How to Sue Your Builder

Posted March 12, 2024 in Construction Law

With the largescale and ongoing residential development in Colorado, we continue to receive numerous calls from nervous homeowners asking what to do because their brand new ¾ million-dollar house is absolutely falling apart at the seams. Colorado, and perhaps other growing states, suffers from the public policy issue of how to increase affordable housing while decreasing shoddy workmanship and litigation in homebuilding. In some cases, to attract developers, state legislatures are enacting laws to reduce/limit homeowners’ ability to hold their builder accountable for construction defects. But Colorado like other states, suffers from an influx of corporate big-box builders, who utilize incompetent laborers to quickly and cheaply mash together what appear, at first glance, to be beautiful homes. 

From contract breaches, to warranty breaches, to construction defects, there are a wide range of issues that may arise during or after the build. 

Homeowner-Builder contracts

Enamored by the perfectly decorated model home and salesperson with a shiny Mercedes SUV parked out front, you go under contract with a large builder in a new development that was nothing but a cattle ranch a year ago. The contract you sign with the builder is about 250 pages long, with a hundred pages of addenda. It would take about 4 hours to read word for word and hours more to understand. And, the salesperson tells you these houses are going like hotcakes and the financing special will be gone tomorrow. So, you sign it and move forward.

You just signed a one-sided contract filled with construction defect disclaimers, defect notice limitation provisions, soils reports, confusing earnest money refund provisions, jury waivers, and arbitration provisions. The entire contract is skillfully designed to make you give up when the house falls apart after closing and you actually begin reading the contract for the first time. You will feel defeated before even beginning the dispute. Yes, it would have been wise to contact a lawyer to review the contract prior to signing it, but lawyers are not cheap.

There are various things that can come up during the build that might cause a contract dispute to happen — namely, construction delays, walk throughs, inspections, and changed circumstances — that make you want to back out of the deal. However, you may have thousands of dollars of earnest money on the line. If any of the following things happen that cause you to be willing to risk your earnest money to back out of the contract, you need to immediately call a lawyer. 

Builder contract breaches

First, many people want to back out of the contract due to delays. This was more common during the height of the pandemic when global supply chains fell apart, but it can still happen. Call us to have a lawyer review the contract documents and law on reasonable delays and advise you whether you have a reasonable argument to back out. We may need to send a demand letter to the sales office and go through their bureaucracy, but if your dispute is justifiable, we’ll likely be able to get you out of the contract with a reasonable compromise settlement. In some cases, we may be able to get your earnest money refunded, in others, we can’t, and litigation may not be wise. It depends on the unique situation you present to us.

Second, you may have walked through the home during the build and observed questionable construction practices. You may have even hired a consultant or inspector to go over and observe the build with you. This often results in the unfortunate realization that the home is hastily being slapped together by unskilled and unsupervised laborers and your discomfort with the deal grows. Somehow the builder will manage to pass building code inspections after repeatedly fixing noncompliant areas and say, “well, it’s now up to code.” Again, call a lawyer to get legal counsel in this situation. You’ll need to determine if you have legal grounds to back out of the contract, based on your unique factual circumstances. Again, these contracts are carefully drafted to minimize your ability to succeed in such disputes, but you may decide it’s worth a shot considering you’ll be fighting with the warranty team constantly for 1-2 years after closing and you don’t want to go through that kind of stress. 

Third, you may have changed circumstances. You may have lost a job during the build and can no longer afford this home. Contact a lawyer for a contract review and consultation to fully evaluate a strategy to get out of the agreement before closing.

After Closing: So how does my ¾ million-dollar home turn into a dumpster fire a year after closing? 

Call us to hear the horror stories. Check with your neighbors to see if they have the same issues. 

Typically, when you move in, despite some minor cosmetic defects in interior finishes, the home is absolutely beautiful. Then as months go on, we begin to see concrete flatwork in and around the home falling apart, cracks, settlement, movement, etc. The sales and/or warranty people will tell you it’s normal settlement and your contract told you to expect “cosmetic” defects, cracks, settlement, etc. But your gut tells you it’s not normal nor is it acceptable. You might let it go, except, now your stucco siding is beginning to fail, your HVAC system doesn’t work right, there is water pooling around your foundation risking foundation failure, windows aren’t sealed right, doors don’t close, floors are separating, drywall is cracking, and the list goes on. You lose all confidence in the builder at this point. The warranty team is exceptional at gaslighting you and ignoring your emails. You hire a contractor and a structural engineer to come over and assess the damages. They quote you about $150,000 in repair costs. 

You now ask yourself, how do I sue my builder? You need to consider at this point the ROI of hiring a lawyer and suing the builder. We will review your contract, discuss construction defect laws with you, and strategize a path to getting you compensated for the damages to the home. We will walk you through what to expect in the dispute or lawsuit against the builder. You likely have potential claims for breach of contract, breach of warranty, and negligence, among other things, but you need to prepare yourself financially and emotionally to handle the fight that is to come.

Keep in mind there are likely going to be pre-suit negotiation and mediation requirements. And likely, binding arbitration. For more information on what to expect with arbitration, review our arbitration practice area page.

Conclusion

Construction litigation is a complex area of law. There are pre-suit notice requirements, complex contractual issues, and difficult bureaucratic communication channels when it comes to the large-scale builders. If you’re in a dispute involving defective construction, call the experienced construction lawyers at Volpe Law, LLC, or contact us online to request a free consultation. We offer experienced, knowledgeable counsel on construction contracts and disputes.

For more information, visit our practice area page on construction disputes.

DISCLAIMER

The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter. Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may request a consultation by completing our consultation request form.