Turnover Traps for Community Associations: Investigate First, Release Claims Later
April 14, 2026 —
Nicholas B. Vargo - Ball Janik LLPTurnover of a community association from developer control to owner control is a uniquely vulnerable moment. Developers are increasingly presenting Florida condominium and homeowners’ associations with “standard” settlement or release agreements at turnover, often being framed as routine steps to finalize the transition of control. In reality, these agreements can have sweeping consequences, including the release of construction-defect claims before the association has conducted any meaningful independent evaluation.
The developer has years of project knowledge and access to plans, subcontractors, and internal records. The newly elected board is just beginning to organize, obtain documents, and understand the property’s condition. Many defects, especially those involving roofing, waterproofing, windows, or structural components, are latent and not yet visible. Signing a release at this stage means the association is making a binding decision under conditions of uncertainty, without full information, to release all future potential claims.
Over the last few years, there has been a rise in reports of developers offering a packaged deal: they agree to complete certain repairs, often minor punch-list or cosmetic items, and to “forgive” an alleged financial deficit (often around $50,000) supposedly owed by the association from the developer-control period. In exchange, the association is asked to sign a broad release covering all claims, including known and unknown construction defects. To a new HOA board that received their community with limited operating and reserve funds, they are left with a difficult decision to either accept the developer’s offer or assess their owners to pay this alleged debt.
These agreements are occasionally presented through community management companies, which may describe them as “standard” or "routine.” Whether due to misunderstanding or influence from the developer, management companies can unintentionally reinforce the idea that signing is expected. Any recommendation provided to HOAs about whether to sign these releases could open community management to liability down the road. The best practice for both associations and community managers is to refer any agreements to be reviewed by general counsel for the association.
The following two case studies illustrate the real-world consequences:
Case Study One: A newly transitioned board relies on its management company to negotiate with the developer-builder to resolve irrigation issues, pond concerns, and signage deficiencies, along with forgiving an asserted financial shortfall. In exchange, the board signs a broad release covering all claims, including latent defects.
Within a year, several punch-list items remain incomplete, and more serious issues arise. When the association demands completion, the developer delays, prompting the association to seek advice on how to enforce the settlement agreement. The association hires counsel to hold the developer responsible for both the previously agreed-upon items and newly identified construction defects. However, when the association brings claims against the developer, the developer points to the release of all potential construction defects in the community. Thus, the only remaining remedy is limited to enforcement of the specific punch-list terms. The community, still relatively new, has no viable claims against the developer-builder for the construction defects. With warranties expired and the release, the association must fund repairs through special assessments, despite defects that would otherwise have been actionable.
Case Study Two: A community is presented with a similar agreement as above. The management company encourages execution, suggesting it is standard and even telling the board to “name your price.” The developer also pressures the newly elected board to sign.
Instead of signing, the board consults with their attorney. Counsel advises the board not to sign the release and recommends further investigation. Engineers are retained and identify early indicators of broader issues, including stucco cracking, water intrusion, and irrigation deficiencies. Based on this information, the association declines to sign the release. Subsequent evaluation reveals potentially significant construction-defect claims, allowing the community to pursue recovery that would have been lost under the proposed agreement.
These scenarios underscore a fundamental point: signing a release at turnover is not an administrative formality—it is a major legal decision. Board members act in a fiduciary capacity on behalf of their community, and their decisions can bind all current and future owners. At turnover, an association’s right is to investigate and pursue claims. Preserving that right until a full and independent evaluation is completed is not adversarial—it is responsible governance.
Accordingly, associations should retain independent evaluations of the property and consult qualified legal counsel before signing any “standard” agreements, especially ones involving a release of future claims.
Nicholas B. Vargo is a partner in Ball Janik LLP’s Construction Practice Group. He may be reached at nvargo@balljanik.com.
Texas Granted Primacy Over Class VI Carbon Storage Wells
December 15, 2025 —
Ashleigh Myers, Robert A. James, Michael S. McDonough & Jillian Marullo - Gravel2GavelOn November 12, 2025, the U.S. Environmental Protection Agency (EPA) approved Texas’s request for primacy over Class VI underground injection control (UIC) wells under the Safe Drinking Water Act, authorizing the Railroad Commission of Texas (RRC) to issue and oversee permits for carbon capture and storage (CCS) injection projects. The final rule makes Texas the sixth state to secure primacy over Class VI wells—following North Dakota, Wyoming, Louisiana, Arizona and West Virginia—and marks EPA’s third such approval in the last several months.
By securing primacy, effective December 15, 2025, Texas gains direct regulatory control over the siting, construction, operation and closure of CO₂ injection wells intended for long-term geological sequestration. This authority enables the state to establish permitting criteria, environmental review procedures and monitoring standards tailored to Texas’s unique geologic formations and existing oil and gas infrastructure.
