Florida courts, like those in many other states, have decided that buyers of newly constructed homes are entitled to a promise from the builder that the home is habitable and fit for its intended purpose (an implied warranty of fitness, in legal language). Particularly in large developments, the developers and builders are in the best position to know what's going on and make sure it gets done right.
A new Florida house needs to be constructed and everything needs to work in the way that someone would reasonably expect. For example, the roof needs to be leak-free, the air conditioning and heating need to work, water needs to come out when you turn on the faucet, and so on.
Home construction is a huge business in Florida. Take a look, for example, at the numerous builder-investors who construct luxury condominium high-rises overlooking the beach. Given the posh environment, you might think that every new home had been crafted to meet the highest standards, but all too often this is not the case. Time is money, and many builders have been known to skimp on materials and choose lower quality in order to boost their profit margin.
It took until fairly recently for Florida courts to declare that implied warranties apply not only to the specific components that make up a home, but also, in a condo or similar complex, to any surrounding features and improvements, if they provide “essential services” for the habitability of the homes. (See Maronda Homes, Inc. of Florida v. Lakeview Reserve Homeowners Association, Inc., No. SC10-2292 (Fla. 2013).)
The Florida legislature pushed back at the court's holding in Florida Statutes § 553.835, saying that offsite improvements do not come under the implied warranty of habitability. But the Florida Supreme Court upheld Maronda nonetheless.
Florida’s required builder warranties apply whether or not they are included in your purchase contract. They are afforded to you by Florida case law; in other words, law created by judges and their written court decisions.
However, for clarity on the specific rights provided by the builder’s warranties, such as how long they apply to the construction and what the builder will be required to fix, if anything, you're best off if you asked the builder or your attorney to provide express, written warranties within your purchase contract.
A standard warranty to look for in your contract documents is a promise that the contractors' work will be defect-free and comply with all contract requirements. Ideally, the builder should not be permitted to use materials of a lesser quality than you want, which might later compromise the overall quality of the home.
Your warranties should also establish that you have a legal relationship with all contractors providing services on your property, because you need that in order to enforce warranties against them. The law refers to this relationship as “privity;” in other words, being a person who is entitled to the rights and protections of a contract.
Hopefully, you or your attorney made sure that your warranties were drafted carefully to ensure that you will be able to enforce them, as complex disputes can arise even with express warranties. You might think that you have coverage, but courts have created a number of exceptions that excuse builders from providing services under a warranty.
For example, one court excused a subcontractor from fulfilling an express warranty that only materials “of good quality” would be used, because other language in the contract documents required the contractor to use only one kind of brick, which turned out to be defective (See Wood Hopkins Contracting Co. v. Masonry Contractors, Inc., 235 So.2d 548 (Fla. 1st DCA 1970).)
In the absence of a written warranty, your rights will need to be determined on an individual basis, likely by a mediator or judge. For example, if there are no passable roads to let you get to and from your residence, and if there is always standing water that attracts mosquitoes and creates a drowning hazard, then these hazards negatively impact the habitability of your home in the eyes of the law, and a court is likely to rule in your favor in a lawsuit against the builder.
Upon noticing any defects in your new home, there are certain procedures you must follow, and a time limit within which to follow them to either resolve the dispute or preserve your ability to ultimately take the matter to court.
For starters, Florida law says that the builders or contractors involved in the construction of your home are entitled to notice of the defects and an opportunity to fix them before you can sue them (See Florida Statutes, Chapter 558).
The notice requirements are too extensive to list here, but they state, among other things, that property owners must provide the responsible contractors with written notice of the defects at least 60 days prior to filing suit. If the complaint involves an association representing more than 20 units, 120 days’ notice must be given. Additionally, homeowners must try to give such notice within 15 days after discovering the defects, if possible.
After receiving such notice from a homeowner, the contractor has the right to perform inspections to determine whether the defects exist and whether the homeowners’ complaints are correct. The contractor must, within a specific timeframe, respond in writing to the homeowner. The contractor’s response may include reports and results of any inspections performed, state whether the contractor is willing to make repairs, and indicate whether the contractor disputes the homeowners’ complaints. The laws go on to give further details about the inspection and response process, and what happens after the contractors provide the homeowners with their response.
