Buying a new home is a significant investment that many people make in their lifetime. When a buyer purchases a new home, they expect it to be in pristine condition with no defects. Unfortunately, this is not always the case, and defects can arise in new home construction. In New York, buyers have certain rights against the builder if defects are present in the new home. These rights are designed to protect the buyer and ensure that they receive a quality product. This Eastcoastlaws.com article will explore the common types of defects found in new home construction in New York and the legal options available to buyers to hold the builder accountable for these defects.
Finding Defects in Newly Constructed Homes
You should have found out about any building flaws before making your purchase. Before deeming the house usable, the building department of your town may discover harmful conditions or a failure to adhere to its basic criteria. During your pre-closing walk-through, you might also discover problems, but these will only be visible flaws. A licensed inspector should be hired to evaluate the property prior to closing on the acquisition, and you should insist that the builder do any necessary repairs or replacements before your closing, according to the standard advice of New York attorneys.
Not all flaws, nevertheless, will become apparent or be found before the close. So, it’s critical to be aware of your legal options if flaws are discovered, whether they do so soon after the closing or years later.
How New York’s Housing Merchant Implied Warranty Protects Buyers
A warranty for the new building is established by New York statutory law and is known as the “Housing Merchant Implied Warranty.” (It took the place of a warranty that had been incorporated into contracts by New York courts prior to the law’s adoption in 1989.) Nowadays, it serves as the sole warranty for all sales of new homes. Every contract for the sale of a single-family home or a unit in a multi-unit residential building with five floors or less has the statutory warranty, which is “implied” in that it need not be stated explicitly in the contract. (See N.Y. General Business Law §§ 777A- 777-B.). If your new home is built on land you already owned when the building began, the statutory warranty will not be inserted into your contract.
The law specifies the structure, materials, appliances, systems, and building elements that are covered by the implied guarantee as well as the things that aren’t covered and how long the warranty lasts for each individual item.
Construction flaws are generally covered by the law for a year from the warranty date, or the day title was transferred to the first new homeowner. For two years following the guaranteed date, plumbing, electrical, heating, cooling, and ventilation systems are covered. After the warranty date, material faults are covered for six years. To determine whether and for how long your defect is covered by the statute, review it.
The statute also specifies the notification and filing deadlines for lawsuits. In order to provide the builder with a reasonable opportunity to inspect, test, and fix the fault, you must give the builder written notice of a warranty claim before filing a lawsuit and no later than 30 days after the warranty term has passed.
The opportunity to inspect, test, and make repairs is not a requirement for launching a lawsuit, even though notice to the builder is. See Trificana v. Carrier, 916 N.Y.S.2d 399 (N.Y. App. Div., 2011). After notifying the builder, you may file suit any time before one year after the warranty period ends, or within four years after the warranty date. (N.Y. General Business Law § 777-A).
The level of skilled workmanship expected in the community determines whether or not a condition qualifies as a defect covered by the warranty. This means that in order to support your claim against the builder, you must provide proof of both the flaw in question and the regional standard for competent workmanship. The standards in local building ordinances as well as the expert witness testimony of local architects, engineers, contractors, or other members of the construction professions may be included in this evidence. The contract terms may alter the caliber of work needed for your new home.
If you file a lawsuit, the amount of money you could receive in compensation would normally equal the cost of the replacements or repairs plus the cost of repairing any harm the warranty work caused to your house. The value of the house alone, excluding the land, is the maximum sum that may be granted. If a court determines that sum to be more equitable in the circumstances, it may determine damages as the worth of the house as it would have been built minus the value of the house as it is with the defect. (N.Y. General Business Law § 777-A).
What If the Buyer Has Waived Rights to Certain Warranties?
