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Five Tips for Homeowners Who Think They Might Have a Construction Defect

A construction project is difficult. It requires a complicated sequence of coordination and cooperation of various trades, including concrete workers, framers, window installers, plumbers, electricians and roofers (to name just a few). A building is a complex puzzle that integrates many pieces of dissimilar materials. Opportunities for errors abound. Unfortunately, some builders, who either know too little or work too fast, miss crucial details. The resulting construction defects can become nightmares for homeowners.

Following are five tips for homeowners to protect yourself if you think your building might be plagued by construction defects.

1. The Passing of Time is Your Enemy

Clients often believe that it is in their interest to engage in protracted negotiations with their builder to resolve a dispute related to a construction defect. What many clients do not realize, however, is that the law imposes strict deadlines upon them to bring their claim (i.e., sue). If you wait too long, you risk that a court will dismiss your claim - even if your claim has merit. These statutes of limitations and statutes of repose exist to prevent stale litigation but they can be a death knell to the claims of an owner who waits too long to sue.

For most claims, Minnesota has adopted a "discovery rule," which usually gives you two years to bring a claim from the date you discover or should have discovered a construction defect. As to "statutory warranty" claims under Minn. Statute ch. 327, you must bring a claim within two years of the builder's failure to honor its promise to keep a building free of construction defects. As to multi-family buildings subject to the Minnesota Common Interest Ownership Act, Minn. Stat. ch 515b, you have six years from the date you discover an injury to bring a claim. Regardless of the type of claim or when you discover a defect, most claims are time-barred 10 years after a unit is first occupied.

2. Your Contract is Key

If you think you have a construction defect, the most important document is your contract with your builder. Through the contract, the builder may extend or disclaim various warranties to you, the owner. Additionally, the contract may describe the responsibilities of the parties in the event of a dispute. If you don't follow these requirements, you may breach your contract. The contract may also indicate whether you or your builder is responsible for reimbursing the prevailing party for its attorney's fees. This is a crucial provision that should not be taken lightly. Finally, your contract may indicate whether you must resolve your dispute through arbitration outside the typical court system (more information on arbitration is found in Tip No. 5, below).

3. If You Intend on Making a 327A Statutory Warranty Claim, You Must First Give Your Builder a Chance to Fix the Problem

In most situations, you may immediately sue your builder for a construction defect. If you intend to bring a claim pursuant to Minn. Stat. ch. 327A, however, you must first provide your builder with notice-and-opportunity to fix the defect. After receiving the notice, the builder has 30 days to respond. Upon receiving the builder's response, the statute contemplates that the owner and builder engage in an interactive process to resolve the dispute. Only after the builder fails to resolve the owner's concerns may the owner commence litigation. Significantly, during this process, the statutes of limitation and repose are tolled (i.e., paused).

4. Obtain an Independent Assessment of Your Problem

Don't expect your builder to properly identify the full scope of your construction defect. It is in the builder's interest to minimize the scope of the problem. Left unchecked, a builder may recommend an inadequate Band-Aid solution that fails to address the true problem. Get an independent assessment from a neutral party with experience recommending solutions for construction defects.

5. Binding Arbitration May Be Preferable to the Court System

Because most courts are overloaded with work, it can take years for a case to wind its way through the judicial system. Even if it is not required in your contract, you and your builder may agree to submit the dispute to binding arbitration. Most of the same rules apply in arbitration as apply to litigation in the courts. Unlike a judge, however, an arbitrator, who is chosen by the parties, often has particular knowledge of construction and construction law. Disputes are typically resolved faster and cheaper through arbitration than the courts. That said, an arbitrator's decision is final and the parties usually have very narrow "appeal" options if they are unhappy with the arbitrator's decision.

Faced with evidence of a construction defect, many builders will do everything they can to satisfy their customers and fix any problems. Some don't. If you suspect that you have a construction defect, follow these tips.

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