Buying a home is both an exciting and a stressful time. Imagine that you’ve just bought a newly built home in North Dakota, constructed by a development company. The developer likely enticed you with all sorts of pictures and promises – a perfect home against an idyllic backdrop of the plains. The developer surely quoted you the price, and then described all facets of the home – its size, its location, its quality, and its amenities and possible upgrades. Based on these representations, you agreed to buy the house.
Not all new construction is perfect, however. For a variety of reasons, you may be dissatisfied with the home after you move in. Perhaps the central air-conditioning is defective; perhaps the floorboards in the bedroom are not level; or perhaps the contract documents made a material misrepresentation, promising you a walk-in closet when no such closet was built.
Defects like these diminish the value of your North Dakota home, not to mention make you feel like you didn't get what you paid for.
How can you use North Dakota's laws to recover against your developer?
Suing a developer might not be easy. Many builders are parts of statewide or nationwide corporations, which have teams of attorneys on staff, ready and eager to defend themselves from claims. You are one home buyer of dozens or possibly even hundreds. Your chances of winning this fight on your own are not good.
If you believe that there are significant defects in your newly built North Dakota home, you should consult a local attorney – preferably one with experience in North Dakota real estate or construction – about your situation.
Suing a developer is different from filing a small lawsuit against a home contractor, for example, which can often behandled without an attorney in North Dakota’s small claims courts. A small claims action might be ideal for a small dispute with a painter, for example, who fails to complete a specific task. A lawsuit against a developer is a larger project, one that generally requires an attorney’s assistance.
Ultimately, your lawsuit against your developer is about its breach of a promise: to deliver you a home as it was described it to you. Buying a newly constructed house is a process that generates lots of paperwork, particularly if the house is within a new planned community. Your builder or developer surely gave you extensive materials describing your new property. You would have needed to sign a contract outlining your payment and the builder’s promise to construct the home.
If you have to file a lawsuit against the builder, part of your claim will be that it breached this agreement – did not give you what it promised it would. Here, all of the materials the builder gave you, including photos, descriptions of the home and landscaping, plans and drawings, lists of appliances and add-ons, 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 crown mouldings, and the walls are just flat from floor to ceiling, this demonstrates the builder’s breach.
North Dakota has a six-year statute of limitations for breach of contract, however, under N.D. Cent. Code § 28-01-16(1). This means that claims based on a contract with the builder must be brought within this period, or they are barred.
However, delayed discovery of the defect can toll (put off) the limitation period in some situations. When a homeowner could not have reasonably discovered the existence of the breach until after the three-year period – for example, if the lights go out after four years because the builder used low-quality wiring and the homeowner couldn’t have reasonably known about it (especially likely, with wires being hidden behind walls) – a court might allow the action to proceed.
Breach of contract isn’t the only basis upon which you might sue your North Dakota home builder. Another useful legal theory is that of ordinary negligence. In this context, the relevant negligence would be the builder’s failure to exercise the correct standard of care in building your North Dakota home.
To establish a claim for negligence in North Dakota, the person filing suit must establish that 1) a particular duty was imposed on the builder or developer by law; 2) the builder failed to conform to that legally imposed standard; 3) there was a causal link between the failure to meet the standard of care and the resulting construction defect; and 4) you suffered actual economic damages as a result of the injury to your North Dakota home.
Note that North Dakota has a three-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under N.D. Cent. Code § 28-01-16(4).
Homeowners seeking to sue their builders need to be mindful of North Dakota’s Statute of Repose – a law intended to give legal certainty to builders after a certain period of time. Under N.D. Cent. Code, § 28-01-44, a homeowner has only 10 years to sue his developer for the construction of the home.
Unlike with statutes of limitations, the ten-year period cannot be extended because of a latent construction defect or late discovery.
You and your attorney should carefully read the language of your sales contract. Check for the presence of any of several clauses before filing your lawsuit. First, it is common in construction contracts in North Dakota and elsewhere to find a dispute resolution clause.
A dispute resolution clause may say that you are 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 relevant experience, most likely with construction law, engineering, or building development.
Your contract may also contain 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 typically quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions generally cannot be appealed.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon that construction contracts will shorten the amount of time that you have in which to file a legal claim against your builder.
An attorney with experience in construction defect litigation in North Dakota will be able to carefully review the document for these sorts of limitations and help strategize how to best seek compensation from your builder or developer.