If you follow these procedures and are still not able to get your issues resolved, you can consider filing a lawsuit. If you have not already consulted with an attorney, now is a good time to do so. Together, you should consider whether there are any alternatives to suing, how serious the defects are, what you might potentially gain in light of the risks and costs involved, and so on.
Florida law also provides deadlines by which you are required to bring certain kinds of lawsuits, or forever lose the rights to sue (known as statutes of limitation, in legalese). In the case of new home defects, you are normally required to file a complaint within four years from the time that you discovered, or should have discovered the defect. (See Florida Statutes § 95.11(3)(c).) Also, you must file within seven years after the project was issued a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or the date of abandonment of construction if it wasn't completed (whichever comes first).
Construction defect law is a busy practice area in Florida, given the abundance of new homes, apartment buildings, and condominiums being built. There are quite a few procedures and deadlines that you need to comply with and meet. If you don’t, you could risk losing your rights against the builder. It's best to consult with an experienced construction defects or condominium attorney early on in the process.
]]>However, that succession of events comes with risks. Imagine that you contracted to purchase a two-story house with three bedrooms and a jacuzzi, but when you moved in, there were only two real bedrooms plus a bonus room with no closet, and no jacuzzi. Or perhaps the bedrooms were all smaller than promised. Or perhaps the heat throughout the home is faulty, costing you thousands of dollars in repairs.
Construction defects are not uncommon in new home construction. Whether the defect represents a major material misrepresentation by the builder (like a missing jacuzzi) or a fixable but important problem (like faulty electric work), construction defects lower the value of your home. How does South Carolina law help you recover against the builder or developer for such defects?
Once you discover a construction defect, don’t run off to court just immediately. In South Carolina, for residential construction, a builder has an automatic right to cure any defects that emerge before litigation can proceed. Basically, this means you need to tell the builder about the problem so the builder has a reasonable chance to fix it.
Under S.C. Code § 40-59-840(A), a homeowner must serve a written notice of claim on the builder at least 90 days before filing suit. Basically, this is a letter that details the defect and the problem(s) it's causing. You might include photographs, as well.
The builder then has 15 days in which to request any needed clarification, and 30 days from receiving the letter in which to inspect the problem and either deny the claim or offer either a monetary settlement or a remedy. You must allow the builder to inspect your home. You'll have 10 days in which to respond to an offer from the builder.
If the builder denies your claim or fails to respond within 30 days, then you can begin litigation.
When you arranged for the construction of your South Carolina home, the builder or developer likely gave you a stack of written materials describing the place. You probably signed a contract outlining your payment and the builder's promise to construct the home according to certain specifications.
Part of your lawsuit against the builder will likely be that it breached this agreement; it failed to construct the house as agreed upon. Here, all of the materials the builder gave you, including photos, floor plans and descriptions of the home, and lists of materials, finishes, or appliances, will be useful in demonstrating your rightful expectations. If, for example, the various documents show that you thought you were getting a home with a two-sink master bathroom but the room contains only one sink, this demonstrates the builder’s breach.
Don't delay: South Carolina has a three-year statute of limitations for breach of contract claims, under S.C. Code § 15-3-530. 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 would be when a homeowner could not have reasonably discovered the existence of the breach until after the period. For example, if the deck collapses after seven years because the builder used low-quality wood and the homeowner couldn’t have reasonably known, a lawsuit that commences at that point should be accepted.
Another legal theory upon which to sue a South Carolina builder is negligence. Ordinary negligence in the context of construction defects is said to be the builder’s failure to exercise the correct standard of care.
In order to establish a claim for negligence, a party must demonstrate that:
South Carolina 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.
South Carolina has an eight-year statute of limitations for property damage caused by basic negligence, found in S.C. Code § 15-3-640. Thus a homeowner who waits until the builder has been “off the job” for nine years is probably barred from filing suit for the alleged construction defect, regardless of when the defect was discovered.
This is different from the law in many other states, where the limitation period is tolled (delayed) based on when the homeowner discovers the existence of the defect. This statute is meant to give certainty to builders, so that they need not worry about potential claims after eight or more years have gone by.
However, it means that homeowners must be vigilant about the condition of their home to ensure 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.
Before filing your lawsuit, check your contract to see whether other steps must be taken first. Many construction contracts contain a dispute resolution clause. That clause might 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 experience with construction law, engineering, or building development.
