Construction Defects Lawsuit Prevention
Avoiding Disputes with Your Builder
Too many homeowners approach the purchase of a house with little information about their rights and remedies. First, purchasers of new homes should confirm that the builder has a comprehensive general liability insurance policy. That policy should cover sums necessary to repair construction defects. Ideally, the homeowner should insist that the subcontractors are also insured. Unless the dwelling is a custom house, however, this is usually not possible. A homeowner should verify that the general contractor has all requisite licenses.
Many builders attempt to exclude the very powerful implied warranty of habitability by placing disclaimers in their contracts. Additionally, they provide so-called warranties from insurers like HW 10, RWC, or HWC. Many are hardly worth the paper they are written on. If possible, the homeowner should reject any contractual language which excludes the implied warranty of habitability. In order to evaluate the effect of language which appears to disclaim legal warranties, you should contact a lawyer licensed to practice in your jurisdiction. Nor should the homeowner count on the “paper” warranties to provide meaningful remedies.
Home buyers should also be wary of arbitration clauses in their contracts with the builder. Arbitration is usually disadvantageous to consumers. Homeowners should use all efforts to preserve their right to a trial by jury in the event they cannot resolve their differences with the builder.
Dealing with your Builder
Some builders do the right thing, making good on problems in the homes they build. If you are fortunate enough to find one of these builders, you still must capture his attention and document what repairs are performed. Here is a simple list of things to do with a responsive builder faced with relatively simple repairs or punchlist items:
- Document all communications.
- Hire a professional to inspect your house, and make your own list of any problems the inspector misses.
- Give both lists to your builder, and ask him to let you know if any repairs will not be made. Get it in writing, including his reason for not making the repair.
- When you have agreed on the scope of repairs, ask the builder for a schedule, including start and finish dates.
- Re-inspect as necessary and sign off on acceptable items.
If your builder did what you expected, you probably wouldn’t be reading this. So what should you do when your builder ignores you? You know, when the Dr. Jekyll you dealt with during construction turns into Mr. Hyde after the closing? Here are some general guidelines.
Remember the construction agreement you signed when you hired the builder? Or the real estate sales contract? Those documents defines most of the obligations your builder owes you. There may be other important papers, like a buildre’s warranty, that describe when, how, and to whom claims must be made.
Read the contract. Read it again. If you still don’t understand it, read it a third time. If your contract offers a specific remedy, follow the steps outlined to pursue it. Remember that following the language of the contract now is easier than explaining later why you did not.
Third-party warranty companies often have standard forms, faraway claim offices, and administrative fees associated with complaints. You must decide whether those costs and procedures are worth the trouble. If you have read this far, chances are you are determined to get your house fixed. Remember that, like the procedures spelled out in the contract, complying with the administrative headache now is easier than explaining later why you didn’t.
Document, document, document
Everything you do should be in writing. Write your builder with a list of defects. Insist that he respond in writing. If he won’t do it confirm your conversation in a letter to him. Remember that Samuel Goldwyn said: Oral agreements aren’t worth the paper they’re written on.
Document the conditions that you want the builder to fix. Use a digital camera-you don’t have to print all the pictures. Whether digital or film, write on the print-or in your photo program-what the picture represents, when it was taken, and what problems the condition has created for you.
Write down what the builder-or any of his subcontractors -do to address your complaints. When did they come to the house? When was your telephone call returned? How many times did you leave work only to have no one meet you at the house? Memories fade over time. If you have to try your case against the builder, your diary of events may provide invaluable.
Squeaky wheels get the grease
Many times in building disputes it doesn’t matter who is right-just who can last the longest. If your builder is ignoring you, he probably understands this and may have lots of practice. The process is not difficult, but it can be frustrating and time consuming. Many builders count on this and figure you will get tired and go away. Be tenacious.
Hey-lawyers wrote this. Do you really think we would recommend avoiding us? When you can’t get satisfaction from your builder through tenacity, documentation, and perseverance, calling a lawyer is probably the right thing to do. If you are determined not to hire a counsel, here are some steps you may consider:
- Talk to your neighbors. You may have more in common than you think. If one squeaky wheel is a pain for the builder, imagine an eighteen-wheeler. Remember too that the quality of construction in your neighborhood affects your investment.
- Talk to your local inspection department. Remember that the inspector deals with your builder every day. He meets you only this once. Typically, inspectors will only address building code violations. If he agrees to inspect your house, ask for a written report. He will be more careful if he has to sign his opinion.
- File complaints with local, state, and national home builders association. A number of similar complaints against the same builder will get their attention. Some may provide arbitration procedures. Make sure the rules are fair. Ask for a copy of their “Code of Ethics”.
