When Are Developers Liable in Construction Defect Case?

When are developers liable in a construction defect case? Developers could be liable in a construction defect case if they acted negligently during the construction process, failed to execute their contract, violated their warranty, or engaged in fraudulent activities. This legal responsibility applies even when the developer did not know about the defects, or stemmed from a third-party contractor. 

If you have detected a construction defect in your private, residential, or commercial property in Reno, Nevada, a construction defect lawyer can investigate your case and examine the evidence to prove liability on the part of the developer. 

What Is a Construction Defect?

A construction defect refers to aspects of a construction project that do not meet one or more contract provisions. Construction defects fall into two different groups: patent and latent. Patent defects constitute those problems that inspectors can identify through careful inspection. A perfect example of a patent defect is a missing roof tile that is noticeable during an inspection. 

Latent defects include those that inspectors cannot detect through careful inspection. An example of a latent defect is a leaking roof without visible leak marks. Such a defect may take a few years to become obvious. 

Establishing Legal Liability for Construction Defects

When a homeowner becomes aware of a construction defect, he or she can establish liability under different legal theories.

Negligence 

Developers have a legal duty to exercise reasonable care and caution when handling a construction project. Failure to use reasonable care in a construction project amounts to negligence. In this case, you need to show that a reasonably careful developer with similar training would have avoided the defect in the same or similar conditions.

Example 

You discover a construction defect in your project immediately or after several years, and the defect was caused because the developer was negligent. You can hold the company liable for damages resulting from the developer’s negligent actions. 

Third parties injured by a construction defect can also hold the original developer liable for their injuries. These third parties include future buyers or tenants of the property.

A developer is also liable for construction defects caused by negligent subcontractors. Plumbers, electricians, and carpenters are examples of subcontractors in construction projects. 

Breach of Contract 

A developer can be liable for construction defects for failure to satisfy the terms of a construction contract. A breach of contract claim generally arises when a developer violates a duty spelled out in the contract, disregards escrow instructions, or fails to comply with purchase or sale documentation. 

Courts usually rely on the principle of substantial performance when a breach of contract claim arises in construction defect cases. The court deems the contract complete if the developer delivered a completed project but failed to meet all the contract specifications. 

However, even upon substantial completion, the homeowner will not be liable for the total cost of the contract. Instead, the homeowner will pay the difference between the full contract price and the diminished value of the property caused by the defect. 

Example 

Let’s say a developer has a contract price of $300,000 to construct a commercial property. A subcontractor hired by the developer performs electrical wiring incorrectly. The faulty electrical wiring lowers the property’s market value by $30,000. In this scenario, you will only need to pay the developer $270,000 for constructing your commercial property. 

Breach of Warranty

The same principles of breach of contract apply to breach of warranty. The difference is that the developer failed to honor the warranty, not the contract. A construction contract may feature warranties for the property or products.

Example

Let’s say a developer offers a three-year warranty on your newly constructed property. You then detect a defect within three years. In this situation, the developer should remove the defect. You might have a breach of warranty claim if the developer fails or refuses to repair the defect. 

Strict Liability

Nearly all states, including Nevada, have an implied warranty of habitability. This warranty promises that a particular property or building is suitable for human occupation and imposes strict liability on the developer. 

You don’t have to prove that the developer acted negligently in a construction defect case involving strict liability. Instead, you only need to provide evidence to show that the developer constructed the property, the property has a construction defect, and the defect makes the residence uninhabitable because it violates the provisions of the Nevada housing or health codes. 

Fraud 

Fraud in construction defect cases arises when a developer deliberately misleads a property owner regarding the quality of a construction project. Knowingly making untrue statements or advertisements may amount to fraud. The developer may, for instance, state that a roof is leak-free when the roof leaks easily. 

Negligent Misrepresentation 

Negligent misrepresentation happens when a developer says something is a fact despite not having evidence to substantiate the assertions. 

Example

The developer tells you that your roof can withstand the weight of three feet of standing snow, even though he or she does not know how much weight the roof can bear. The roof collapses during a winter storm with heavy snowfall. The developer cannot justify his or her claim when you seek answers. 

Recoverable Damages in Construction Defect Cases 

What types of damages can be recovered in a construction defect case in Nevada? You can recover repair costs in a construction defect case. These repair costs cover the design fees, developer fees, and construction manager charges. You can also recover relocation expenses if you must move out of the house during the repairs. The cost incurred by a consultant in defect detection and documentation is also recoverable. The amount of compensation recovered will depend on the facts and circumstances of your construction defect case. 

How Can a Construction Defect Lawyer Help You? 

The cost of fixing construction defects can be high. Some defects can cost you hundreds of thousands of dollars. Others can even reach millions of dollars, especially when a high-value construction project is involved. Defects that remain undetected for years can damage your property and valuable possessions and potentially result in injuries or fatalities.

The best step to take immediately after suspecting or detecting a problem is to involve a construction defect lawyer. The lawyer will review the specific facts of your case and explain your rights. 

The lawyer will open an investigation into the case to compile all the information and evidence required to prove the developer’s negligence. This investigation may involve hiring a construction professional to inspect the building and prepare a competent inspection report. 

After investigating your case, your lawyer will help you navigate the mandatory prelitigation process in Nevada. The prelitigation process requires homeowners to give the developer adequate notice of the construction defect and allow an opportunity to remedy the defect.

If the developer refuses to remedy the defect or is unable to remedy the defect, your attorney can help you file a lawsuit to recover damages. Most lawsuits settle before reaching trial. Your lawyer can use the evidence he or she has collected to aggressively negotiate on your behalf. If negotiations fail, he or she can take your case to trial and argue for you in front of a jury. 

Did your negligent developer file bankruptcy? Not to worry. Your lawyer can help you file a claim with the developer’s liability insurance or pursue a claim against subcontractors after seeking leave from the bankruptcy court.

Whatever challenges you are facing in your construction defect case, a construction lawyer can help you overcome them.