What do Joe Montana and Hunter Pence have in common? Other than having professional careers in athletics for San Francisco teams (former hall of fame quarterback for San Francisco 49ers and current all-star outfielder for San Francisco Giants), they both have been residents of the luxury condominium complex in San Francisco known as Millennium Towers.
Millennium Tower is a 60-story luxury building located on Mission Street in San Francisco’s financial district/South of Market (SoMa). It currently holds a spot as one of the top 10 residential buildings in the world according to Worth magazine. Condos sell for anywhere from $1.6 million to north of $10 million.
But now residents are thinking they “sunk” money into a bad investment, because the building is sinking. And not just a little – it’s sunk 16 inches and tilted 2 inches since its opening in 2008. The reason? It’s built on landfill that is prone to liquefying.
While the fact that it’s sinking is certainly cause for concern, Stanford’s seismic center says that there is no actual risk that it will fall over, at least at this time. “The settlement has not significantly affected the seismic performance of the building, and does not represent a safety risk.”
What, if any, legal recourse do the residents of Millennium Tower have?
Depreciation of Home Values
One of the main concerns of the residents at Millennium Tower, as it should be, is whether the value of their luxury condos have depreciated in value. It’s a valid concern. With all the bad press that Millennium Tower is receiving, it is unlikely people are jumping at the opportunity to live in the sinking building, even if experts claim the sinking will not cause the building to topple over. The only hope residents have of selling their luxury condos at this point is at deeply discounted prices to speculators. The condos are not exactly carrying the equity homeowners once believed would make home ownership in Millennium Towers a wise investment.
While a claim that property damage to the building is effectively depreciating the value of their homes, sinking home values in and of itself is not a valid legal claim. It is an unfortunate effect of faulty construction.
Millennium Tower’s Homeowners Association (HOA) states that they expected the building to settle a maximum of 12 inches over the life of the building. It’s alarming that the building settled four more inches than expected in just eight years.
Geologists are saying that the building is settling because it was built on landfill that has liquefied. In other words, the building was built on dense sand, not bedrock. Additionally, construction for the new Transbay Transit Center next door to the tower is being blamed for movement, but they deny liability.
Construction defect is a legal cause of action that alleges some type of faulty or defective work that occurred during construction that leads to damages. On a project like the Millennium Tower, anybody who had anything to do with the building will be sued. This includes the developer, architect, and construction company that built the tower. All of the parties associated with the project could be personally liable for the damage and any subsequent damage to individual owners. If the construction company, architect, and developer have insurance, the insurance can also be on the hook for damages.
On behalf of all the over 400 homeowners of Millennium Tower, a class action was filed recently against Millennium Partners and the Transbay Joint Powers Authority. Both have denied all liability. The lawsuit cites uneven floors and interior cracks, among other problems caused by improper design and construction defects, causing the building to sink into the landfill beneath it and lean to the northwest. The result of these catastrophic defects is diminution of value to all the units in the building. The lawsuit seeks at least $500 million in damages for the class, which amounts to an average of $1.25 Million for each homeowner.
This is the first step in a legal battle that could last years and will cost millions to resolve. Nevertheless, these cases typically settle. Moreover, the cost of ongoing litigation, which can reach into the hundreds of thousands or even millions in this case, deter many plaintiffs from continuing to litigate. Homeowners of Millennium Tower have relatively deep pockets themselves, so they likely won’t be deterred by mounting legal expenses required to continue to litigate this lawsuit.
Authored by Erin Chan-Adams, Legal Match Legal Writer and Attorney at Law