Read the builder’s contract carefully. It might require you to waive the Housing Merchant Implied Warranty and accept a limited or modified warranty in its place, as is allowed under N.Y. General Business Law § 777-B(3). But, if the waiver is hidden in a small language, this won’t hold up in court: The implied warranty must be mentioned in the contract conditions that replace the statutory warranty, and it must be explicitly stated that the limited warranty changes or supersedes it. “There are no warranties which extend beyond the face hereof,” is an example of significantly less clear phrasing that is acceptable according to the law. A copy of the limited warranty must also be attached to the contract and given to you by the builder before you sign it.
The limited warranty shall contain the full disclosure specified in Section 777-B. (4). Standards established by the limited warranty must be equal to or higher than those set forth in the local building code or, in cases where code requirements do not apply, the locally accepted building practice. Construction specifications specified in the limited warranty that are not up to par with regional building codes or make the house hazardous are void under New York law.
Buyers Can Claim Breach of Contract for Custom Homes
A “custom home” is one that was constructed on property that you previously owned. Custom homes are exempt from the coverage requirements, notice requirements, and time restrictions of the Housing Merchant Implied Warranty. You can file a contract breach lawsuit against the builder as a remedy for flaws in a custom home. You must demonstrate one of two things in order to win your case: either the house was not built in accordance with any plans, specifications, or drawings that were included in the contract, or it was not built to the standards that were guaranteed therein.
In most cases, the cost to correct a problem in a custom home will constitute your damages. The difference between the home’s worth with flaws and its value without problems, however, may be awarded to you by the court. Where a builder substantially fulfilled the terms of the contract in good faith, the expense of fixing flaws would be excessive given the home’s value, or when repairs may make the house unlivable, courts will typically award the difference in value.
Alternatives to Filing a Lawsuit
Alternative dispute resolution methods are frequently more appealing to both parties due to the time and expense of a lawsuit. You might be able to reach an agreement with the builder on your own or through your lawyer. If you and the builder are willing to negotiate but have been unable to come to an agreement, you might want to consider working together to hire a mediator. The contracts, inspection reports, and any supporting documentation you give will be examined by a mediator, who will then work with both parties to find a solution.
Many construction contracts stipulate that disagreements must be resolved by binding arbitration. Mediation is different from arbitration in that it resembles a court proceeding more. Similar to how a judge would decide, the arbitrator hears the facts and the evidence at a hearing. The builder must pay for any voluntary arbitration in New York, and no limited warranties that replace or alter the Housing Merchant Implied Guarantee may contain a requirement for binding arbitration. (N.Y. General Business Law § 777-B(4)(h).)
If You Home Builder Files for Bankruptcy
A builder who filed for bankruptcy before your lawsuit cannot be sued demanded from, or have a judgment enforced against them. You might be able to sue the subcontractors—members of the many home-building trades who assisted in building the defective components of your home, such as plumbers, electricians, and carpenters—if your builder has already declared bankruptcy. You had two years from the day you discovered—or reasonably should have discovered—that you had the right to bring legal action against the subcontractor.
Suggested Actions When You Discover a Home Defect
When a flaw in your freshly built home is discovered, act fast to safeguard your rights. There are time restrictions on your rights to seek repairs or damages under warranties and contract clauses. The following are the first steps to take:
- If you purchased the new home and land from the builder, review your contract looking for any limited or modified warranty that might replace the Housing Merchant Implied Warranty.
- If you purchased a custom home on land you already owned, review your contract for the plans and specifications, drawings, any other builder’s obligations, and any agreed-upon procedures for notifying the builder of a defect, or any binding arbitration requirements.
- Follow any procedure for notifying the builder contained in either the Home Merchant Implied Warranty, any limited or modified warranty that replaced the statutory warranty, or in your contract, if you purchased a custom home on land you already owned.
- Keep copies of all your correspondence with the builder as well as work orders and receipts for any repair work you have done.
- Take photographs of the defect and any damage caused by the defect, as well as after-repair photographs. Be sure to date and describe what’s in each photo for future use as evidence.
In order to comprehend the flaw and strengthen your argument against the building, you may also call in a certified inspector. You can better understand and defend your legal rights against the builder with the aid of a knowledgeable real estate attorney.