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Legal Liability for Construction Defects

A building inspector looking at a possible construction error (incomplete stucco).

Home construction defects are problems or mistakes you find in the work done on your home, including issues with the workmanship, design, materials, engineering, and more. The typical construction defect case is based on contracts between:

  • The homeowner and developer 
  • The homeowner and the contractor or subcontractors
  • The contractor and their suppliers, architects, and engineers
  • You and anyone involved in building your home

Homeowners bring construction defect lawsuits in order to fix the situation and/or get money for the damage done. The goal is to find the person responsible for the defect in your property. 

After you determine who is responsible, you can bring a legal claim. These usually involve:

Negligence

The law requires developers/general contractors/subcontractors to use "reasonable care" in the construction process. Think of it this way: If a reasonably careful person in the same role as the construction professional would have done the same thing in similar circumstances, they were probably using reasonable care. If not, you might have a negligence claim. You will need to show that the contractor did something that didn't meet their profession's standards.

In some cases, you may be able to prove that they simply didn't have the knowledge necessary to do the work. For example, if a developer doesn't have the proper degree or license to do their job correctly, but a company hires them anyway and puts them on a job, the company can be held negligent for damage the developer causes.

The duty of care is extended to anyone who could be hurt by the construction defect. This includes future purchasers of the house or property. For example, even if an issue happens ten years later, the original builder could still get in trouble. 

Developers and general contractors are responsible for the negligence of their subcontractors.

Breach of Contract

Real estate owners can sue the builder/developer for not living up to the language in their contract. A breach of contract usually involves:

  • Breaking an obligation in the construction contract
  • Not following purchase or sale documentation
  • Not following the escrow instructions

Typically, this is something more than the builder not following the plans and specifications.

When such claims are made, courts often look to the "doctrine of substantial performance." If the builder made an effort to complete the contract, but didn't meet all requirements, the court will consider the contract complete. But the homeowner will not be required to pay the full contract price. Typically, the homeowner needs to pay the contract price minus the reduced market value of the home (caused by the error). 

For example:

  • A builder has a contract price of $100,000 to build a home
  • The builder accidentally has a subcontractor do bad plumbing work
  • The reduced value is caused by the failure of the builder to follow the plans and specifications listed in the contract
  • The bad plumbing is estimated at losing $25,000 of market value for the home
  • You only have to pay the builder $75,000 for building your home

Breach of Warranty

Breach of warranty is like the breach of contract theories. But instead of a contract not being followed, a breach of warranty means the warranty was not followed.

The contract may have warranties about the condition of the property in case of defective products. An example is a warranty saying a washing machine will work for five years. If the washer breaks after three years, then the company needs to uphold their warranty. Often, this means replacing the broken item for free.

If the property damage relates to a breach of an express warranty, the principles of the contract apply.

Courts say that builders and sellers of new construction are responsible for:

  • What is implied in the contract or warranty
  • Reasonably designing and constructing the structure

All builders and vendor have to work under the theory that a home was built to be:

  • Sold to public buyers
  • Used for a specific purpose (such as living in it or renting it out)

Privity of contract is not always required under this particular theory of liability.

In some states, homebuyers may waive warranties. Builders may also disclaim implied warranties. If disclaimers are involved, they work against the seller/developer. This means they work in favor of the homeowner. Typically, waivers are difficult to enforce.

Strict Liability Claims

The "implied warranty of habitability" puts strict liability, or responsibility, on the general contractor. In a strict liability case, the property owner does not have to prove the general contractor or developer was negligent in the construction of the new home. 

However, they must prove:

  • The contractor or developer was involved in the mass production of housing
  • A defect in the house exists
  • Damage or injury was caused by the defect
  • The contractor or developer caused or created the defect

Fraud

Fraud means the developer intentionally misrepresented the quality of construction. This often involves false statements or false advertisements. An example is saying "scratch-proof flooring" when the floors scratch easily.

To win the case, your attorney must show the developer had no intention of following the design plans and specifications as promised.

Negligent Misrepresentation

In negligent misrepresentation cases, homeowners need to prove:

  • The developer asserted something to the homeowner
  • The developer had no reason to believe the information was true

An example of this could be a developer saying their plumbing will never break. Once it breaks, the homeowner is upset, and the developer has nothing to back up their claim.

Have Your Construction Defect Claim Reviewed by an Attorney 

Owning a home is a big responsibility. There are always ongoing maintenance concerns and high costs. The last thing you need to worry about is a construction defect caused by someone else's mistake.

If you believe a defect in your home is the result of someone's carelessness, you may want to file a claim. A construction law attorney can help you get started.

Next Steps

Contact a qualified real estate attorney to help protect you from the costs and frustration of construction defects

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