Changing Landscape in Residential Construction Defect Cases

It is no secret that building envelope construction defects are prominent throughout the Northeast and the Mid-Atlantic regions. This issue affects thousands of properties and multiple builders. These defects are truly latent, with no visual cues or outward manifestation of water infiltration. Homeowners often discover the defect when they see scaffolding at their neighbor’s home and wonder if their home is similarly impacted. When invasive tests are finally performed, they often reveal a costly problem that in most cases requires removal and replacement of the entire building envelope, microbial growth remediation, window and door replacement as well as interior work. Real estate transactional practitioners and construction attorneys are left to navigate scopes of repair and sort through the shifting causes of action on behalf of the builders, subcontractors and the homeowners who are impacted.

Practitioners should be aware of recent changes in the law affecting spoliation. From the spoliation perspective, all parties must be especially mindful of new pitfalls relating to mere photographic evidence. When considering whether or not to have an invasive moisture test performed, the Seller’s Disclosure Law must be considered, along with timing concerns.

Spoliation: Use caution when remediating

The doctrine of spoliation features prominently in many construction defect matters because the parties frequently mitigate their damages through repair and remediation. The recent case of Kinder v. Heritage Lower Salford, although nonprecedential, provides a cautionary and important roadmap for all construction practitioners and parties. In Kinder, the homeowners remediated their defective stucco during the litigation, taking photographs of the work, but not notifying the defendants of the repairs. No experts observed the remediation work and the plaintiffs’ own expert was unable to prepare a report based on the photographic evidence gathered in this case. In granting a motion in limine, the court barred evidence at trial and determined that the Plaintiffs were at fault for destroying the evidence at issue. As a result, the defendants were unable to conduct a physical inspection or otherwise identify the cause/source of the subject water infiltration and present a defense. Consequently, the Kinders’ claim was barred.

Practitioners should be cognizant of the fast pace of remediation and give reasonable notice to all parties and experts. Physical evidence of the underlying construction defect and damaged property should always be preserved to insulate against spoliation claims, which, as Kinder advises, can be fatal.

Building Envelope Defects and the Changing Real Estate Landscape

Building envelope defects have had a tremendous impact on the real estate market and the pace and manner of sales. It has become widely known that building envelope defects are not limited to stucco homes. Homes with brick, cultured stone and fiber cement siding can also have building envelope defects. This is where construction law intersects with the real estate practice and, importantly, Sellers’ Disclosure Law. Homeowners weigh the benefits and risks of having an invasive moisture penetration test performed on their home. The results of these tests must be disclosed with any sale. Such a test is necessary evidence to reveal the defect. However, if a potential claim is untimely, homeowners may not want to know whether they have a building envelope defect. Pitfalls await as more and more real estate agents are recommending that their buyers perform invasive moisture tests along with routine home inspections prior to purchasing a home. Real estate agents, homebuyers and sellers should be aware that claims against sellers for failure to disclose building envelope defects are on the rise.

The issues surrounding building envelope defects are multilayered and very complex. We find that homebuyers and builders receive a lot of bad information from multiple sources. In our office, we often hear from homeowners who believe they are “out of time” because their home is over 12 years old. However, often because of the facts of their specific case, this is not true. Practitioners advising homebuilders and homeowners should be cautious as the legal landscape continues to shift.

This article is based on the original article, “Changing Landscape in Residential Construction Defect Cases,” by Jennifer M. Horn, published in the Legal Intelligencer (August 2017).

Pennsylvania Fellow Jennifer M. Horn is managing member of Horn Williamson, LLC. She has built her practice representing owners, construction managers, contractors, subcontractors, suppliers, sureties and homeowners in matters arising from public and private construction projects. In addition to construction, Horn is active in the women and minority-owned business community and can be reached at jhorn@hornwilliamson.com and at 215-987-3800.