Last year, my family and I purchased a new home from a developer. The developer promised us a state-of-the-art suburban home, built from scratch. We didn’t know the specific architect, contractor, or subcontractors who would be involved in building the home, but we did view a model home by the same developer and construction team.
We signed the sales agreement with the developer and moved into the home a few months after construction. Shortly after moving in, however, we began to notice all sorts of problems with the home’s quality – the marble in the kitchen was cracked; the windows don’t close; and the electricity is spotty.
Clearly, the issues relate to the quality of the materials, the design, and the installation. I'm frustrated, and feel I deserve compensation. Who am I permitted to sue? Only the developer, or can I include the architect, the general contractor, and any relevant subcontractors?
In many construction disputes, plaintiffs will try to sue everyone involved in a construction project – suppliers, subcontractors, architects, designers, and various developers. The strategy for doing this is often the hope that some of these smaller entities (or their insurance companies) will offer settlement monies to escape involvement in the litigation.
Unfortunately for you, in the situation of a new-home construction project, your sole contract was with the developer. You never spoke with the architect. You don’t know the general contractor’s identity. And you certainly never met the representatives of the company that supplied the cracked marble to your contractor who installed your kitchen floor.
In legal terms, you lack “privity of contract” with these individuals and companies. This is a legal-jargony way of saying that you cannot sue them for breach of contract, since you never had a contract with them to begin with.
Having said that, your developer may, once you file suit, implead the architect or third-party contractors. Impleading means that the developer could file its own, related lawsuit against these other parties.
Even if the developer breached its contract with you, the buyer, it may argue that the designers and contractors breached their contracts with it. That is, the developer had a contract with a general contractor to build a quality house that the developer could turn around and sell to buyers. The general contractor had an obligation to hire qualified subcontractors and suppliers, and supervise their work. If the general contractor failed to do this, resulting in legal claims against the developer, the developer is likely to sue the general contractor.
By the same token, the developer hired an architect to design a quality house. If the house as designed is unsafe or unlivable, the developer could also sue the architect.
In short, the fact that you cannot necessarily sue these other entities directly for breach of contract should not concern you. Your only contract was with the developer, and it was the developer’s responsibility to give you the home you expected under the terms of the contract. Should the developer want to file its own claims against these other entities for breaching their duties to the developer, that will only aid your recovery of what you're owed.