Legal Liability for Construction Defects
The typical construction defect cases is based on the contracts between the homeowner and developer and the contracts between the contractor and subcontractors, including suppliers, architects and engineers, involved in building the home. The goal is to require the party who is responsible for the defect to remedy the situation. The complaint against the defendants typically alleges negligence, breach of contract or warranty, strict liability, and in some instances fraud or negligent misrepresentation may be alleged.
The law imposes the obligation upon the developer/general contractor/ subcontractor to exercise the reasonable degree of care, skill and knowledge that is ordinarily employed by such building professionals. The duty of care is extended to all who may foreseeably be injured by the construction defect, including subsequent purchasers. Developers and general contractors are responsible for the negligence of their subcontractor.
Breach of Contract
Homeowners can sue the builder/developer, under theories based upon privity of contract, for breach of any obligation set forth in the purchase and sale documentation, and/or the escrow instructions. Typically, this is something that goes beyond a failure of the builder to build the project in accordance with the plans and specifications.
When such claims are made, courts often invoke the doctrine of substantial performance, which typically requires the builder to pay the contract price with the deduction for the reduced market value of the home/unit caused by the failure of the builder to strictly comply with the plans and specifications.
Breach of Warranty
Similar to breach of contract theories, the purchase documentation between the developer and the homeowner often sets forth warranties regarding the condition of the property. If there is an issue as to breach of an express warranty, the principles of contract apply.
Courts have held that builders and sellers of new construction should be held to what is implied, that the completed structure was designed and constructed in a reasonable workmanlike manner. A builder/vendor is subject to the theory that a home was built for sale to the public to be used for a specific purpose. Privity of contract is not always required under this particular theory of liability.
In some states, homebuyers may waive or builders may disclaim implied warranties. If disclaimers are involved, they are strictly construed against the seller/developer. Typically, waivers are difficult to enforce.
Strict Liability Claims
In most jurisdictions, the implied warranty of habitability imposes strict liability on the general contractor. The theory of strict liability against a general contractor evolved from products liability law. In a strict liability case the plaintiff does not have to prove the general contractor or developer was negligent in the construction of the home. They do have to prove the defendant was involved in the mass production of housing, a defect in the house exists, damages were proximately caused by the defect, and the defendant caused or created the defect.
Fraud and Negligent Misrepresentation
Fraud is alleged on the grounds that the developer intentionally misrepresented the quality of construction in false statements or advertisements. It must be shown the developer had not intention of following the design plans and specifications as promised.
Negligent misrepresentation is based on proving the developer asserted something as factual, but had not reasonable basis for believing the information to be true.