Absolutely it is in British Columbia. I don't know for sure if it's code, but it's absolutely standard practice in stairwells (usually the only place where you get your whole two floors height in one wall. I'm an alarm technician, and I see it (the gap and the trim that covers it) in every new house. Mine has the same bulge at the seam at the level of the upper floor, because it was built before that trick was introduced. I assume it's not a rule in the US since nobody seems to know about it, but it's standard here, and it WILL fix the OP's problem (assuming it's only one seam, but if it's several, once the gap is introduced, the others can probably be fixed.) What 'framing' would fix it, in your opinion? Clearly it's downward pressure. Sure, a heavier point load may have reduced the effect, but the direction of pressure certainly appears to be downwards. I guess that's why we leave a 3/8" gap at the bottom of a wall.

Just my opinion, but if the drywall is solidly attached to the studs and isn't flexing and doesn't move when you push it, then I would assume that any settling is done and nothing is going to move. I would finish the walls and see what happens. By the way, there is a comment on the other thread about first filling in the gaps with some expansion foam and/or pre-caulk filler rope. That might be a good idea since it it an outside wall. Also, there is a professional drywallers site with forums called drywalltalk.com. They might have opinions on whether this is just crummy installation or structural movement.

Well there is one thing I think is pretty unanimous - the doorway between the dining and living rooms will get moved over to the west about 20", allowing the space under the stairs to be better utilized either for storage or a little reading nook/desk spot. Got the toughest decision out of the way first :) I really don't want to mess with the plumbing stack that is behind the built-in.....so unless that's really the only way to make things work, there will be no passageway along that north living room wall. I had thought about moving the heat pump away from the laundry room window and over to the west, on the other side of the garage door, and then converting the laundry room window to a door and having that be our main entry on the back side of the house. I'm afraid it may look funny though to have two exterior doors right next to each other, and I don't want to lose the exterior access to the garage, so that door will have to stay put. I think the laundry room window will need to stay as it is and the dining room door should be the main entrance. We can redo the landscaping & put in a sidewalk that will direct traffic to that door from the driveway. One thing I'm not sure of is if I should do sliders or French doors? Is it weird to have a slider as the "front" door? And how do I handle privacy - the door faces the back yard, there is no house or anything back there that could see in, but I still want something to cover the door at night. Maybe built-in blinds would be best? I love the idea of moving the kitchen to the nook....it would be so nice to look out into the yard while working in the kitchen, but that would mean that we have to use the dining room as THE dining room. I don't think that will work if the dining room door is the entry and even if it weren't, that room is not really suited for a dining room table. It's too narrow and too much of a passthrough room. I tried it out briefly a year or so ago and it didn't work very well. bp's suggestion of closing off the current laundry/kitchen connection and moving the washer/dryer there looks good - we could open up a doorway to the right of the sink and shift the sink/stove/kitchen to the south. Opening up a doorway to the living room from the kitchen would let in light from the big picture window in the living room, so the kitchen wouldn't feel as dark. The rest of the laundry room space (north end) could be used as a mudroom and normal household traffic could go from the garage to the "dining" room and then on to the bedrooms or living room. The one thing I'm not sure about with that plan is where does my pantry go? I would like to have a decent pantry as we do a lot of gardening and canning in the summer and I don't have a basement or cellar to use for storage. Maybe it would have to go somewhere in the laundry area. Thanks again for the terrific suggestions and the kind comments about our little house. It's not perfect and definitely has its idiosyncrasies but it's also got a lot of character and charm - thanks for reminding me of that, I tend to take it for granted sometimes!

That’s not Level 5. Level 5 starts with better framing than is ever underneath textured anything. Then it doesn’t ever think of using watery joint compound. Be prepared for disappointment on multiple fronts. You’re not starting in the right spot, or using the right labor. You can get a good Level 4. Maybe. Not Level 5.