Your contract might also have an arbitration clause. This 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 (typically with experience in construction) 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 ordinarily final, that is, not subject to appeal or further court proceedings.
Lastly, take note of any language within the contract that shortens your statute of limitations period or ability to make legal claims. It is not uncommon for construction contracts to shorten the amount of time that the homeowner has in which to file a claim against the builder.
An attorney with experience in construction defect litigation in South Carolina will be able to discuss with you whether these limitations can be enforced against you and help you further explore your likely remedies.
]]>Before you look into whether the builder is responsible to fix the home defect you’ve found, you must first prevent the problem from causing any further damage. The builder is not responsible for any damage that occurs to the home after you’ve discovered the problem.
This means that once you discover the leak in the roof, if it is causing damage to the home, you must repair it as soon as possible. Even if the builder must ultimately repair the leak (or reimburse you for the repair), the builder will not be responsible for replacing the carpeting that got wet and ruined during the three storms that occurred after you discovered the leak.
If you make any repairs to prevent further damage, keep receipts and detailed records of their costs. Also keep any estimates or bids you receive from professional contractors to completely fix the problem. These documents are necessary to show the amount owed you if you are later successful with a claim against the builder for the home defect. If you can, take photos or a video of the defect and any damage it has caused. These can also provide useful documentation in any later claim against the builder.
After you complete any necessary repairs, the first place to look to determine whether the builder is responsible to fix the defect is to the terms of the written warranty given by the builder.
Under Georgia law, home builders must provide a written warranty to the buyer before starting work on any job valued at over $2,500. (Georgia Code §43-41-7.) The warranty provided by the builder for the new home must, by law:
(The warranty requirements are found in the Georgia State Licensing Board’s rule 553-07).
Carefully review the terms of the builder warranty and follow all the procedures it calls for to make a claim. Usually a builder’s warranty covers only defects in materials and workmanship (and specifically does not include normal wear and tear) for a specified period of time (typically one year).
Normally, if the defect is something covered under the warranty, and you make a claim within the warranty period, the builder will be responsible for fixing the problem or reimbursing you for the cost of fixing the problem (this is where that documentation relating to the defect and the repairs is useful).
If that doesn’t happen, of course, it’s time to see a lawyer. The first thing the lawyer will ask to see is your copies of any written claims or requests that you sent to the builder and the builder’s responses, and your dated notes of any telephone conversations, so start keeping a file now.
If you find that the defect you’ve discovered with the home is not covered under the builder’s warranty (maybe it’s specifically excluded, or the problem appeared after the warranty period expired), you might not be out of luck.
Under Georgia law, an owner’s alternative legal claims against the builder include breach of contract, negligent construction, or fraud. Whether you have a legitimate basis for such a lawsuit depends on the facts of your particular situation.
For example, if the home was not constructed according to the terms of the plans and specifications that you as, a buyer, signed off on as a part of the agreement for the purchase and sale of the home, you might have a claim against the builder for breach of contract.
If the problem is due to the home’s poor construction (for example if you can show that the roof leak is due to the fact that the builder constructed the roof in a shoddy manner that no other builder would use), you might be able to bring an action against the builder for negligent construction.
If the builder outright lied about the quality or type of materials used, or deliberately concealed facts about the home (for example if the driveway cracks are due to the builder knowingly using a defective concrete that the builder told you was top of the line stuff), you might have a claim against the builder for fraud.
Although there is a limit to how long you can wait to file a lawsuit after discovering a problem with the condition of the home, this time limit (known in legalese as the “statute of limitations”) could be longer than the warranty period. In Georgia, any claim for breach of contract must be brought within six years of the discovery of the defect (Georgia Code §9-3-24).
Also, any claim for negligent construction or fraud must be brought within four years from the time the claim arises (Georgia Code §9-3-30).
If you believe you have a valid legal claim against the builder for a defect in your newly constructed home, and you are within the time period allowed for starting a lawsuit, you still cannot jump right in and file a complaint with the courts. Under Georgia law, you must first provide the builder with certain notifications. Georgia’s Right to Repair Act (Georgia Code § § 8-2A-35 through 8-2A-43) sets out certain steps that an owner of a newly constructed home must follow prior to filing a lawsuit, and allows the builder to resolve the problem before a lawsuit is initiated.
