While hundreds of new homes are constructed and sold in California each year, some buyers are disappointed to discover defects in their newly constructed homes – commonly referred to as construction defects. Depending on what the defect is and when it is discovered, you have various options to get your home repaired without dipping into your own pocketbook.
A construction defect is any physical condition that reduces the value of a home or property and that is a result of a flaw in design or workmanship. Examples of this can include things like water seeping through the roof or windows of a new home, faulty drains, cracks in the foundation, or portions of your new home collapsing. In some circumstances, construction defects can also include earth settlement problems such as inadequate grading and drainage. California Civil Code Section 896 and its following sections outline specific defects that builders are responsible for fixing. The list is meant to be quite broad, as the statute says, "The standards set forth in this chapter are intended to address every function or component of a structure."
In order for a defect to qualify as a construction defect, the law requires that it be discovered within a certain number of years from the date of construction completion or from the close of escrow (depending on the defect and your set of circumstances). This can be anywhere from one to ten years, again depending on the type of defect.
In some circumstances the law also sets deadlines (periods of years) by which you can file a lawsuit related to a new home construction defect. As a result, if you think you may have noticed a defect, don’t delay. Your best course of action is to look into it immediately, to avoid missing any of the cutoff dates should you ultimately need to file a lawsuit. Ten years from the date the home was substantially completed tends to be the longest any homeowners can wait to file suit.
You can’t just sit back and watch the damage go from bad to worse—for example, watch as a leak in the roof allows water to pour in, damaging your floors and leading to a household-wide mold problem. California law requires you to take reasonable steps to protect your property from additional damage once you notice there is a problem, such as covering up any holes where water is leaking in.
These “temporary fix” costs are normally recoverable as part of a lawsuit, if you ultimately have to file one. Be sure to enlist the help of an expert to ensure that what you’re doing is the best way to handle the situation, and to be sure that all your efforts are well documented.
Under California law, the builder must provide a limited warranty, in writing, as to “fit and finish” items (including the quality completion of cabinets, flooring, mirrors, walls, countertops, and paint finishes, both inside and out). This warranty must last at least one year from the close of escrow (see, California Civil Code Section 900).
Even if you didn't receive a written warranty from the builder, the law says the builder owes you one for a one-year period. To make a claim under this warranty you would be required to give the builder a chance to fix the problem, and if that doesn't work, initiate a lawsuit for the defect within the one-year period. You will also need to have taken care of any reasonable maintenance obligations that you were informed of in writing by both the builder and any product manufacturers, as well as any commonly accepted maintenance practices.
California’s standard home warranties do not usually cover defects to any appliances in a new home. Most appliances come with manufacturer’s coverage so, for instance, if you had a problem with your stove, you would want to refer to the stove manufacturer’s coverage rather than the homebuilder’s.
Most builder’s warranties also do not cover things like the windows and doors that go into your home, since there is commonly a manufacturer’s warranty for these items as well.
If you think you have found a defect in your new home, you’ll want to hire an independent contractor, inspector, or other expert with specific knowledge of that type of problem (for instance, you’d hire a roof or waterproofing expert if your roof were leaking) to confirm and document the defect.
Generally, as soon as you discover a problem, start documenting the issue – make a note of the dates, the specific circumstances such as the weather, and any other details that might be relevant in discussing how the defect came to light, including whether you’ve experienced any similar issues in the home before.
Prior to filing a lawsuit, you must notify the homebuilder and give him or her the opportunity to inspect the home to see the alleged defect (see, California Civil Code Sections 910-938).
You may have opportunities or a requirement to mediate or arbitrate before filing a lawsuit. Mediation means meeting with trained mediators (who are often also lawyers) and the homebuilder in a setting outside the courtroom to attempt to discuss and resolve the issues. During arbitration, a neutral third party hears the evidence from both sides and then makes a binding decision. Your attorney can help you determine whether mediation or arbitration would be helpful or whether it might be required under the builder’s warranty.
Sometimes, upon notification, the developer will offer to make the necessary repairs to bring your home up to standard. If this occurs, you should no longer need to file a lawsuit as to that particular defect. It can be a good idea to locate an independent expert (possibly the same one you used to inspect and document your home defect in the first place) to oversee these repairs and to make sure that things are done as agreed upon. You might need to sign a limited release relating to the repairs that are done; but make sure it still allows you to pursue a remedy from the developer if, say, you discover a wholly different defect while still within the one-to-two year allowable period, or ten years for major defects.
If the developer does not agree to make repairs to your home, or the repairs are inadequate, you may then have to pursue a lawsuit. In addition to possible claims for breach of warranty, others theories upon which you may be able to suie include strict liability, or negligence. A qualified California real estate attorney will be a necessary and valuable resource if you go this route.