- File a complaint with the Better Business Bureau. The BBB may have problem resolutions procedures set up with the Builder. If nothing else, it may prevent someone else from experiencing the same problems.
Remember if your relationship with the builder has deteriorated to this level, hiring an experienced defect attorney is the best course of action.
Under time-honored principles of common law, homeowners have recovered hundreds of millions of dollars for defective building practices and products. In response, the building industry has moved to limit its liability in contract documents, by substituting limited express warranty for the broader warranties available from the courts, and by convincing the legislature to make it harder to sue builders and material suppliers for shoddy work.
When you bought your house, you may have received a thick binder with maintenance instruction and a “builder warranty”. What you did not realize, though, is it furnishes far less protection than you would have enjoyed with no written warranty whatsoever. It places severe limitations on the scope and duration of the warranty and imposes onerous procedural requirements for enforcement.
Read through the warranty. You will find it limits claims by time in two days. First, most claims must be made in the first year after your house is completed or they will not be covered. Exceptions may include appliances and other fixtures carrying a manufacturer’s warranty, or serious structural defects. The latter may be covered for a longer period of time, perhaps ten years. It’s still shorter than your mortgage. Second, you must make claim within a set period after discovering the problem. The period may be as short as ten days, and certainly shorter than the statue of limitations for filing lawsuit. If you don’t make the claim timely, the warranty company will deny it.
Not everything is covered in the warranty. Some builder warranties exclude concrete cracks smaller than a number tw pencil. If your driveway cracks that badly in the first year, imagine what it will look like after five years of raid and exposure. Most warranties exclude “cosmetic” damage-say, that five-foot-long crack in the dining room wall. All these warranties exclude what they call “consequential damages”. Consequential damages may be mold, resulting from a roof leak. The roof may be repaired for a couple hundred dollars, but you can be left with thousands for mold cleanup. They may be the ruined carpet from walls that fail to keep the rain out. The builder will return to put some caulk on the window, but you’re on your own for the carpet replacement.
Pay attention to how the warranty defines covered defects. It may describe as “normal” the concrete cracks mentioned above. It may declare that paint peeling after one year is not a defect. In addition to “defining down” what a defect is, the warranties typically set ridiculously low performance standards. For example, they may require door frames to be plumb “within IU4 in four feet”. The door inside that frame will stick for as long as you own your house.
Your remedy under most builder warranties is to accept the builder’s method of fixing the problem. Since he doesn’t have to live there, and probably isn’t responsible for the repair after the original warranty expires, he has no incentive to make a lasting repair. Most warranties require you to waive your right to a jury trial and to submit claims to arbitration. While arbitration itself is not necessarily bad, the panel of “neutrals” who hear these claims are dominated by the building industry.
A Protocol For Repairs
Don’t stop doing the usual items for maintenance simply because you have a disagreement with your builder. When push comes to shove, he-or his lawyer-will look for anyone to blame for your problems. You will be number one on his list. He will claim you failed to take care of the house. He will claim you stood by and watched while your problems got worse and more expensive to repair.
It’s true that you must act “reasonably” to minimize or mitigate damage to your house. Typically, that means continuing to monitor the condition of caulk joints and paint, and maintaining those items. In rare instances, it may entail taking a second mortgage to finance major repairs. Use common sense-it’s no shame to say you don’t have $10,000 or $50,000 to finance extraordinary repairs.
If you undertake significant repairs, let your builder know. Florida law may require that you give him an opportunity to see the defective condition and propose a repair himself. In an event, you should let him know there is a problem and tell him what you plan to do to remedy the problem.
Of course, if you have hired a lawyer you should let counsel know what you are doing. Remember that in any arbitration or lawsuit over the problems at your house, the house itself is the best evidence in the case. Don’t handcuff your attorney by altering or destroying that evidence.
If you are planning minor repairs, simple “before and after” photographs may be sufficient to show that was done. If your repairs are more substantial, or if you know there will be legal action, check out the next section.
- Still Photographs
- Take many photographs. Err on the side of too many. When possible, repeat the series of pictures from the same vantage points to document the progress.
- Take both close-up and panoramic photographs of the corrective area prior to the corrective work starting to document the appearance of the original condition.
- Take both close-up and panoramic photographs of the corrective area during the demolition process. If the demolition process involves several layers or steps carefully photograph each.
- Take both close-up and panoramic photographs of the corrective area at the completion of the demolition process.
- Date and initial the photographs as they are developed.
- Keep receipts for all film, development, batteries, etc.
- Video Pictures
- If possible, duplicate the still photographs with videos.