You should be able to find the relevant provisions of the Right to Repair act in your purchase and sale agreement for the home (a Georgia builder must provide buyers with notice of the provisions of the Right to Repair Act in any sales contract for a newly constructed home).
You'll see that the law says that before you (the homeowner) can initiate a lawsuit against the builder for a new-home defect, you must first send written notice to the builder regarding your claim. The notice must:
After receiving the notice, the builder has 30 days to give you a written reply, choosing either to settle the claim without an inspection (by paying the cost of the repair, making the repair, or both), or to inspect the defect and determine the need for any repairs. If the builder chooses to inspect the defect, after the inspection the builder must provide you with a statement either refusing to fix the defects (including the reasons) or offering to pay for or repair the defect (or both). If you reject the builder’s offer, if the builder refuses to fix the defect, or if the builder fails to respond to your notification, then you may file a lawsuit.
Ideally, by following the steps of the Right to Repair Act, you can reach a resolution with the builder without needing to resort to a lawsuit. Since bringing a legal action involves a lot of time and expense and an unpredictable outcome, both the homeowner and the builder benefit if they can resolve problem without bringing it to court.
Hopefully, as the owner of a newly constructed Georgia home, you will find it’s well constructed, in great condition, and you will settle in and enjoy living there with no problems. If you do discover a defect with the home after moving in, however, and are unsure the best way to proceed, contact a construction law or real estate attorney in your area. A professional can help you determine the best course of action, and ensure you are following the correct procedures to get a speedy resolution to the problem.
]]>Unfortunately, just because a Texas builder promises you a state-of-the-art home does not mean that the final product will be perfect. For a variety of reasons, you may be dissatisfied with the home after you move in. Perhaps the air-conditioning is weak; perhaps the tiles in the kitchen are improperly installed; or perhaps the builder actually misrepresented the size or scope of the home, promising you four full bathrooms when the home contains only three and a half.
These problems are commonly known as “construction defects.” They make living in the home less satisfying than you'd hoped for, and in some cases require expensive repairs and remodeling. And such defects lower the value of your home, should you want to resell. How can you use Texas laws to recover against your developer?
Home development contracts can be complex. Not only are the laws involved complex, but many builders are parts of statewide or nationwide corporations with teams of attorneys to defend them. You cannot be expected to win this fight on your own.
If you believe that significant defects exist in your newly built Texas home, you should consult a local attorney – preferably one with experience in Texas 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 Texas’s Small Claims Court. This type of action is ideal for a small dispute with a painter who, for example, fails to complete a specific task. A lawsuit against a developer is a larger project, one that generally requires an attorney’s assistance.
Some construction defects are obvious. Your builder charged you a fixed price for a house with two floors and a swimming pool, but built you a one-story house with no pool.
Other construction defects will not be quite as obvious to the naked eye. For example, what if the builder used a low-quality wood to construct the stairs? Or did not use proper methods to support the deck? These sorts of problems are serious, and lower the value of your home. But to detect them, you may need to invest in an engineering inspection. If you are considering filing a lawsuit against your Texas builder, your attorney may recommend a so-called “expert report,” which will lend objective credibility to your allegations.
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 in all likelihood gave you extensive materials describing your new property. You (and the builder) would have needed to sign a written contract outlining your payment and the builder’s promise to construct the home.
If you end up having to file a lawsuit against your Texas 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 inside and out, 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 stucco exterior, and the finished exterior is cheap vinyl siding, this demonstrates the builder’s breach.
One law you'll need to watch out for, however, is Texas's a four-year statute of limitations for breach of contract, under Tex. Civ. Prac. & Rem. Code § 16.004(a)(3). 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 (delay) 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 homebuilder. 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 home-construction negligence in Texas, 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 Texas home.
Note that Texas has a two-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under Tex. Civ. Prac. & Rem. Code § 16.003(a).
Under Tex. Civ. Prac. & Rem. Code § 16.008, a homeowner has a maximum of six years from written acceptance or actual occupancy for design or construction of improvement to real property.
