by the association.
Dive Insight:
Courts in other states may find the Massachusetts case cited in claims in their jurisdictions in coming years, with lawyers for condo trustees hoping for similar rulings. Insurers have long used the need to show economic loss as a reason to defeat claims by associations. If the ruling's effect results in damage awards to associations, contractors may see higher insurance premiums.