Potential Damages in a Construction Defect Claim

When a homeowner suffers damages due to a construction defect, they usually just want to have the defect repaired. For simple defects, this will usually compensate the homeowner, and there are a few ways that the homeowner can go about getting the defect repaired.

Complain to the Arizona Registrar of Contractors

The Arizona Registrar of Contractors (“ROC”) has broad authority over contractors, and complaining to the ROC can result in a faster resolution than filing a lawsuit. Filing a complaint with the ROC can be a good first step to getting your construction defect corrected.

The ROC will have an inspector look at the defect, and determine if a corrective work order should be issued. If the work is deficient, the contractor will be ordered to fix the problem, and the inspector will return after the work is finished to make sure it was done properly.

If the contractor cannot or does not adequately correct the defect, the homeowner can request an administrative hearing to state their claim that the contractor’s work failed to satisfy the requirements of the ROC. The property owner will have the burden of proving that the contractor failed to satisfy the minimum standards of workmanship. In some situationsthe customer can then submit a claim for compensation under the Registrar’s Residential Contractor Recovery Fund.  In most situations, the remedy is to force repair or loss of license.

Unfortunately, this fund is limited to claims filed within a two year period from the project completion date, and is limited to $30,000 per consumer, so it will not adequately compensate the property owner in all cases.

In addition, the customer will usually be bound by the outcome before the ROC.  Sometimes, the customer would rather move directly to litigation than leave the matter in the hands of an inspector.

Court Actions for Construction Defects

In some cases, typically residential construction, before a property owner can file a lawsuit to attempt to win damages for a construction defect, they must give the builder the opportunity to repair the defect. Arizona gives the builder the right to repair defects, and the homeowner must comply with these requirements before filing a construction defect lawsuit. The property owner must send a certified letter to the builder, notifying them of the defect, and give them the opportunity to correct the problem.  See our earlier post for more details.

After these requirements are satisfied, the property owner can file a lawsuit.

Damages for breach of contract will typically be the cost to repair the defect, or the diminution in value of the property. The property owner may also be awarded attorney’s fees, but this is decided on a case-by-case basis.

Negligence actions are difficult to pursue for construction defects because there must be a physical harm person a person or property damage caused by the defect. Diminution in value to the real property will not be sufficient to pursue a negligence action. If there is physical harm or property damage, the property owner can recover for the injury or cost of the damage.

Chernoff Law handles real estate litigation matters throughout Arizona, including construction defect cases. Contact us by calling 480-719-7307 to discuss your real estate matters.