This means that even if you can extend the three-year statutes of limitations on breach of contract or negligence through the doctrine of discovery – that is, when you reasonably could have discovered the problem with your home – six years is the “ultimate” limit. As a homeowner, therefore, you must be diligent in discovering any potential defects.
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 Texas and elsewhere to find 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 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 Texas 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.
]]>This article will examine your remedies for defects in your newly constructed New York home and the actions you can take upon finding them. For information about remedies for defects in previously constructed homes, see Home Defects in New York: What Can a Buyer Do?
Ideally, you will have discovered any construction defects prior to your purchase. The building department of your municipality, which will do a final inspection before declaring the house habitable, might find unsafe conditions or noncompliance with its minimum standards. You might also find defects during your preclosing walk-through, but those will be limited to easily observable defects.
New York attorneys typically recommend you attempt to negotiate an inspection provision into your construction and purchase contract, hire a licensed inspector to inspect the property before closing on the purchase, and demand that the builder make the recommended repairs or replacements prior to your closing.
However, not all defects will manifest or be detected prior to the closing. It is therefore important to understand your rights against the builder if defects are found, whether days, weeks, or years after the closing.
New York statutory law creates a warranty for new construction, called the “Housing Merchant Implied Warranty.” (It replaced a warranty that had been implied into contracts by the New York courts in the years before the 1989 passage of the law.)
Today, it's the exclusive warranty for all sales of new construction homes. The statutory warranty is “implied,” in that it need not be written into the contract, but exists within every contract for the sale of a single family house or unit in a multi-unit residential building of five stories or less. (See N.Y. General Business Law §§ 777A- 777-B.) The statutory warranty will not be implied into your contract if your new home is built on land you owned prior to construction.
The law describes the construction, materials, appliances, systems, and building components covered by the implied warranty, as well as items excluded from coverage and the length of the warranty period for each item.
In general, the law says that construction defects are covered for one year after the warranty date—the date title passed to the first new home owner. Plumbing, electrical, heating, cooling, and ventilation systems are covered for two years after the warranty date. Material defects are covered for six years after the warranty date. Review the statute to see whether your defect is covered and if so, for how long.
The law also describes the time notice and limitations periods for filing a lawsuit. You must notify the builder of a warranty claim in writing before filing suit, and no later than 30 days after the warranty period expires, and give the builder a reasonable opportunity to inspect, test, and repair the defect.
While the notice to the builder is a precondition to filing a lawsuit, the opportunity to inspect, test, and repair is not. See Trificana v. Carrier, 916 N.Y.S.2d 399 (N.Y. App. Div., 2011). After notifying the builder, you may file suit any time before one year after the warranty period ends, or within four years after the warranty date. (N.Y. General Business Law § 777-A).
Whether or not a condition is a defect covered under the warranty is judged by the level of skillful workmanship standard in the community. This means that to prove your case against the builder, you should submit evidence of the defect itself and the local standard for skillful workmanship. This evidence may include expert witness testimony from local architects, engineers, contractors, or others in the building trades, and the standards in local building ordinances. The level of workmanship required for your new home may be changed by the terms of contract.
If you sue, the monetary damages you may win will typically be the cost of the repairs or replacements plus the cost to repair any damage to the home caused by the warranty work. The maximum amount that may be awarded is the value of the home itself, without the land. However, a court may calculate damages as the value of the home as it should have been built minus the value of the home as it is with the defect, if it finds that amount to be more equitable under the circumstances. (N.Y. General Business Law § 777-A).
Read the builder’s contract carefully. It might require you to waive the Housing Merchant Implied Warranty and accept a limited or modified warranty in its place, as is allowed under N.Y. General Business Law § 777-B(3).
But this won’t hold up in court if the waiver is buried in fine print: The contract terms replacing the statutory warranty must be conspicuous, mention the existence of the implied warranty, and state that the limited warranty excludes or modifies the implied warranty. However, the law gives an example of far less explicit language that will suffice: “There are no warranties which extend beyond the face hereof.” The builder must also supply you with a copy of the limited warranty prior to your signing the contract, and attach a copy of the limited warranty.
The limited warranty must state all of the information required in Section 777-B(4). Standards set in the limited warranty must meet or exceed standards in the local building code or the locally accepted building practice where code provisions do not apply. Building standards set in the limited warranty that fall below local building standards, or render the home unsafe, are considered void under New York law.
