Over the last year our firm has seen an uptick in offers to associations from the developer to pay money in exchange for signing a release.
The language of releases can vary but the purpose is almost always the same – The money being offered to the association is in exchange for releasing the developer and any other named parties from any and all claims, known or unknown, that the association may have. These claims being released will almost certainly include claims for construction defects for the association’s amenities but can also include a release for claims related to the Declarant’s service on the board of directors while they were in control.
Several factors for the current board of directors to consider when deciding to sign a release are the existence and complexity of amenities in the community, the historical experience with the quality and condition of those amenities, the statute of limitations and the statute of repose, and the liquidity of the developer after they are done with the community.
Releases are powerful documents. If the release is signed on Monday that releases claims for construction defects and the swimming pool has a major structural failure on Tuesday with an estimated repair cost of $300,000 the claims against the developer and any other named parties in the release are likely waived.
It is strongly recommended that any release presented to an association be reviewed by legal counsel for the association. The lawyers at Law Firm Carolinas are familiar with the releases sought by developers and are glad to help.
Author: Steven E. Black
Articles have been Reprinted with permission from Black, Slaughter, Black.
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