Imagine that you’ve just moved into a new home in Louisville, Kentucky, constructed by a builder or developer. From the outside, the house looks perfect, exactly as had been promised in the various planning documents and prospectus papers. But after a couple weeks of living there, you begin to notice problems – big problems.
The issues aren’t just aesthetic. The stairs are uneven, the pipes are rusted, and the windows are crooked. Not only are these defects troubling as a resident, they also lower the value of your home, should you ever want to resell. How can you recover for these major structural problems in a newly constructed home?
First of all, note that under Kentucky law (K.R.S. 411.260), the builder has an automatic right to try to cure whatever defect you discover before you sue. This is somewhat unique to Kentucky. This means that you must give your builder notice of the situation before running to court. The policy purpose, of course, is to prevent unnecessary litigation; if the builder can fix the problem, perhaps a lawsuit is not needed.
The builder may, however, ignore your invitation to cure the defect, or offer a cure that's unsatisfactory. In either such case, you’ll probably want to take the next step, into litigation.
If you moved into a newly constructed home in Kentucky, your builder or developer likely gave you extensive materials describing your new home. You would have needed to sign a contract outlining your payment and the builder’s promise to construct the home. The developer might have also given you prospectus documents, showing renderings of what the home would look like.
Part of any possible lawsuit against the builder will be that it breached this agreement – did not give you the building that was promised. Here, all of the written materials the builder gave you, including photos, (glowing) 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 pool, but the home as built includes no pool, this demonstrates the builder’s breach. Or if the documents guaranteed you a home with air conditioning, and the air conditioning did not work, this would violate Kentucky’s statute on express warranties, K.R.S. 355.2-202.
Regardless of the existence of a written contract, builders owe homeowners an implied warranty over the quality of their work. Kentucky courts recognize that a new homeowner has a claim for an implied warranty of quality and fitness against a contractor who fails to live up to a basic standard of care.
Another possible basis upon which to sue a Kentucky builder for construction defects is ordinary negligence. In this context, that would mean proving the builder’s failure to exercise the correct standard of care.
In order to successfully establish a claim for negligence, you'd need to show that
An example might be a builder who left electrical wires exposed in the bathroom, allowing contact with water, such that a resulting power surge occurred.
Note that Kentucky has a two-year negligence statute of limitations (putting a deadline on when you can sue) under Ky. Rev. Stat. § 413.125.
Before you run to court, you should carefully re-read your contract with your builder or developer (or any prospectus documents that the developer provided). Dispute resolution clauses are common in construction contracts.
These clauses typically state that, before proceeding to court, you must go to mediation or, in the alternative, binding arbitration. Mediation is a negotiation between you and your builder that is facilitated through a third-party neutral, known as a mediator. The mediator’s job is to help you reach a settlement without the need for litigation.
In mediation, you could craft a creative deal with the builder – for example, a combination of the builder's doing further repairs on your home, and perhaps some sort of cash payment. If mediation fails, you are ordinarily still permitted to sue in court.
Arbitration is very different. If your contract has a mandatory arbitration clause, arbitration would be in lieu of court. In arbitration, either one or three individuals – typically lawyers with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is generally faster than litigation, saving you money on legal fees. A potential disadvantage, however, is that an arbitrator’s decision is typically non-appealable.
Lastly, be sure to look through your contract for any shortened claims periods. It is not uncommon for construction contracts to shorten the amount of time that a homeowner has in which to file a legal claim against the builder.
An attorney with experience in construction defect litigation in Kentucky will be able to carefully review your documents for these sorts of limitations.