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El Cortez settles defects suit for $6.4 million
Last Post 01 Jan 1900 12:00 AM by Anonymous. 5 Replies.
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Stephanie

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28 Mar 2011 01:24 PM

    El Cortez settles defects suit for $6.4 million

    Five-year battle aimed at fixing construction flaws

    Originally published March 28, 2011 at 11:40 a.m., updated March 28, 2011 at 1:11 p.m.

    The neon sign atop El Cortez Hotel has been a landmark for decades. The downtown building, opened in 1927, was converted to residential use in 2000.

    A 12-story annex would be built just north of the El Cortez tower under a plan approved by the city.

    The condo owners in the landmark El Cortez Hotel building in downtown San Diego have received a $6.4 million settlement in a construction-defect lawsuit and are moving to fix the many water leaks that were detected even before they moved in.

    "I believe this construction defect settlement will improve our situation financially," said homeowners president Barry Bruins. "I believe lenders will be interested in the building again -- as well as the fact that the real estate market seems to be coming back in general. All things are coming together to help our values come up a little, and I think they will continue to improve."

    There are currently three units for sale, ranging from $214,340 to $225,000, according to the San Diego Condo Mania website.

    Located at 702 Ash Street, El Cortez opened in 1927 and achieved its pinnacle of popularity in the 1950s after the addition of a glass elevator and Sky Room cocktail lounge on the roof of the 17-story building.

    But the building eventually lost its attraction, fell into disrepair went through a series of ownerships and uses before developers Peter Janopaul and Anthony Block bought it in the 1990s, restored it to its original look and reopened it as an apartment building in 2000 and converted it to condos in 2004.

    However, in the restoration process, plumbing problems were not adequately handled and the developers sued their contractor and subcontractors and the condo buyers sued the developers as well.

    "I've been doing complex business litigation and construction defect litigation for 20 years and I have never seen a case like this before," said the owners' attorney, Andrew Berman.

    He said five years of litigation involved six lawsuits, 200 depositions and multiple construction tests.

    The settlement, reached earlier this month, will net the homeowners association just over $3 million, some of which will be used to repay a $200,000 loan taken out earlier to fix the worst problems.

    "The board will be very careful about spending money that will save us money in the long run in the maintenance of the building," Bruins said.

    Janopaul, who has left San Diego, could not be reached, and his business partner on the project, Anthony Block, declined to comment.

    Less certain is a 78-unit, 12-story tower proposed by Janopaul on the north side of the block. Residents opposed it but the city approved it.

    "Due to the real estate market, we don't think anything will be built," Bruins said.

    A spokeswoman for the Centre City Development Corp. said Janopaul is expected to request an extension of the permit to build.

    As for consumers, Berman said they cannot count on construction defects being caught by either city inspectors or developers, and state guidelines do not require adequate reserves for high rises.

    "There are protections that should be there and they aren't," he said.

    Consequently, he said buyers of old buildings, whether a house in Mission Hills or a historic high rise downtown, should be prepared to face higher costs than initially projected.

    "It's a shame," Berman said. "I feel terrible for the people who bought into this project. They truly believed in the project -- they loved the iconic nature of the El Cortez. Not until several winters and rainy seasons did they realize what they had bought is different from what they thought they had bought. A lot have suffered in the last five years of the project. Hopefully, they have turned the corner."

    roger.showley@uniontrib.com, (619) 293-1286; Twitter: rmshowley; Facebook: Roger Showley

    http://www.signonsandiego.com/news/2011/mar/28/el-cortez-settles-64-million/

    Topazzzer

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    28 Mar 2011 06:18 PM
    This has to be good for the HOA, but my guess is that $3 million will not last very long when considering the higher costs of dealing with maintenance of an older structure.
    realityczech

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    31 Mar 2011 11:12 AM
    How do they typically dole out the $, by how much damage was done or does each unit owner get a piece of the settlement?

    With all the costs and red tape assoicated wth city building inspectors, permit grantors, home inspectors, etc how does it ever to to this? Everyone needs to be sued!
    mastergpat

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    01 Apr 2011 07:49 AM
    The money will probably be left ion the condo assn's general fund, to be used as needed. NO way that any of the owners get a check.  But doin';t worry- the assn will easily find ways to spend the money...
    Brian

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    21 Apr 2011 10:38 AM
    $ 3 million is not much money for a large old building needing a lot of repair.
    Homeowners will be paying through the nose for maintenance in this building for as long as they own.

    Brian

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    10 Nov 2011 02:14 PM
    El Cortez is now $666/mo HOA for a 1/1, despite $3 million settlement.
    will it hit $1000/mo. I would not be surprise if it does so in a few years. An old leaky building is costly to maintain.

    http://www.sdlookup.com/MLS-1100606...o_CA_92101
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