New-Home Construction Defects in Maryland: Buyer's Rights Against the Builder

Discovering defects in your newly constructed Maryland home? Here are your legal remedies.

Many Maryland homebuyers purchase their homes from developers before the homes are actually constructed. If you’ve purchased a home from a developer, you will pay based upon the promises made to you – about the size, quality, and overall look and features of the home. Is it one story or two? Brick or wood? Swimming pool or no swimming pool? All of these factors determine the price.

Imagine that you expected to purchase a two-story house with three bedrooms and a tennis court, but when you moved into the constructed home, there were only two bedrooms and no court. Or perhaps the bedrooms were all ten square feet smaller than was promised on the plans. Or perhaps the electricity throughout the home is faulty, costing you thousands of dollars in necessary repairs.

Construction defects are not uncommon in new home construction. Whether the defect represents a major material misrepresentation by the builder (like a missing tennis court) or a fixable but important problem (like faulty electric work), construction defects lower the value of your home.

How does Maryland law help you recover against the builder or developer for such defects?

Claims Against a Maryland Builder for Breach of Contract

When you arranged for the construction of your Maryland home, the builder or developer likely gave you a stack of written materials describing the place. You probably signed a contract, outlining your payment and its promise to build the home according to certain specifications.

Part of your lawsuit against the builder will likely be that it breached this agreement – it failed to construct the house as agreed upon. Here, all of the materials the builder gave you, including photos, descriptions of the home, and emails describing the work, will be useful in demonstrating your rightful 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-sink master bathroom but the room contains only one sink, this demonstrates the builder’s breach.

Maryland has a three-year statute of limitations for breach of contract claims under Md. Cts. & Jud. Proc. Code § 5-101. 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 would be when a homeowner could not have reasonably discovered the existence of the breach until after the period – for example, if the deck collapses after seven years because the builder used low-quality wood and the homeowner couldn’t have reasonably known.

Claims of Negligence Against a Maryland Builder

Another possible basis upon which to sue a Maryland builder is for negligence. Ordinary negligence in the context of construction defects is said to be the builder’s failure to exercise the correct standard of care.

In Maryland, in order to establish a claim for negligence, a party 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) you sustained actual economic damages due to the injury to your home.

Maryland courts hold that builders have an implied duty to perform services required by their contract with homeowners in a skillful, careful, diligent and workmanlike manner, even without a written agreement. Note that Maryland has a three-year statute of limitations for property damage caused by basic negligence under Md. Cts. & Jud. Proc. Code § 5-101.

Time Limits Created by Maryland’s Statute of Repose

Maryland has a unique Statute of Repose, which may affect your construction-defect litigation. Under Md. Code Ann. § § 5-108, homeowners have 20 years to sue a builder based on improvements to their real property, but only ten years to sue architects or engineers.

If the homeowner waits until the builder has been “off the job” for 21 years, he or she is probably barred from filing suit for the alleged construction defect, regardless of when the defect was discovered.

This is different from the law in many other states, where the limitation period is tolled (delayed) based on when the homeowner discovers the existence of the defect. This statute is meant to give certainty to builders, so that they need not worry about potential claims after six years have gone by.

However, it means homeowners must be vigilant to ensure they do not get blocked by the statute. If you see any signs of trouble with the construction of your new home, investigate further rather than waiting for it to fully manifest! A small leak or other problem could be a sign of something larger lurking beneath or within. The window of the Statute of Repose begins to run regardless of whether the homeowner could have known about the defect in construction.

Mediation, Arbitration, and Shortened Claim Periods in Construction Contracts

Before filing your lawsuit, check your contract to see whether other steps must be taken first. Many construction contracts contain a dispute resolution clause. That clause may provide that the homeowner is required to go to mediation with the builder or developer before filing suit. Mediation, in this situation, means a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have 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 litigation in a court of law.

In arbitration, either one or three individuals – again, typically with experience in construction – will issue a final determination on your dispute. The advantage of arbitration is that it is usually quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions are probably final, that is, not subject to appeal or further court proceedings.

Lastly, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon for construction contracts to shorten the amount of time that the homeowner has in which to file a legal claim against the builder. An attorney with experience in construction defect litigation in Maryland will be able to carefully review the document for these sorts of limitations and tell you whether they can be enforced against you.

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