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

Both your contract and South Dakota law should provide protection against construction defects in your new home.

Like the architects of Mount Rushmore, home developers are rushing to make their mark on the state of South Dakota. If you buy your home from a South Dakota developer, you want to ensure that it gets built exactly as it was promised to you. Developers often entice consumers with beautiful prospectuses, renderings of perfect new homes, and promises of how wonderful the house will be.

What if you move in, but find that things are not so perfect? The price you paid was based on the promises made to you – the home's size, quality of material and workmanship, number of bedrooms, landscaping, finishing touches, and amenities. If you discover deficiencies after moving in, you'll not only feel cheated, but the value of your property is less than what you paid for.

How can you recover against a South Dakota developer for such construction defects?

Hiring an Attorney with Experience in South Dakota Construction Law

First of all, realize that suing a developer might not necessarily simple. The laws and procedures are complex. Litigation against a large development company means fighting with professional attorneys who defend themselves from such defect claims.

If you believe that there are significant defects in your newly built South Dakota home, you should consult a local attorney with experience in construction litigation about your situation. Remember that suing a developer is different from filing a small lawsuit against a home contractor, for example, which can often be handled without an attorney in South Dakota’s small claims courts.

Be ready to take the lawsuit seriously, and recognize that there will be a financial cost – an investment, really – in recouping the damages caused by your builder’s faulty work.

No Statute of Repose in South Dakota

Fortunately for homeowners looking to sue, there is no statute of repose in South Dakota. In some states, these statutes place an absolute bar on when you can file a lawsuit against a builder. South Dakota’s only limitations period is defined by the statutes of limitations themselves. With only four years on one of the most common causes of action, you should act diligently in consulting a lawyer and filing a suit.

Claims of Breach of Contract Against a South Dakota Builder

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, 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 finished basement, and the basement comes with a cement floor and bare insulation on the walls, this demonstrates the builder’s breach.

South Dakota has a six-year statute of limitations under S.D. Codified Laws § § 15-2-13(1). This means that claims based on a contract with the builder must be brought within this period, or they are barred.

However, discovery of the defect can toll the limitation period in some situations. When a homeowner could not have reasonably discovered the existence of the breach until after the six-year period – for example, if the lights go out after seven 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.

Claims of Negligence Against a South Dakota Builder

Breach of contract isn’t the only basis upon which you might sue your South Dakota developer. 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 home.

To establish a claim for negligence in South 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 South Dakota home.

South Dakota has a four-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under S.D. Codified Laws § 15-2-13(4).

Check Your Contract for Mediation, Arbitration, and Shortened Claim Periods

You and your attorney should carefully read the language of your sales contract. There are a few clauses to watch out for before filing your lawsuit. First, it is common in construction contracts in South Dakota and elsewhere to find that the builder has inserted a dispute resolution clause.

A dispute resolution clause may say 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 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 issue 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 South 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.

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