Hawaii is not just a popular vacation spot. The Aloha State is home to a booming home development industry. If you purchase a home from a developer, your expectation is that the home will be built exactly as it was promised. Unfortunately, not all new construction is perfect. You might move into the home and find significant problems – the stairs might be uneven, or the windows improperly installed, or the water pressure might be weak.
You paid the price you did for the home on the assumption that it would be perfect, or at least reasonably close to perfect. Construction defects lower the value of your home. What provisions does Hawaii law make such that you can recover against the builder or developer for such defects?
If you commissioned a newly constructed home, your builder or developer likely gave you extensive materials describing what it would eventually look like. You would have needed to sign a contract, outlining your payment and the builder's promise to construct the home.
Part of your lawsuit against the builder will be that it breached this agreement – it did not give you the building that it promised. Here, all of the materials the builder gave you, including photos, plans and descriptions of the home, and emails describing the work, will be useful to establishing your expectations at the time you entered into the contract.
For example, if the various documents clearly show that you thought you were getting a home with a two-car garage but the garage as built fits only one car, this demonstrates the builder’s breach.
Hawaii has a six-year statute of limitations period on actions for breach of contract, under Haw. Rev. Code Ann. § 657-1. This means that claims based on a contract with the builder must be brought within this period, or they are barred. An exception to this is when a homeowner could not have reasonably discovered the existence of the breach until after the period – for example, if the roof caves in after six years because the builder used low-quality wood.
Breach of contract isn’t the only cause of action you might have against your builder. Imagine that the builder allowed water to leak into the electrical sockets in the basement, which ended up causing massive surges and destroying your appliances. In a situation like this, you can sue your builder under a legal theory known as negligence.
Ordinary negligence in the context of construction defects means the builder’s failure to exercise the correct standard of care. In Hawaii, in order to establish a claim for negligence, the homeowner must establish that: (1) a duty was imposed by law, (2) the builder failed to conform to that standard, (3) there was a causal link between the failure to meet the standard of care and the resulting construction defect, and (4) actual economic damages to your home resulted.
Hawaii has a two-year statute of limitations for property damage caused by negligence under Haw. Rev. Code Ann. § 657-7. This means that you should act quickly if you discover that negligent building was done on your home.
A unique facet of construction defect litigation in Hawaii is a law called the Statute of Repose for improvements to real property, Haw. Rev. Code Ann. § 657-8. Under this legislation, homeowners have ten years from the substantial completion (or the last specific act or omission of the builder) to file suit. After the builder has been “off the job” for ten years, a homeowner is generally barred from filing a lawsuit for an alleged construction defect, regardless of when the defect was or is discovered.
The statutes of limitations for breach of contract or negligence can often be tolled (or delayed) based on circumstances. If, for example, you do not discover the construction defect for three years after you move in, a court may begin the limitations period from the date of discovery.
The statute of repose, however, is not nearly so flexible. It operates to give certainty to builders, so that they need not worry about claims after ten years. This means homeowners must be vigilant to ensure that they do not get blocked by the statute.
There are a few clauses to check for in your contract before filing your lawsuit. First, it is common in construction contracts to find a dispute-resolution clause. That clause may provide that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have some experience with construction law, engineering, or building development.
Your contract may also contain an arbitration clause. This would require that you go to arbitration against the builder or developer, instead of litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is generally quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that these decisions cannot, in most cases, be appealed -- they are meant as a complete substitute for going to court.
Finally, take note of any language in the contract shortening your statute of limitations or ability to make legal claims. It is not uncommon that construction contracts will reduce the amount of time that you have in which to file a legal claim against the builder. An attorney who has experience in construction defect litigation in Hawaii will be able to carefully review the document for these sorts of limitations and advise you of your rights going forward.