- Scan very slowly from a panoramic perspective to provide a point of reference for the close-ups, stopping to focus on the specific corrective area. For depth perception move to slightly different angles and pause each time for 15-20 seconds.
- Keep receipts for all film, development, batteries, etc.
- Draw a simple plan view sketch or use an available set of plans to indicate where samples are taken.
- Give each sample an alpha-numeric identification. The letter can denote the roll of film and number the exposure in that roll.
- Clearly mark the sample identification on the sketch or drawing and on the sample. The marking on the sample should be with a permanent marker in large enough letters to be clearly legible in a photograph. Include the date on the sample.
- Place each sample in a “baggie” when possible. If the sample is too large, place it in some kind of container. Otherwise, over a period of time they tend to get lost.
- Where practical, take a photograph with the sample in the foreground and the demolition area in the background. This is not a must, but is helpful in aligning the sample with the test hole.
- Diaries or Daily Reports
- Document, in expanded writing, any observations, discussions, recollections and/or any other facts relative to the defective work. “Expanded” is used to mean to err on the side of saying too much rather than not enough. Getting to court can sometimes take years and brief notes do not spark memory.
- Document, in expanded writing, any observations, discussions, recollections and/or other facts relative to the corrective work.
- The observations and inspection of the corrective work should be n a regular interval clearly documenting the progress.
- Some of the activity may be delegated by agreement to the Contractor performing the corrective work or the Architect preparing the repair documents. If this is the case, the format of the daily or periodic report should be pre-determined and, as a minimum, should include:
- Weather conditions
- Description of existing construction (Ex.: Synthetic stucco (Product name, if known), on ½” OSB, no vapor barrier, poor adherence of EPS, no flashing, stud, plate girder and joist rot)
- Description of corrective work (Ex.: Remove and replace synthetic stucco with brick veneer, enlarge footing to Engineer’s detail, repair studs, joists, girders, add felt and brick ties, reinstall window flashing and window)
- Quantity of work performed
- Names of subcontractors
- Quantity of subcontractors workers
- GC workers
- Products used
- Identification of photographs taken
- Summary of findings and conclusions
- Site visitors
- Corrective Work
- If possible, do not undertake corrective measures without sketches, bulletin drawings and specifications prepared by a Registered Architect or Engineer.
- If possible, do not undertake corrective measures without the scrutiny of inspections by the Registered Architect or Engineer.
- If patches are made, where possible, require that products not be mixed, i.e., try to use the same product contained in the original construction.
- If reliance is to be placed purely on a General Contractor or Subcontractor to make the repairs, do not undertake this work without written and drawn confirmation of the scope of work.
- Do not undertake corrective work without a contract. For smaller projects AIA has “abbreviated” forms for agreements with the design professional and the general contractor. If an architect source for the document is not available, copies can normally be obtained through a blueprint copying company.
- Take care to reference the documents prepared by the design professional in your agreement with the contractor. Seek his assistance in preparing and/or reviewing the contract between the Owner and Contractor if it is prepared by the Contractor.
- At a minimum, besides reference to the proper design documents, the contract should include the following:
- The total cost.
- The start date.
- The completion date.
- The schedule of progress and final payments.
- Special requirements such as reports and photographs to accompany the work. Be specific. Require daily reports. Delineate the photographic requirements as to quantity and frequency.
- Detailed description of work, including materials to be used, detailed drawings and specifications.
- It is a paramount importance that the attorneys be provided with copies of the contract and other documents prior to the execution of the documents. The attorney should be apprized of progress related to the corrective work. No agreement should be signed without an attorney’s review.
- As a part of “6” above, include in the contract the requirement for a specific accounting of the cost necessitated by the repair. A lump sum is insufficient.
- Require breakouts for quantities, unit prices and total costs for each separate activity as they may later be challenged.
- In the event the repair is to involve a significant change in product (ex.: synthetic stucco to brick veneer) request that the bid include the cost to replace with like products, the cost of the changes design and the net difference.
- Maintain receipts for all other expenses incurred due to the repairs. Examples would be removal, cleaning and refrigerated food products due to the need to cut power for an extended period, relocation costs (rent, telephone and utility deposits, etc.) sue to the severity of the repair, collateral damage to areas adjacent to the defect caused by the impact, repair of landscaping and irrigation due to the construction traffic, and increased utilities due to the construction. This list of examples is not intended to be totally inclusive of all ancillary costs. If there is any indecision as to whether an item is recoverable, keep the records. They can always be discarded at a later date.
- Keep a daily log of personal time devoted to coordinating and inspecting the work. Specially denote time spent away from your normal employment
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