The Most Frequently Asked Questions about Claims for Construction Defects

Claims for construction defects are one of the most complex forms of legal action, due to the varied scenarios in which construction defects can occur and the processes that have to be completed in order to establish a plaintiff´s entitlement to compensation.

Even though many compensation claims for construction defects are resolved through mediation and negotiation, a construction defect attorney has to be an expert in legislation relating to insurance and real estate, and it is an advantage to have an advanced understanding of engineering and construction.

We have used some of that expertise to compile a construction defects Q&A containing some of the most frequently asked questions about claims for construction defects. However, due to regional differences, varied building codes and diverse legislation, it is not always possible to provide comprehensive answers that may be relevant in your particular situation.

Therefore, if you believe that you have a fault in your residential or commercial property, and you cannot find the answer you are looking for in our construction defects Q&A, please do not hesitate to contact us via our toll-free claims advice service and discuss your specific property issue directly with an experienced construction defect attorney.

Q. What is a Construction Defect?

A construction defect is a deficiency in design, materials or workmanship which results in a fault that causes a personal injury, property damage or a reduction in the value of the property. Defects caused by land movements – the potential for which should “with reasonable care” have been identified prior to construction – can also be classified as construction defects, as can defects which result from a breach of your jurisdiction´s building code.

Some jurisdictions vary considerably on what classifies as a construction defect. California, for example, has an exhaustive list in its Civil Code § 896, but such is the complexity of claims for construction defects, even the California Civil Code comes with a disclaimer that “if a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage”.

We have compiled our own list of “Common Construction Defects” and how to detect signs of a property fault, and if you have any doubt about whether or not the fault in your property comprises a construction defect, it is advisable to give us a call and discuss the issue you are having with your property with an experienced construction defect attorney.

Q. How do I Prove that a Defect Exists?

In most cases, you will need to hire the services of an independent construction expert who will able to verify that the fault in your property could have been avoided with “reasonable care” and who would be able to credibly support your construction defect compensation claim if your case has to be presented in court (i.e. it is not always sufficient to engage the services of a construction “expert”. He or she must also be an “expert witness”.)

Consequently, while a general or roofing contractor can repair a damaged roof, he may not be the best person to act as your expert. Your construction defect attorney will not, in most cases, be able to prove your construction defect compensation claim against the builder of your property unless he or she has a qualified expert witness who can provide credible testimony at a court hearing.

“Experts” (Architects, Civil Engineers, Soil Engineers, Mechanical Engineers, Appraisers, Stucco Experts, etc.) are available in nearly every element of residential and commercial construction. An expert’s services usually cost from $150.00 to $300.00 or more per hour, and consequently it is advisable to make sure you engage the right “expert” by speaking with a construction defect attorney at the first practical opportunity.

Q. How do I Know if I have a Claim for Compensation?

Initially you are not going to know whether you have a claim for compensation or not – no matter how obvious a defect due to negligence is. In order for claims for construction defects to be successful, there has to be an insurance policy to claim against; and, just like builders warranties, insurance policies are not totally comprehensive.

Insurance policies can have exclusions in which certain forms of deficiencies are not covered, or insurance carriers can exercise their “reservation of rights”. The policy may only be in force for a specific period of time or may have lapsed due to the builder not having paid the premiums. These are areas that you are unlikely to be aware of and will only be resolved once your claim has been investigated by a construction defect attorney.

Q. Who is Responsible for Construction Defects?

Once it has been determined that you have a construction defect compensation claim worth your while to pursue, the case is usually brought against the primary builder or developer of your property. Even though the fault may be clearly due to the negligence of a designer, engineer or sub-contractor, it is the builder or developer who has overall responsibility for the integrity of your property and against whom claims for construction defects are made.

Q. Can I Still Recover Compensation if the Builder/Developer of my Property is Bankrupt or No Longer Trading?

In the majority of cases it will still be possible to recover compensation if the builder or developer no longer exists – provided that a valid insurance policy covers the warranties issued by the builder or developer. The most important asset in many claims for construction defects is the builder´s/developer´s insurance policy and, even if the developer is bankrupt or no longer trading, the insurance carrier must defend and pay claims that are covered under the policy.

One of the first tasks a construction defect attorney will undertake is to determine how much insurance the builder/developer maintained from completion of construction to the present, and how much of it is left (if other claims have been brought against the negligent party). The attorney will also investigate the insurance assets of any designers, architects, engineers and sub-contractors as well.

Q. Can a Building Inspector be Held Responsible for my Property´s Construction Defects?

No. In most cases, construction defects are not “reasonably” visible during an inspection (they tend to develop over a period of 4-6 years before they become noticeable) and, even if they could have been identified at the time of the inspection, building inspectors – being public employees – are immune from prosecution due to “sovereign immunity”.

Q. Should I Contact the Builder Before Making Claims for Construction Defects?

A reputable builder will normally offer to make the necessary repairs to your home due to the costs of defending against your construction defect compensation claim and also because he or she will want to protect their good name. If a builder agrees to rectify the construction defect, it is still advisable to retain a construction expert to oversee the repairs, and to ask the builder for additional warranties relative to their repair work.

Q. How Much Time do I Have in which to Make a Claim?

The time limits that you have in which to make claims for construction defects vary from state to state and can be substantially different. Time limits can also vary depending on whether the fault in your property is considered to be a “parent defect” (one which is obvious and readily discoverable), a “latent defect” (one which is hidden and only becomes apparent after a number of years), or a “known defect” (one which the builder with “reasonable diligence” should have been aware of at the time of construction).

This is definitely a question that cannot be answered comprehensively in our Construction Defects Q&A and is one that should be directed to a construction defect attorney.

Q. Who Can Make Claims for Construction Defects?

Any individual, partner, or entity whose interests in the property have been harmed may make claims for construction defects – but with restrictions. In some states, only the original owner of the property may make a construction defect compensation claim; whereas, in other states, subsequent owners of a property may also be entitled to compensation for property defects.

The situation becomes more complicated when an owner of a condominium has been affected by a construction defect which has damaged other properties in the residential block. In many cases, claims for construction defects can be made by a property owners association (POA) on behalf of the affected owner(s); but the extent of the POA´s responsibility may be limited depending on the wording of the POA´s governing documents. This again is a question which cannot be comprehensively answered in a Construction Defects Q&A.

Q. How Much Compensation for Construction Defects Can I Recover?

The amount of compensation that you will be entitled to recover for a fault in your property is usually limited to the cost of repairs (including any repairs you have already undertaken), the decrease in the value of your property, the cost of investigations by experts to support your claim, any additional expenses you may have incurred by moving out from your residential or commercial property while repairs are being conducted and an amount for your loss of use and enjoyment.

Construction defect law varies from state to state regarding whether it will be possible to claim punitive damages, and the recovery of fees charge by your construction defect attorney is also subject to state legislation – although many attorney´s offer their services on a contingency fee basis, or will build their charges into a negotiated settlement so that you do not have to pay them.

Q. Can I Sell or Re-finance my Home during a Construction Defect Compensation Claim?

Being involved in a construction defect compensation claim should not prevent you from selling or re-financing your property, although some lenders will have policies against financing properties that are involved in claims for construction defects.

You must disclose to any prospective purchaser or lender that you are involved/have been involved in a construction defect compensation claim and furnish the purchaser/lender with copies of the investigations conducted by your construction expert, any settlement terms or judgments related to the claim, and a detailed report of any repairs that had been carried out before, or as a result of, a claim.