Legal Options If New Home Contractor or Builder Does Not Honor Written Warranty
UPDATED: August 16, 2013
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A written warranty for new home construction given by its builder is a representation by the builder that it will stand behind the construction for certain specified defects within a certain time period. What is covered is stated in the written warranty given to the purchaser of the new home construction as part of the purchase agreement.
Consequently, it is important in any purchase of a new home where a warranty is given by the builder that the purchaser read carefully the document because its terms and conditions govern the obligations owed to the homeowner by the builder and vice versa.
Signs of Construction Defects
In many home warranties for new construction, the homeowner is required to give the builder written notice of all possible problems as soon as problems arise, so that attempts to fix them can quickly begin. When the first signs of a construction defect pop up in a newly constructed home that is under a “builder’s warranty”, the homeowner should take photographs of the problem area and/or video tape to document the defect. In addition, the homeowner should immediately let the contractor know, in writing, and request a site inspection of the home by a specific date.
Retaining an Attorney After Builder's Failure to Fix
Depending upon the severity of problems with the home’s new construction, the homeowner can either fix the problem himself, or request that the builder honor the given warranty. If the builder does not fix the defective construction under the warranty, the homeowner should immediately consult an attorney experienced in construction defect matters to protect his interests. The attorney should be provided with a copy of the warranty given for the new home’s construction, a copy of the purchase contract, all transactional documents for the home’s purchase, escrow documents, and all correspondence to the builder by the homeowner, including photographs and videotape. The attorney should draft up a written initial evaluation of the claim and suggest a course of action to resolve the builder’s failure to honor the given warranty.
Typically, the attorney suggests the retention of third party experts for the homeowner such as structural engineers and/or licensed contractors to inspect the home to determine the scope of the problem and to establish estimated costs of repairs. Once that is completed, the attorney will write a demand letter to the builder and request necessary repairs within a certain time period.
Many warranties such as manufacturer agreements and purchase contracts contain mediation and/or arbitration provisions between the homeowner and the builder that must be followed to be awarded attorney fees. Mediation is a process where parties try to informally resolve a problem; aribitration is an informal process to resolve a legal dispute without a sitting judge or jury.
Hopefully, the builder is responsive to the written demand of the attorney. If not, and the builder does not fix the defects, the homeowner can either mediate or arbitrate the dispute, if required, or file a lawsuit.
If the builder constructed a subdivision with multiple units, other units will probably be facing similar problems. If so, it is best for the individual homeowners to band together with one attorney to represent their interests. By having one attorney represent the interests of similarly situated homeowners, the costs of any mediation, arbitration or lawsuit would be minimized in that most likely the required experts would be the same and attorney’s fees would be less as well as court costs.