You’ve just had a new home built, only to discover that the builder made a number of critical errors in the design and execution of the space. Perhaps the door frames don’t quite fit, there is serious leaking from the pipes in the basement, and the heating and air conditioning system was improperly installed. Even if you’re interested in selling the home and moving elsewhere, you realize you need to go after the contractor in order to recover some of the value of the house. How can you do this without breaking the bank?
Most contractors have common sense. They want to avoid costly and time-consuming litigation. Call your contractor and explain the situation. Describe the problems that you’re seeing, and state firmly that they need to be remedied – either by the contractor itself coming back and remedying its own errors, or by the contractor refunding a portion of whatever you paid so that you can find a replacement contractor to make those corrections.
Typically, the contractor will at least send someone to look over your house and catalog the situation. By seeing the problems firsthand, they will be in a position to negotiate with you (or decide not to negotiate with you) about the best course of action. This initial step takes time and aggravation, but is free. More often than not, a firm negotiation will solve your dispute.
Contractors are accustomed to complaints from homeowners. Merely calling to complain might not be the best way to bring them to the bargaining table. To truly get a builder’s attention, you might seek the input of a third-party expert in the construction industry – someone with industry credibility who can objectively articulate the problems with your home.
A quick Google search in your area will reveal experts who provide exactly this type of service – a detailed inspection and analysis, following by a written report. With this sort of neutral evaluation, your contractor will realize that you are serious about seeing your situation remedied, and will also see that the defects were serious (and potentially provable in a court of law). Often, this sort of report is less expensive than an attorney's fees, and would convey the same seriousness of purpose to your contractor.
If your contractor refuses to remedy the situation, or at least put up some money towards your repairs, considermediation. If you’re looking to keep costs down during your litigation, mediation is a wonderful way of doing so.
Mediation is essentially a structured negotiation facilitated by a third-party neutral. That mediator has no decision-making power, but may have substantial experience in construction, law, or both. This means that the mediator can suggest creative solutions and have a sense of the legal duties your contractor has.
Mediation avoids many of the formalities of discovery and evidence that make litigation through the court system so expensive. You can mediate without hiring an attorney. Typically, both parties will consent to split the cost of the mediator. Needless to say, this is far less expensive than both you and your contractor being forced to hire lawyers.
Hiring an attorney can be an expensive proposition. You often do not need one to solve your dispute. But if you do need one, try to find a lawyer who will take a contingency fee agreement. While some attorneys will expect a retainer deposit or will bill you by the hour, others will take your case on contingency – meaning they only get paid if you win money from the contractor.
Depending on the size of your defect claim, it might make sense to hire an inspector before hiring an attorney. If the defect claim is merely, say, an error in your bathroom tiling, it might not make economic sense to pay a lawyer. But for a larger claim – where multiple aspects of the home are flawed – you might want to begin by meeting with an attorney. That attorney can then suggest the names of expert inspectors they’ve worked with in the past. Check out Nolo’s guide to "New-Home Defects: Holding Your Builder Responsible."
Remember, even if you intend to sell your home during your construction-defect litigation against the builder, you have an obligation to future buyers to disclose the issues with the home and to disclose the litigation. You also have an obligation to fix any problems with the home that could further impair its value.
In the example above, the new home has leaky pipes in the basement. A flood could be catastrophic, ruining the floors and electrical system and causing mold. You need to hire a contractor to fix this. This does not mean, however, that you need to hire the best contractor or ask for a total reinstallation of the plumbing. Your primary obligation is to “stop the bleeding” to ensure that no further serious damage is done. As long as you disclose the situation to the buyers before the closing, and do not conceal any of the damage, you don’t need to make it “perfect.”