Who Can I Sue for New-Home Defects: Architect, Contractors, or Only the Developer?

Let's say you've purchased a new home from a developer. You were probably promised a state-of-the-art structure, built to your specifications, and perhaps looking much like a model home that you toured. The developer lined up the architect, contractor, and subcontractors. But what happens if, after construction is over and you've moved into the home, you begin to notice problems? Perhaps the marble in the kitchen is cracked, the windows don't close properly, or the electricity is spotty.

Clearly, such issues relate to the quality of the materials, the design, and the installation. You probably feel frustrated, and like you deserve compensation. The question is, who are you permitted to sue? Only the developer, or also the architect, general contractor, and any relevant subcontractors?

Before Suing, Check Whether the Issue Is Covered by a Builder Warranty

Most home developers issue new owners a warranty (sometimes called a "limited warranty") on their work, either within the sales contract or as a separate document. See New-Home Defects: Holding Your Builder Responsible Under a Warranty for more information.

Who a Homeowner Can Sue Depends on Who the Construction Contract Was Signed With

In many construction disputes, plaintiffs will try to sue everyone involved in a construction project: suppliers, subcontractors, architects, designers, and various developers. The strategy for doing this is usually the hope that some of these smaller entities (or their insurance companies) will offer settlement monies to escape involvement in the litigation.

Unfortunately, in the situation of a new-home construction project, the homeowner's sole contract is normally made with the developer. The homeowner likely never spoke with the architect, possibly doesn't know the general contractor's identity, and in all probability never met the representatives of the company that, for instance, supplied the cracked marble to the contractor.

In legal terms, the homeowner lacks "privity of contract" with these individuals and companies. This is a legal-jargony way of saying that the homeowner cannot sue them for breach of contract, having never had a contract with them to begin with.

How Subcontractors and Others Might Be Dragged Into the Lawsuit Regardless

A developer facing a lawsuit might, as a way of reassigning responsibility, implead the architect or third-party contractors. Impleading means that the developer could file its own, related lawsuit against these others.

Even if the developer breached its contract with the buyer, it could argue that the designers and contractors breached their contracts with it. That is, the developer had a contract with a general contractor to build a quality house that the developer could turn around and sell to buyers. The general contractor had an obligation to hire qualified subcontractors and suppliers, and supervise their work. If the general contractor failed to do this, resulting in legal claims against the developer, the developer is likely to sue the general contractor.

By the same token, the developer hired an architect to design a quality house. If the house as designed is unsafe or unlivable, the developer could also sue the architect.

In short, the fact that the dissatisfied homeowner cannot necessarily sue these other entities directly for breach of contract should not necessarily be of concern. It was the developer's responsibility to create a home as expected under the terms of the contract. Should the developer want to file its own claims against other entities for breaching their duties to the developer, that will only aid in recovering what the homeowner-plaintiff is owed.

If Your Lawsuit Is Successful, Will You Recover the Money?

Actual financial recovery is a valid concern. Chances are you wouldn't be the owner disgruntled homeowner filing suit. Depending on what financial shape your developer is currently in, you might also need to learn about Suing a Bankrupt Home Builder for Construction Defects.