MOISTURE ROTTING OREGON HOMES:

July 4, 2005

An investigation by The Oregonian revealed that moisture is rotting newer homes and condominiums from Portland to Seattle. The moisture is the result of a combination of new building techniques, trouble-prone materials and bad construction. Homeowners are particularly suffering in the Pacific Northwest due to the heavy year-round rainfall, resulting in a weighty financial toll on homeowners, builders, and insurance companies. Million-dollar condominiums in Portland’s West Hills have been covered with tarps for more than a year while residents settle for $5.5 million in repairs. A Lake Oswego couple sued for $898,000 to fix a leaky roof, walls and windows of their $1.8 million home. Depoe Bay time share owners are demanding $12 million for damages so extensive, the complex needs to be rebuilt, said their lawyer. The Oregonian reported that most homeowners are getting reimbursed for 50 to 70 percent of their repair costs, with the rest coming out of pocket. Builders and engineers are partly blaming construction codes dating back to the 1970s, which where strengthened throughout the 1980s and early 1990s. When the moisture penetrates walls built to current codes, they tend to stay wet, The Oregonian reported. The National Association of Home Builders pointed the finger at money-hungry lawyers for their part in the rising litigation over construction defects. Other housing professionals and builders believe that design, materials and current construction practices contribute to the problem, and some are adopting new preventive techniques. Home building is one of the nation’s biggest industries, generating about 14 percent of the nation’s gross national product, according to the NAHB. Lawsuits against builders are rampant in Oregon, Washington, California, Nevada and Colorado, a trend that has staggered the construction industry while adding thousands of dollars to home prices as insurers increase rates for builder liability policies, or refuse to cover some types of damage. At least five companies have pulled out of the contractor liability business in Oregon, saying defects and big payouts make it too risky. Builders are fighting for laws in Oregon and other states that would restrict the right of homeowners to sue for repairs. In a survey, insurance companies told Oregon regulators that they could pay out more than $125 million for construction defects on liability policies in place during 2001-03 alone. Regulators said the insurers portrayed the figure as a dramatic increase from prior years. The Oregonian confirmed that since 2001, lawsuits and settlements have totaled $70 million for Oregon and southwest Washington state homeowners.

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Insurance Journal West July 4, 2005
July 4, 2005
Insurance Journal West Magazine

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