If you’ve just moved into a newly built home in Iowa, you no doubt expect the place to be perfect. The developer probably promised you a very precise house, and you paid for the house to meet those specifications. But what if you discover that the home does not live up to what was promised? Imagine that you find leaky pipes in the basement, or discover that the bedrooms are all smaller than what was laid out in the plans.
These sorts of problems mean that you got a worse house than you bargained for. They also could lower the value of your home, should you attempt to sell it. How can you recover against your builder or developer and recapture that lost value?
When you moved into a newly constructed home, your Iowa builder or developer in all likelihood gave you written materials describing it. You should have signed a contract outlining your payment and the builder's promise to construct the home.
That gives you grounds for a lawsuit against the builder, alleging that it breached the contract or agreement – the builder did not create the structure that it agreed to. Here, all of the materials the builder gave you, including photos, descriptions of the home, and emails discussing the work, will be useful to proving 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 finished basement, but the basement as built has only a concrete slab and plywood walls, this would demonstrate the builder’s breach.
Iowa has a ten-year statute of limitations for breach of contract, under Iowa Code § 614.1(6). This means that claims based on a contract with the builder must be brought within this period, or they will be 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 seven years because the builder used low-quality wood and the homeowner couldn’t have reasonably known that a problem existed with the roof, which perhaps looked fine until a heavy rainstorm.
A lawsuit can also be based on the legal theory of "negligence." Ordinary negligence in the context of construction defects means the builder’s failure to exercise the correct standard of care.
In Iowa, in order to establish a claim for negligence, a party must establish that:
Note that Iowa has a five-year statute of limitations for basic negligence under Iowa Code § 614.1(4).
Before considering filing a lawsuit, read your contract with the Iowa builder carefully. You are likely to find -- as is common in construction contracts -- a dispute resolution clause. That clause may provide that you must go to mediation with your builder or developer before filing a lawsuit.
Mediation means, in this context, a facilitated negotiation for settlement, led by a third-party neutral person. Often, that person will have some experience with construction law, engineering, or building development.
Your contract may also have an arbitration clause. This clause would require that you go to arbitration against the builder or developer instead of suing in a court of law. In arbitration, either one or three individuals – again, typically who have experience in construction – will make 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 an arbitrator's decisions cannot, ordinarily, be appealed to a higher authority.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims against the builder or developer. It is not uncommon for construction contracts to shorten the amount of time that you have in which to file a legal claim against your builder. It is permissible for this to be included in a construction contract under Iowa Code § 554.2725.
An attorney with experience in construction defect litigation in Iowa will be able to carefully review the document for these sorts of limitations.