What Recourse Do I Have Against a Home Builder?

If you have issues with a home builder, you have several avenues for recourse. The steps you take will depend on the specific problems you’re experiencing and the nature of your contract with the builder. Here are some general steps and options:

Table of Contents

1. Review Your Contract and Warranty

Contract: Carefully review the terms of your contract with the builder. Pay attention to clauses related to construction standards, timelines, and dispute resolution procedures.
Warranty: Check if there is a warranty provided by the builder. Warranties can cover various aspects such as structural defects, workmanship, and materials for specific periods.

2. Document Everything

Keep Records: Document all issues, communications, and steps taken to resolve the problems. This includes taking photos of defects, keeping copies of emails and letters, and maintaining a log of phone calls.
Inspections: Consider hiring a professional inspector to assess and document the issues.

3. Communicate with the Builder

Formal Request: Send a formal written request to the builder detailing the issues and requesting resolution. Be clear, concise, and include any supporting documentation.
Follow-Up: Follow up if you don’t receive a response within a reasonable timeframe.

4. Utilize Dispute Resolution Mechanisms

Mediation: Some contracts include a mediation clause, where an impartial third party helps both sides reach an agreement.
Arbitration: Arbitration is a more formal process than mediation and can be binding. An arbitrator reviews the evidence and makes a decision.

5. File a Complaint

Local Government: Check if your local or state government has a consumer protection agency or a licensing board for builders. File a complaint if applicable.
Better Business Bureau (BBB): File a complaint with the BBB. While the BBB cannot enforce resolutions, it can mediate disputes and record complaints.

6. Seek Legal Action

Consult an Attorney: If the builder is unresponsive or disputes are unresolved, consult with an attorney who specializes in construction law.
Litigation: Consider filing a lawsuit for breach of contract, negligence, or other applicable claims. Be aware of statutes of limitations for filing such claims.

7. Notify Your Mortgage Lender

Lender Involvement: Inform your mortgage lender of the issues. Lenders have a vested interest in ensuring the property is in good condition and may assist in pressuring the builder to address problems.

8. Join or Form a Homeowners’ Association (HOA) Action

Collective Action: If multiple homeowners are experiencing similar issues with the same builder, consider collective legal action through an HOA or a class-action lawsuit.

Common Issues and Remedies

Construction Defects: Can be addressed through warranty claims or legal action for breach of contract.
Delays: If the builder has not met agreed-upon timelines, review contract terms related to penalties or compensation for delays.
Poor Workmanship: Document issues and seek repairs under the warranty or through legal recourse.

Preventive Measures

Due Diligence: Before signing a contract, research the builder’s reputation, check for complaints, and review past projects.
Detailed Contracts: Ensure contracts are detailed and include clear specifications, timelines, and warranty information.
Regular Inspections: Conduct regular inspections during construction to identify and address issues early.

Navigating disputes with a home builder can be complex, but by understanding your rights, documenting issues, and following appropriate steps, you can seek resolution. Legal advice is often beneficial, especially for significant disputes.

Purchasing a home is a long and arduous process. Many resell homes have at least a couple of things that need replacing or upgrading prior to close.

Many home defects are evident and will be disclosed quickly. It’s also helpful to know the age of specific features, including the septic tank (if applicable), and roof because they’ll be required to be replaced over time. Overall, though, the individual who is actually selling the home is accountable for disclosing any material defects in the home.

But what could you do if you discover a defect in the home following the completion of the deal? This post centers on the options for home buyers who find home defects following the sale that were not previously disclosed prior to close.

Problems with House Following the Purchase: Undisclosed Defects

General home defects that sellers don’t disclose include:

Rusted pipes or bad sewer lines
Large cracks in driveways or house foundation
Concealed water damage
Termite damage or rotting wood
Electrical and plumbing problems
Older or bad ventilation or windows
Leaking Radon
Bad roofing
Septic systems or HVAC problems
Old wiring

This doesn’t apply to noted defects, like purchasing a defective home in foreclosure for a lower cost.

Disclosing Home Defects: Responsibilities of the Seller

The laws concerning disclosure statements or disclosure forms differ from state to state and often change. Typically, state disclosure laws calls for sellers to “disclose all material defects” when selling a property. This implies listing them out and explaining them to the buyer. If they refuse or don’t remember, the sale can sometimes be deemed invalid.

When a recent home buyer later finds a material defect that the seller didn’t disclose prior to the close of the transaction, the law could give them the right to stop the sale, rescind the sale, or collect monetary damages.

Summary of Material Defects

As reported by the International Association of Certified Home Inspectors, material defects are anything that:

Has a particular problem with an element or system of a residential property
May have a considerable, detrimental effect on the property’s value
Poses an irrational risk to individuals

This doesn’t automatically include elements or systems that are near or past the end of their normal life cycle. For example, a heater that is in working order but was predicted to break down a while ago isn’t thought to be defective. So for example, if the seller listed the heater as “being over 20 years old”, and it later fails to work, the seller is not likely on the hook.

The inspector (of which the buyer chooses) will typically only focus on transgressions considered material defects witnessed during the inspection. So, a scrape across the bathroom counter or a window screen with a couple of small gashes probably wouldn’t make it on this list.

When Home Defects are Found Following the Sale

The laws consistently are dependent on the state in which you live. Typically, once escrow is closed, a buyer may be restricted to recouping money for any defects later discovered.

Escrow is the deposited money that guarantees you’ll purchase the home. These funds will be transferred from the escrow account to the seller. The day the money is transferred is usually the “cut off” date for getting money back from the seller for defects found in the home.

As an alternative, a state’s law can allow the home buyer to cancel the transaction, typically in the case of, particularly extreme defects.

Responsibilities of the Home Inspector

It might not always be the seller that is held liable for undisclosed defects. Liability occasionally is extended to either party’s realtor, real estate broker, and/or the home inspector. Every case is different, so finding out who is be liable is your first move.

In Illinois, for instance, it is mandatory for sellers to disclose defects from a designated list (noted by law) and have an explanation for each one.

The seller could be found liable for the expense of the defect when:

The buyer has evidence that the seller should have known or had knowledge about the defect
A defect on the list of possible defects isn’t disclosed

Nevertheless, if the inspector has been found liable, they may only be accountable for the cost of the report (instead of the expense of the defect).

Allow an Attorney Help You Work Through Your Concerns About Home Defects

There isn’t anyone that wants to find that their dream home has horrific defects, particularly after the deal has already closed and recorded. Sometimes these facts may represent a breach of contract, and you have legal rights. A demand letter can describe what needs to be repaired or the funds you want back in compensation thereof.

If you’re coping with a home defect matter, don’t postpone to finding answers to your legal questions. Those with questions concerning their house might want to speak with a real estate attorney for more detailed and thorough information. You may also need a real estate expert witness to help advance your claims in a court of law.

Source:

“Home Defects Discovered After the Sale.” Findlaw, 31 Jan. 2020, realestate.findlaw.com/buying-a-home/home-defects-discovered-after-the-sale.html.

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Disclaimer: This Post Is Not Legal Advice.

You should not ever depend on an online post for legal advice as the law and codes changes often, information sometimes might not be accurate, there can be exceptions to the rule, and wholesale reliance on such matters could be damaging. Always consult with experienced attorneys for current, effective, and factual legal advice.