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

Discovered problems in the construction of your Minnesota home? Here's what the law allows you to do next.

Imagine that you’ve moved to a new home in St. Paul, Minnesota, 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 – major problems.

The issues aren’t just aesthetic. The floors are uneven, the pipes are rusted, and the windows are cracked. Not only are these defects troubling as a resident, they also lower the value of your home, should you ever wish to resell. You should not be “Minnesota nice” to your developer; you need to assert your rights and be made whole!

How can you recover for these major structural problems in a newly constructed home in Minnesota?

Make a Formal Demand

Unlike other states, Minnesota law does not require that you give your developer the ability to correct any construction defects before you file a lawsuit in court. However, doing so is still a good idea.

Your first step should be contacting the developer over the phone, or suggesting an in-person inspection, to review the defects. You could also send a formal demand letter asking for reimbursement, or remediation work. The developer, wanting to avoid litigation, may do the right thing and send inspectors or contractors to correct the issues. If the developer ignores the letter or fails to properly address the situation, you’ll know that it’s time to file suit.

Claims of Breach of Contract Against a Minnesota Builder

If you moved into a newly constructed home in Minnesota, 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 structure that was promised. Here, all of the written materials the builder gave you, including photos, effusive 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. Regardless of the existence of a written contract, builders owe homeowners an implied warranty over the quality of their work. Minnesota 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.

Keep in mind, however, the statute for limitations (putting a deadline on when you can sue) on an action for breach of contract in Minnesota is six years, under Minn. Stat. § 541.05, subd. 1(1).

Claims of Negligence Against a Minnesota Builder

Another possible basis upon which to sue a Minnesota 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 1) a duty was imposed on the builder by law; 2) the builder failed to conform to the correct standard; 3) there was a causal link between the builder's failure to meet the standard of care and the resulting construction defect; 4) and you sustained actual economic damages from the injury to your Minnesota home.

An example might be a builder who left electrical wires exposed in the kitchen, allowing contact with water, such that a resulting power surge destroyed your appliances.

Note that Minnesota has a six-year statute of limitations for property damage caused by negligence under Minn. Stat. § 541.05, subd. 1(4).

Minnesota’s Statute of Repose

Homeowners seeking to sue their builders need to be mindful of Minnesota’s Statute of Repose – a law intended to give legal certainty to builders after a certain period of time. Under Minn. Stat. § 541.051, a homeowner has only ten years to sue his developer for the construction of the home.

Unlike statutes of limitations the ten-year period cannot be extended because of a latent construction defect or late discovery.

Read Your Contract: Mediation, Arbitration, and Shortened Claim Periods

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 Minnesota will be able to carefully review your documents for these sorts of limitations.

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