Construction Defect Basics

Construction defects are a potentially stressful aspect of purchasing, building, or remodeling a home. Defects can significantly reduce the value of your home, not to mention cause unnecessary stress to your living situation. Some defects are difficult to spot until years later—after they have caused noticeable damage. This section covers the basics of construction defects and what you can do to remedy a defect. It also overviews legal liability for construction defects.

Construction Defect Cases

Many unsuspecting property owners realize their new homes have new construction defects. These defects may cost thousands of dollars to repair, depreciate the value of their home, or force them to leave their home. Defects in the construction process cover a broad spectrum. They can include minor problems like popped nails and peeling paint to major situations like bulldozing a house. Examples of types of defects include:

• A faulty electrical system
• Toxic mold contamination
• Roof cracks, leaking pipes, or other structural failures
• Code violations or substandard workmanship that lead to property damage

Many general contractors are inexperienced. Others mass-produce thousands of houses. The real estate construction industry is intensely competitive. Many builders respond to the competition with low bids for contracts and then cut corners. They frequently employ unskilled or overworked subcontractors. Subcontracted work is also often poorly supervised.

Unfortunately, government inspectors don’t always have the funding to adequately inspect homes and commercial properties. Inspectors may approve subpar construction projects unsuspectingly. Contractors may fail to exercise reasonable care and follow industry standards. These factors result in home construction defects that can give rise to liability claims.

Types of Construction Defects

While all homes require regular upkeep and occasional repairs, construction defects are design, materials, or construction errors. They may include unstable or cracked foundations, water intrusion, or uneven surfaces caused by expansive soils. The main construction defect categories are:

• Design defects: These are problems caused by architectural or engineering designs that either weren’t properly executed or else didn't perform as expected. A poorly designed roof, for instance, may result in water intrusion or lack of proper structural support.

• Material defects: Sometimes, poorly designed or manufactured materials can cause major problems, such as leaky windows or deteriorated flashing.

• Construction defects: Even with the right design and materials, inferior workmanship can create a cascade of problems. For instance, the failure to install proper ventilation may result in extra moisture and mold growth.

• Subsurface defects: These defects relate to the actual ground on which the house is built. They concern builders who fail to account for shifting soil or steep hillsides.

The Claim and Liability Process

When you are faced with a construction defect, the first step is to determine whether it’s a defect in:

• Design
• Materials
• Construction
• Subsurface

Depending on your circumstances, you may have legal options available to you. Ideally, the party legally responsible for the defect should be held accountable for remedying the situation. It’s possible for you to bring a lawsuit based on different legal theories and seek damages. That may include the cost of repairing the defect and the loss in the value of the home.

Initially, the responsible party may not be easily apparent. Many parties are involved in building a home, including:

• Subcontractors
• Architects
• Suppliers
• Manufacturers

You’ll want to determine the appropriate cause of action, be it negligence or something else. Claims typically include one or more of the following:

Breach of Contract or Warranty

To be in breach of contract is to default on one or more responsibilities laid out in the contract. Suppose the contract specifically states that all countertops and bathroom vanities are to be of a certain quality of marble. But the builder cuts corners and gets a cheaper alternative. Here, they are probably liable. With these kinds of claims, courts typically invoke what is called the "doctrine of substantial performance.” This may require the builder to pay the difference in home value resulting from the breach.

You may want to consider carefully reviewing the construction contract for your home. It may be possible for you to sue the builder for breach of contract if the home was not built to the specifications set out in your contract or blueprints. Note that you must be a party to the contract in order to have standing to sue for the breach of that contract.

Also, review any warranties given to you by the builder. Your builder may have guaranteed the quality of construction of your home for a specific period. If the construction defect arose during this time period, you may have recourse for breach of warranty. Developers often set forth warranties regarding a property's condition. These can be found in the purchase documentation presented to homeowners. Also, courts have held that there are certain implied warranties with respect to a home. So, if the exterior walls disintegrate after the first rainfall, it may be considered a breach of warranty. This is true even if the warranty didn’t mention the exterior walls specifically.

Negligence and Strict Liability

You may also be able to sue your builder for negligence. This is perhaps the most common allegation when assigning fault for a construction defect. To be negligent is to fail in your obligation to:

1. Exercise the same level of care, skill, and knowledge
2. As would a reasonable person in the same profession

For example, a reasonable carpenter would ensure everything is level. If your builder fails to do so, leading to a structural defect, they may be liable. When constructing your home, the builder owed you a duty of care to construct the home carefully and produce a home free of defects. If the builder breached that duty and caused you damages, you may be able to sue for negligence.

Depending on your state’s laws, you may also be able to sue based on a strict liability theory. This means the builder or materials manufacturer is strictly liable. They’re liable for defects regardless of whether they were negligent. Some states place limitations on who can be sued under this theory. For example, in California, only mass developers can be sued under strict liability.

Most states impose strict liability for breaches of the implied warranty of habitability. In some states, a home built without adequate insulation may be considered a breach of this implied warranty. This can trigger strict liability, requiring the builder to take action.

Finally, suppose the developer or general contractor intentionally misrepresents the home’s quality. They may lie or hide the truth in advertisements or sales documents. Here, they may be sued for fraud or negligent misrepresentation.

Time Limitations on Construction Defect Claims

Most states impose time limits on construction defect claims by statutes of repose and statutes of limitations. Statutes of repose specify the time within which a cause of action (claim) can occur at all. Under these statutes, the limitation period may expire before the plaintiff's cause of action has occurred. Conversely, statutes of limitation foreclose suits after a fixed period following the occurrence or discovery of an injury. These statutes are complex and vary from state to state.

In most states, the time limits begin to run when the defect is discovered or should have been discovered by a reasonable person. The time to file suit is more limited if the defect is patent or apparent based on reasonable inspection. If the defect is latent or not readily apparent by reasonable inspection, state laws may grant more time.

Your construction contract may also contain provisions regarding disputes. That includes an arbitration clause or alternate dispute resolution requirement. These contract clauses require that you attempt to resolve the matter out of court before filing a lawsuit. Before litigation, it’s important to know if your contract contains these sorts of provisions.

Conclusion

Construction defect litigation is complex. It may involve several defendants, including insurance companies, and involve many legal theories. Most states impose complex time limits on bringing a construction defect lawsuit. Protect your rights if you believe your home suffers from a defect caused by the builder or another party. Get legal advice from a real estate law attorney who handles construction cases. They can warn you about disclaimers and help you file suit against construction professionals.

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