The situation is not uncommon in Arizona: a homeowner contracts with a home builder to construct a new home for the homeowner. A few years after the homeowner moves into the home, he or she discover that the foundation has a defect that begins to compromise the structural integrity of the home. Does the homeowner have any legal rights in this situation? And, what if a secondary buyer on the market purchases the home from the original homeowner, and later discovers a construction defect with the home? Does that buyer have any rights?
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The short answer is, yes, but it’s not as straightforward as filing an ordinary civil lawsuit. The Arizona legislature has enacted the Purchaser Dwelling Act (“PDA”), which is intended to slow the filing of lawsuits against a residential home builder or contractor. Specifically, the PDA requires the purchaser of a home to give the home builder reasonable notice of the alleged defects and the opportunity to cure the defects – prior to filing a lawsuit.
Thus, with exception of very limited circumstances, the buyer cannot sue the home builder prior to providing the home builder with written notice that provides specifics on the defects at the home. Once the home builder receives the written notice, it will generally investigate the claims and, if appropriate, propose various remedies to the homeowner, which may include monetary compensation and/or repairs.
Only after the parties have exhausted the PDA procedures fully may the homeowner file a lawsuit against the home builder. It should also be noted that construction defect actions are not limited to actions against a home builder and can also be against contractors and subcontractors for projects and remodels.
If a homeowner sues the home builder under the new build contract, the breach of contract action must be brought within the six-year statute of limitation. The homeowner may decide to assert other claims, however, including breach of the implied warranty of workmanship and habitability. For the latter claim, the homeowner may pursue a claim against the home builder as long as the action is filed within eight years after substantial completion of the home. If the defects are discovered in the 8th year, the homeowner has an additional year to litigate. Further, there is no privity of contract requirement to pursue an implied warranty claim, meaning a homeowner further down the chain of title can pursue claims against the home builder, even if that homeowner did not contract with the home builder.
In all cases involving home defects it is important to consult with counsel prior to making any substantive decisions. You can contact Ben Gottlieb at firstname.lastname@example.org or 602-533-2840 with any questions regarding real estate legal concerns.
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