Reprinted courtesy of
Ashleigh Myers, Pillsbury,
Robert A. James, Pillsbury,
Michael S. McDonough, Pillsbury and
Jillian Marullo, Pillsbury
Ms. Myers may be contacted at ashleigh.myers@pillsburylaw.com
Mr. James may be contacted at rob.james@pillsburylaw.com
Mr. McDonough may be contacted at michael.mcdonough@pillsburylaw.com
Ms. Marullo may be contacted at jillian.marullo@pillsburylaw.com
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Time to Negotiate Limitation on Remedies and Damages Is on the Front End
February 10, 2026 —
David Adelstein - Florida Construction Legal UpdatesRemember, when it comes to contracts, the time to negotiate and enter into mutually agreed upon bargains is on the front end. And, if the contract is not negotiable, at least you know that and can make the business decision whether you want to accept the bargains and risks. If you don’t, well, you can walk away. Move onto another deal. If you do, then you make the business decision as to the bargains or risk transfers and accept them moving forward. One of those bargains and risks deals with a limitation on damages and remedies.
In a recent dispute dealing with the sale of an aircraft, there was a provision dealing with the buyer and seller’s remedies in the event of a breach. (Similar to a real estate transaction or other buyer-seller scenario.) “Contract section 10.4(a) stated that if the buyer defaulted, the seller’s “exclusive remedies” were to keep the aircraft and the buyer’s deposit. Section 10.4(b) stated that if the seller defaulted by “fail[ing] to deliver the [aircraft] in accordance with the terms of [the contract],” the buyer’s “sole remedies” were the seller’s reimbursement of the buyer’s inspection costs.” Sky Aviation Holdings, LLC v. Aviation Unlimited, 50 Fla.L.Weekly D2658c (Fla. 4th DCA 2025). As you can see, there was a limitation on the seller’s damages.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
CA Civil Code § 8850: What Private Multi-state Owners and Developers Building in California in 2026 Need to Know
January 26, 2026 —
Anand Gupta - Construction Law Zone BlogOwners and developers building in California must be aware of a new statute, CA Civil Code § 8850, which takes effect for contracts entered into, on, and after January 1, 2026. The statute will likely apply to most private construction projects; however, a carve-out exists for residential projects that are not mixed use and are four stories or less.
When a contractor—or, with proper authorization, a subcontractor—submits a claim related to payment, time extensions, damages, or change orders (encompassing the majority of construction disputes), the owner must provide a written response within 30 days. This response must clearly state which portions of the claim are disputed and which are not. The owner has 60 days from the date of its response to issue payment for those undisputed amounts. Late payments will accrue interest at a rate of two percent per month.
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Anand Gupta, Robinson & ColeMr. Gupta may be contacted at
agupta@rc.com
Insurer’s Federal Suit Dismissed in Favor of Insured’s State Suit
April 14, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court granted the insured’s motion to dismiss the insurer’s federal suit for declaratory judgment because the insured filed a more complete action in state court. Church Mut. Ins. Co. v. Elmwood Baptist Church, 2025 U.S. Dist. LEXIS 259762 (S.D. W.V. Dec. 16, 2025).
Elmwood purchased a property policy from Church Mutual Insurance Company. After the roof of Elmwood’s property collapsed, the parties disputed the amount Church Mutual owed to Elmwood.
Church Mutual filed suit in federal district court asking for a declaration that the policy was “void ab initio,’ or, alternatively, that Church had fully compensated Elmwood for its loss.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Applying Jury Verdict Method in Quantifying Damages Due to Defective Specifications
March 31, 2026 —
David Adelstein - Florida Construction Legal UpdatesAn older case deals with three important considerations: (1) defective specifications; (2) whether the defective specifications were misleading or misrepresentative; and (3) applying the jury verdict method in quantifying damages.
In Metric Construction Co., Inc. v. U.S., 80 Fed. Cl. 178 (Fed. Cl. 2008), a contractor was contracted by the federal government to construct a warehouse. There were defects in the structural steel design specifications underlying the standing seam metal roof installed by the contractor and, as a result, the roof system leaked causing damage. The contractor incurred significant costs in repairing the damage, and pursued recovery of these costs against the government. The contractor claimed the structural steel design serving as the framework for the metal roof was defective and misleading and caused the leaks.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
$27B Meta Data Center Pushes Louisiana Toward Massive Power Expansion
April 27, 2026 —
Vince Kong - Engineering News-RecordMeta Platforms has reached an agreement with Entergy Louisiana to fund new energy infrastructure to support its planned $27-billion data center in Richland Parish, a project the company says could ultimately scale to 5 GW, becoming its largest facility to date. CEO Mark Zuckerberg has described the site as large enough to cover a significant portion of Manhattan.
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Vince Kong, Engineering News-RecordMr. Kong may be contacted at
kongv@enr.com
Groundbreaking New York Law Regulates Third-Party Litigation Funding for the First Time
February 02, 2026 —
Nicholas P. Hurzeler - Lewis BrisboisOn December 19, 2025, New York Governor Kathy Hochul signed the Consumer Litigation Funding Act (A804-C/S1104A) into law. The new statute takes aim at abusive third-party litigation funding practices statewide.
For years, the unregulated "lawsuit loan" industry has acted as a silent inflator of claim values, forcing plaintiffs to reject reasonable settlement offers in order to pay back exorbitant interest. The new regulatory framework, effective June 17, 2026, introduces caps and transparency measures that may help stabilize settlement negotiations and curb artificially inflated demands. The law does not apply to contracts made before its effective date. Below are some of its most important provisions.
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Nicholas P. Hurzeler, Lewis BrisboisMr. Hurzeler may be contacted at
Nicholas.Hurzeler@lewisbrisbois.com