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Construction Defects: How Building Flaws Can Create Contractor Liability

A building is more than just a roof and four walls. A structure can shelter a family, becoming the setting of a lifetime of memories – or provide the space needed for business dreams to flourish into profitable enterprises. Buildings are important, and it comes as little surprise those organizations and individuals who commission the construction of a building expect the final product to be as close to perfection as possible.

While true perfection is, of course, unattainable, owners may have a legal cause of action against contractors or subcontractors for substantive construction defects that arose due to a mistake or oversight. For builders, this can mean an increased cost of doing business. For property owners, it can mean an avenue to pursue financial remedies when a building does not live up to expected standards of quality.

Hodgepodge of Legal Theories May Underlie Construction Defect Cases

Part of the complexity surrounding construction defect cases stems from the fact that there is not a single “construction defect” legal cause of action. Rather, lawsuits dealing with building defects may be grounded in several different types of claims.

Many construction defect cases are based upon the various contracts between the owner, the general contractor, subcontractors, suppliers of material and others that may be involved in the construction process. Agreements between these parties do not necessarily have to be in writing in order to be considered binding contracts. However, one of the best ways for builders to protect themselves from baseless lawsuits – and for owners to establish specific expectations – is to engage a Portland business transactions attorney to craft a strong written contract before commencing with a project. Failure to substantially comply with the agreed-upon terms of a contract constitutes a “breach” that can ultimately culminate in a lawsuit.

Warranty theories of liability for construction defects are related to their contract counterparts. Warranties may be “express,” for example, when a builder guarantees that a roof will not leak for two years following construction. Alternately, legally actionable warranties may be “implied,” meaning that they take effect without the builder actually having to make any overt guarantees; for instance, it may be implied that a home will be constructed such that it is habitable year-round. Whether they know it or not, builders typically “warrant” that their projects will be suitable for the intended purpose of the structure.

Negligence theories of liability may be important in some construction defect cases: everyone involved in a construction project has a duty to personally exercise a reasonable degree of care and employ all the skills and knowledge ordinarily used in similar endeavors. When builders neglect to live up to this standard of care, they can be held financially responsible for resulting construction defects. Yet, sometimes builders can even be held responsible for work done by others.

A general contractor or developer may be strictly liable for all construction defects affecting a given project; even if defects were caused by a third party contractor or they were not aware of any problems. When a general contractor is sued because of the work of a subcontractor, the general contractor may attempt to force the subcontractor to provide reimbursement for any damages awarded in the lawsuit. Yet, this is not always a sufficient remedy for general contractors, as subcontractors may not be adequately insured or bankrolled to pay for a judgment against them.

Finally, fraud or negligent misrepresentation may form the basis of some construction defect cases. In these suits, allegations are made that a developer made misleading statements as to the quality of construction projects, to the detriment of the eventual owner.

Protecting Yourself Legally From Construction Defects

Many parties – developers, general contractors, subcontractors, suppliers, architects and engineer, to name a few – potentially expose themselves to liability in the course of constructing a home, office or some other type of building. For builders of all stripes, limiting their exposure to liability is essential.

First and foremost, the best way to avoid a lawsuit it to build things right the first time. This does not just mean a general contractor must exercise caution in their own work; it also means finding competent subcontractors and ensuring they perform up to par (the Oregon Construction Contractors Board can be valuable resource for checking into licensing and other qualifications of contractors). General contractors should perform thorough, periodic onsite inspections, taking care to comprehensively document every visit. In addition, all contractors should carry adequate insurance.

As mentioned, for both builders and owners, a written, well-crafted contract helps set expectations and avoids problems later on. Any subsequent modifications of the agreement should be signed off on in writing. Open communications as to expectations, the realistic projected outcomes of a project and any unexpected difficulties that arise during construction help prevent later conflict. Ensuring that everyone is on the same page regarding a construction project can pay dividends down the road.

Addressing Construction Defect Claims

After paying for a building, owners want to ensure that the construction work was performed up to the rigorous standards they demanded. When the end result falls short, it is only fair that they ask to receive what they originally bargained for in a construction defect lawsuit.

On the other hand, builders do not wish to be held financially responsible for construction flaws that they feel were not their fault, or be forced to suffer monetary loss because after making a construction decision the building owner later underwent a change of heart. For contractors and others invested in the construction process, a legal dispute affords a chance to set the record straight and disclaim liability that is not theirs to bear.

Whatever your role in a construction dispute, competent legal representation is an absolute must given the complicated nature of construction defect liability. If you need help with a construction defect claim, contact an attorney today.