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Home, bittersweet home: while defects in newly built homes have risen to unprecedented levels, recent legal developments have blunted homeowners' ability to sue for shoddy materials and workmanship. But all is not lost.

Article Excerpt
A house is the most expensive commodity most people will buy in their lifetimes, yet almost all other goods sold carry with them more meaningful rights and protections for the purchaser. Manufacturers and sellers of cars, appliances, and many other consumer products all have a greater legal duty to ensure the quality of their products than do general contractors and other members of the building trade.

Until recently, homeowners trying to recover property damages arising from defective construction had a powerful arsenal of legal weapons. For example, the implied warranty of habitability requires general contractors to build dwellings that satisfy the building code and meet prevailing standards of workmanship. For decades, homeowners have recovered substantial damages against builders for violation of this standard. In recent years, however, legislatures and courts have become more hostile toward homeowners seeking restitution for defective construction.

In 2004, Americans purchased almost 1 million new homes, at an average price of about $250,000. (1) The residential construction market is robust, with housing starts and industry profits steadily increasing.

Consumer complaints about the quality of construction--and about the prevalence and impact of construction defects--have also increased. (2) Several major newspapers have published lengthy stories about widespread reports of defective residential construction. (3) The problem has spawned new consumer rights organizations--like Homeowners Against Deficient Dwellings (HADD) and HomeOwners for Better Building (HOBB)--that specifically target home builders' shoddy practices. (4)

Several factors have contributed to the increase in defective home-building. For example, the escalating pace of construction has prompted builders to cut comers. Subcontractors are often insufficiently skilled or trained. Building components are more complex, requiring greater care and coordination--which is frequently lacking--among the subcontractors. Houses are more energy-efficient and airtight, trapping moisture and causing rot and mold infestation. And government inspection departments are poorly funded, understaffed, and overworked.

Ironically, as these forces have exacerbated the problems of defective residential construction, judicial opinions and statutory initiatives have stripped homeowners of the legal tools they need to hold builders, subcontractors, and manufacturers accountable.

Elusive warranty

The implied warranty of habitability arises from the common law and imposes strict liability on a builder to construct a house in a workmanlike manner, free from structural defects. (5) The warranty has been construed expansively to cover a wide range of deficiencies. It has long been the homeowner's most powerful tool in seeking recovery for building defects.

To avoid construction defect litigation, some general contractors now include language in their standard contracts providing that the habitability warranty is either excluded or waived. Most courts have upheld contracts that include this language as long as it is "clear and unambiguous." (6)

Building companies that insert this...