HOA in Sandy sues developer over damage to townhomes due to collapsible soil

Posted at 8:44 PM, May 28, 2015

SANDY, Utah -- A local homeowner's association has filed a lawsuit against Castlewood Builders after accusing them of building more than 70 Sandy townhomes on collapsible soil.

It's a five-year lawsuit that has homeowners dipping into their own pockets and potential buyers staying away.

The homeowner's association is accusing the builders of negligence and breach of contract, among other things. Put simply, they say engineers warned the builders beforehand that certain steps needed to be taken to ensure durability and that the advice was allegedly disregarded.

With just a first glance, one wouldn't suspect the cracks beneath the surface of the townhomes in Sandy.

"There's a page and a half of damage, structural damage that they had never mentioned to me," said Melanie Drake, who is a prospective buyer.

Developers Castlewood-River Oaks LLC completed 74 townhomes in this Sandy subdivision in 2009. In 2010, the homeowner's association filed a lawsuit after finding reoccurring issues with the cement and exterior of several units.

"It was discovered that the place was not built according to the building code and there were some problems with the way the certain components were installed that allowed water to intrude,” said Doug Shumway, the HOA Attorney representing the Gables and Villas at River Oaks. “Some soil compaction problems that's allowing sinking of the concrete, that's allowing cracking.”

But in a statement from the developer's attorney, it states the lawsuit was filed after the 1-year warranty period ended. (Click here for the full statement as a PDF: Statement form Castlewood Development)

However, according to the lawsuit and HOA attorneys, the warranty is void because engineers warned builders before starting the project that the subsurface soils were collapsible. (Click here for the complaint as a PDF: Amended Complaint in Gables and Villas at River Oaks HOA vs. Castlewood)

"This homeowners association knowing it was going to be a problem, they decided that it was in the best interest of the community to bring this lawsuit and try to recover enough money to make the repairs rather than forcing every homeowner to pay out of pocket," Shumway said.

In the meantime, homeowners are dealing with units in need of repair and potential buyers like Melaine Drake are backing out.

Drake said: "How's it going to be resolved? Who is going to pay it if the builder doesn't pay for it? What's going to happen? Is the HOA going to increase? What am I going to pay monthly? It could financially ruin somebody if they get into one of these homes.”

The attorneys have plans to meet next week, and experts will be doing destructive testing--which could bring a resolution.