If your new home was built on land that you previously owned, it is a “custom home.” The Housing Merchant Implied Warranty, including the coverage requirements, notice requirements, and time limitations, does not apply to custom homes.
Your remedy for custom home defects is to sue the builder for breach of contract. To succeed, you will have to show either that the home was not built according to any plans and specifications or drawings made a part of the contract, or that it was not built up to the standards promised in the contract.
Your damages for defects in a custom home will typically be the amount required to fix the defect. However, the court can award you the difference between the value of the home with defects and its value without defects.
Courts usually award the difference in value when the builder substantially performed the contract in good faith and the cost of remedying defects would be unreasonable compared to the value of the home, or when repairs might render the home uninhabitable. (See Lyon v. Belosky Const. Inc., 669 N.Y.S.2d 400 N.Y.A.D. 3 Dept. (1998).)
The time and cost involved with a lawsuit often make other forms of dispute resolution attractive to both parties. You may be able to negotiate an acceptable settlement with the builder yourself or through your attorney. If the builder is amenable to negotiation, but you have not been able to reach a settlement consider jointly hiring a mediator to help. A mediator will review the contracts, inspection reports, and other evidence you provide, and work with both sides to resolve the matter.
Some construction contracts require that disputes be settled through binding arbitration. Arbitration differs from mediation in that it is more like a court proceeding. The arbitrator hears the facts and evidence at a hearing, and makes a decision much like a judge would do. However, in New York, the builder is not permitted to require binding arbitration in any limited warranties replacing or modifying the Housing Merchant Implied Warranty, and must pay for any voluntary arbitration. (N.Y. General Business Law § 777-B(4)(h).)
You cannot make any demand on, sue, or enforce a judgment against a builder who has filed for bankruptcy prior to your lawsuit. 11 U.S.C. § 362.
If your builder has already filed for bankruptcy, you might be able to sue the subcontractors—members of the various home building trades who helped build your home’s defective components, such as plumbers, electricians, and carpenters. You have two years from the date you found out or reasonably should have known of your right to sue the subcontractor to do so.
Act quickly to protect your rights immediately after discovering a defect in your newly constructed house. Your ability to demand repairs or damages under warranties and contract terms are limited by time. Here are some initial actions to take:
You may also bring in a licensed inspector to help you understand the defect and make your case against the builder. An experienced real estate attorney will be able to help you understand and protect your rights against the builder.
]]>Surely, you paid for the home on the assumption that it would be perfect, or at least reasonably close. Construction defects lower the value of a home. How can you recover against the builder or developer for such defects?
Some states' legislatures set out to give homeowners express warranties by statute, listing specific duties that the builder has with respect to the homeowner. In North Carolina, by contrast, 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.
In accordance with this, however, South Carolina's standard forms for the sale of new construction include a limited warranty. These state that, for of one year after the sale, the builder/seller will make all repairs and corrections to the home that become necessary through faulty construction, labor, or materials. Alternatively, a North Carolina home builder can offer its own warranty.
Review your sale materials to see whether a warranty can be found within, and its terms. Pay particular attention to any responsibilities it might give you, such as regarding notifying the builder of your complaint. You might not need to proceed straight to a lawsuit.
If you didn't receive a warranty, or the builder is refusing to honor it, again look to the contract you signed. Part of your lawsuit against the builder will be that it breached this agreement; it did not give you the building that it promised to.
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 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 a 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:
To bring such a claim, you'd need to pay special attention to gathering evidence showing that the builder did something "wrong," for example installed windows facing the wrong way, thus causing a leak and resulting damage. Be sure to take photos and maintain all documents and receipts before you clean up or try to repair the problems yourself. (Basic repairs might be both practically and legally necessary so that the problem doesn't get worse while you wait for attention from the builder.)
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). This law says 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 might 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 person will have some experience with construction law, engineering, or building development.
Your contract might 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 ordinarily 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.
]]>A construction defect is any physical condition that reduces the value of a home or property and that was caused by a flaw in design or workmanship.
Examples can include things like water seeping through the roof or windows of a new home, faulty drains, cracks in the foundation, or portions of the new home collapsing. In some circumstances, construction defects can also include earth settlement problems such as inadequate grading and drainage.
