Legal Liability for Construction Defects

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 real property 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 to fix the situation and/or get money for the damage. 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 causes of action (claims) for:

• Negligence torts (civil wrongs involving carelessness)
• Breach of contract
• Breach of warranty
• Strict liability
• In some cases, fraud or negligent misrepresentation

Negligence

The law requires developers, general contractors, and 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 for the value of the property that was damaged and any resulting personal injury. You will need to show that the contractor did something that didn't meet their profession's standards. Or perhaps they committed an omission, failing to perform construction in a workmanlike manner.

In some cases, you may be able to prove that they didn't have the knowledge necessary to do the work. For example, suppose 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. In that case, the company can be held negligent for damage the developer causes.

The duty of care extends 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 occurs 10 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 Claims

Real estate owners can sue the builder/developer for not living up to the language in their contract. In construction defect litigation, 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 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. 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 condominium.
• 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 to lose $25,000 of market value for the home.
• You only have to pay the builder $75,000 for building your home.

If you win a breach of contract case, you may be able to collect attorney fees if your construction project agreement provides for them.

Breach of Warranty

Breach of warranty is like breach of contract. 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 property's condition 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, the company must uphold the 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 vendors 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 (a direct legal relationship) 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 constructing 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
• The defect caused damage or injury
• 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 or design professional 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 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.

Beware of the Statute of Limitations and Repose

Statutes of repose bar recovery after a certain deadline. Statutes of limitations disallow you from filing a lawsuit for your legal issue if you've waited too long after discovering it. Sometimes, even if you didn't timely discover an issue but a reasonable person in your shoes would have discovered it sooner, it could cause your case to be barred. Having a legal expert on your side can help you avoid these problems.

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 someone's carelessness caused a defect in your home, you may want to file a claim with their insurance company and a court of law. A construction law attorney can help you get started by giving valuable legal advice.