Montana is known as the Big Sky State, but that doesn’t mean that construction isn’t booming on the ground. Developers who are constructing homes in new markets are looking for Montanans to agree to buy these houses after they’re complete.
What if you buy a house before construction based on the builder’s promises about quality and size, but then discover substantial defects after you move in? Montana law will allow you to sue the builder in order to recover the lost value of your home.
When you moved into a newly constructed Montana home, the builder or developer likely gave you a stack of written materials describing the home. The materials told you how big it would be, what the floors would look like, whether there would be a garage, and what light fixtures and major appliances would be installed. You probably signed a contract, outlining your payment and the builder’s promise to construct the home according to certain specifications.
Now you’ve discovered that those specifications have not been met. By definition, if your builder delivered to you a house that is different from (and worse than) what was promised in those contractual documents, it breached this agreement – it failed to construct the house as agreed upon.
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 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 basement, but the home as built contains a crawl space you can't even stand up in, this demonstrates the builder’s breach.
Montana has an eight-year statute of limitations for breach of contract claims under state law, Mont. Code Ann. § 27-2-202(1). This means that homeowner 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 windows must be replaced after nine years because the builder installed them improperly, allowing dry rot, and the homeowner couldn’t have reasonably known.
Imagine that the builder installed the electrical system in a shoddy manner. Months later, after you move in, an electrical fire destroys part of the home and many of your possessions. This could give rise to a claim for negligence against your builder.
Negligence offers an alternative legal theory to breach of contract when suing a Montana builder. The builder might have delivered the house as promised, but with negligent construction mistakes that resulted in damage to the property. Negligence in the context of construction defects is said to be the builder’s failure to exercise the correct standard of care.
To establish a claim for negligence in Montana, a party must establish that 1) Montana law imposed a duty on the defendant builder; 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.
Montana 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. Montana has a two-year statute of limitations for property damage caused by basic negligence under Mont. Code Ann. § 22-2-207(2).
Statutes of limitations can be extended in certain cases – particularly if the homeowner could not have reasonably discovered a construction defect within the statutory period. Montana has a Statute of Repose, however, which creates an absolute bar of ten years from the date of construction for any claims against your builder. This cannot be extended, even by a sympathetic judge.
Under Mont. Code Anno., § 27-2-208, homeowners have ten years in which to file suit after substantial completion of the construction project. If the homeowner waits until the builder has been “off the job” for ten years, he or she is probably barred from filing suit for the alleged construction defect, regardless of when the defect was discovered.
Homeowners must be vigilant to ensure that 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 ten-year window of the statute of repose begins to run regardless of whether the homeowner could have known about the defect in construction.
Before filing your lawsuit, check your contract to see whether other steps must be taken first. Many construction contracts, in Montana and elsewhere, 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 related experience; perhaps in 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 court. In arbitration, either one or three individuals – again, typically with some experience in construction matters – 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 in most cases final, that is, not subject to appeal or further court proceedings.
Finally, 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 Montana will be able to carefully review the document for these sorts of limitations and tell you whether they can be enforced against you.