Cal. Civil Code § 896 and its following sections outline specific defects that home builders are responsible for fixing. The list is meant to be quite broad, as the statute says, "The standards set forth in this chapter are intended to address every function or component of a structure." (Cal. Civil Code § 897.)
In order for a defect to qualify as a construction defect, the law requires that it be discovered within a certain number of years from the date of construction completion or from the close of escrow (depending on the defect and your set of circumstances). This can be anywhere from one to ten years, again depending on the type of defect.
In some circumstances California law also sets deadlines (periods of years) by which you must file your lawsuit related to a new home construction defect. As a result, if you think you have noticed a defect, don’t delay. Your best course of action is to look into it immediately, to avoid missing any of the cutoff dates should you ultimately need to file a lawsuit. Ten years from the date the home was substantially completed tends to be the longest any homeowner can wait to file suit.
You can’t just sit back and watch the damage go from bad to worse and then expect to collect for repairs—for example, watch as a leak in the roof allows water to pour in, damaging your floors and leading to a household-wide mold problem. California law requires you to take reasonable steps to protect your property from additional damage once you notice there is a problem, such as covering up any holes where water is leaking in.
These “temporary fix” costs are normally recoverable as part of a lawsuit, if you ultimately have to file one. Be sure to enlist the help of an expert to ensure that what you’re doing is the best way to handle the situation, and to be sure that all your efforts are well documented.
Under California law, the builder must provide a limited warranty, in writing, as to “fit and finish” items (including the quality completion of cabinets, flooring, mirrors, walls, countertops, and paint finishes, both inside and out). This warranty must last at least one year from the close of escrow (see Cal. Civil Code § 900).
Even if you didn't receive a written warranty from the builder, the law says the builder owes you one for a one-year period. To make a claim under this warranty you would be required to give the builder a chance to fix the problem, and if that doesn't work, initiate a lawsuit for the defect within the one-year period. You will also need to have taken care of any reasonable maintenance obligations that you were informed of in writing by both the builder and any product manufacturers, as well as any commonly accepted maintenance practices.
California’s standard home warranties do not usually cover defects to any appliances in a new home. Most appliances come with manufacturer’s coverage so, for instance, if you had a problem with your stove, you would want to refer to the stove manufacturer’s coverage rather than the homebuilder’s.
Most builder’s warranties also do not cover things like the windows and doors that go into your home, since there is commonly a manufacturer’s warranty for these items as well.
If you think you have found a defect in your new home, you’ll want to hire an independent contractor, inspector, engineer, or other expert with specific knowledge of that type of problem (for instance, you’d hire a roof or waterproofing expert if your roof were leaking) to confirm and document the defect.
As soon as you discover a problem, start documenting the issue. Make a note of the dates, the specific circumstances such as the weather, and any other details that might be relevant in discussing how the defect came to light, including whether you’ve experienced any similar issues in the home before.
Prior to filing a lawsuit, you must notify the homebuilder in writing, providing details of the alleged defect, and give the builder the opportunity to inspect the home to see it (see Cal. Civil Code §§910-938).
You might have opportunities or a requirement to mediate or arbitrate before filing a lawsuit. Mediation means meeting with trained mediators (who are often also lawyers) and the homebuilder in a setting outside the courtroom to attempt to discuss and resolve the issues. During arbitration, a neutral third party hears the evidence from both sides and then makes a binding decision. Your attorney can help you determine whether mediation or arbitration would be helpful or whether it might be required under the builder’s warranty.
Sometimes, upon notification, the developer will offer to make the necessary repairs to bring your home up to standard. If this occurs, you should no longer need to file a lawsuit as to that particular defect.
It can be a good idea to locate an independent expert (possibly the same one you used to inspect and document your home defect in the first place) to oversee these repairs and to make sure that things are done as agreed upon. You might need to sign a limited release relating to the repairs that are done; but make sure it still allows you to pursue a remedy from the developer if, say, you discover a wholly different defect while still within the one-to-two year allowable period, or ten years for major defects.
If the developer does not agree to make repairs to your home, or the repairs are inadequate, you might then have to pursue a lawsuit. In addition to possible claims for breach of warranty, others theories upon which you might be able to sue include strict liability or negligence. A qualified California real estate attorney will be a necessary and valuable resource if you go this route.
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