You’ve just moved into a newly built home in North Carolina, constructed by a builder or developer. From the outside, the house looks wonderful, exactly as it had been promised. But after a couple weeks of living there, you begin to notice serious issues. Perhaps the issues are aesthetic – the tiles on the bathroom floor don’t quite line up, or the windows have a strange dark tint. Or perhaps the issues are more structural – the stairs feel shaky, or the doors don’t fit into the frames.
Surely, you paid the price you paid for the home on the assumption that your home would be perfect, or at least reasonably close to perfect. Construction defects lower the value of your home. How can you recover against the builder or developer for such defects?
Some states give homeowners express warranties by statute, listing specific duties that the builder has with respect to the homeowner. In North Carolina, by contract, the legal duties owned to the homeowner are implied by the courts.
North Carolina courts hold that builders of new homes give homeowners implied warranties – essentially legal guarantees – that the home will be habitable and constructed in a workmanlike manner. These implied warranties do not necessarily mean that the home will be perfect, merely that the home is free from major structural defects. Because the statutory authority is not explicit, courts have wide latitude to determine whether or not a builder met its obligations.
If you moved into a newly constructed home, your builder or developer surely 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.
Part of your lawsuit against the builder will be that it breached this agreement – it did not give you the building that it promised it would. Here, all of the materials the builder gave you, including photos, descriptions of the home, 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 two-car garage but the garage as built fits only one car, this demonstrates the builder’s breach.
North Carolina has a three-year statute of limitations period on actions for breach of contract and negligence. 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 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 four years because the builder used low-quality wood.
Ordinary negligence in the context of construction defects is the builder’s failure to exercise the correct standard of care. In North Carolina, in order to establish a claim for negligence, the homeowner must establish that:
A unique facet of construction defect litigation in North Carolina is the Statute of Repose for improvements to real property, N.C. Gen. Stat. §1-50(a)(5)(a). Under this legislation, homeowners have six years from the substantial completion (or the last specific act or omission of the builder) to file suit. After the builder has been “off the job” for six years, a homeowner is generally barred from filing a lawsuit for an alleged construction defect, regardless of when the defect was or is discovered.
This is different from in many other states, where the limitation period is tolled (or delayed) based on when the homeowner discovers the existence of the defect. The North Carolina statute is meant to give certainty to builders, so that they need not worry about claims after six years. However, it means homeowners must be vigilant to ensure they do not get blocked by the statute.
There are a few clauses to watch out for in your contract before filing your lawsuit. First, it is common in construction contracts to find a dispute-resolution clause. That clause may provide that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual 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 litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render 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 these decisions are generally non-appealable.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make legal claims. It is not uncommon that construction contracts will shorten the amount of time that you have to file a legal claim against your builder. An attorney with experience in construction defect litigation in North Carolina will be able to carefully review the document for these sorts of limitations.