Frequently Asked Questions About Construction Projects

1. What is a construction defect?

Almost any condition that reduces the value of a home, condominium, or common area can be legally recognized as a defect in design or workmanship, or a defect related to land movement.

Defects in design, workmanship and materials: These include, water seepage through roofs windows and sliding glass doors; siding and stucco deficiencies; slab leaks or cracks; faulty drainage; improper landscaping and irrigation; termite infestation; improper materials; structural failure or collapse; defective mechanical and plumbing; faulty electrical wiring; inadequate environmental controls; improper security measures and devices; insufficient insulation and poor sound protection; and inadequate firewall protection.

Structural failures:  can be catastrophic in nature and present both personal injury and substantial property damage exposure. Landslide and settlement conditions may result in the collapse of buildings; cracks in slabs, walls, foundations, and ceilings; disturbance of public or private utilities; and sometimes a complete undermining of the structures.

2. What does the builder’s warranty really cover?

Every warranty is different in what is covered and what is not, how long the warranty lasts, and what the builder will do to fix construction problems. Some warranties specify industry standards which the work should meet.The warranty is often more a marketing tool than a real effort to address serious problems in your home.  In fact, in most instances, you would have greater warranty protect if there were no warranty. Read the fine print because there are often limitations on the warranty and many warranties require you the right to sue in court and to arbitrate any dispute.

3. How do I prove that the Builder’s work was defective?

In most cases, you will need to hire the services of an expert to prove the contractor’s work was defective. Under Wisconsin law, experts may testify if they have the necessary training, education, and experience to give testimony in court as to the cause of a defect. For example, if your roof leaks and has caused damage you will need experts to determine (1) why your roof leaked; and (2) what is the cost of repairing the damage.

4. What kinds of damages can I recover in a lawsuit, and can I recover attorney’s fees?

Subject to some exceptions, the general measure of damage in Wisconsin is that you are entitled to the lesser of the cost-of-repair or the diminished value caused by the defect.  If the construction defect poses a safety hazard you are entitled to the cost-of-repair.

In addition, you can likely recovery consequential damages such as the costs of having your experts to investigate the cause of your defects and the costs of mitigating your damages through temporary repairs to prevent further the damage are also recoverable.

Unless expressly provided for in the parties’ contract, attorney’s fees are generally not recoverable. Exemplary damages may be awarded where the contractor has defrauded the buyer or violated Wisconsin’s home improvement practices act. Where a violation of the home improvement practices act is proven, the homeowner shall recover double damages and attorneys fees.

5. What is the Right to Cure?

Homeowners, dissatisfied with the construction of their new home or the results of a remodeling project, must follow the provisions of the Wisconsin Right to Cure Law before entering a courtroom to resolve their dispute.

First, before a written contract is entered into, or where there is no written contract before any work is commenced, the contractor is required by law to give the homeowner a copy of a brochure prepared by the Wisconsin Department of Commerce regarding Consumer Rights and a written notice of Wisconsin’s Right to Cure Law.

Second, the homeowner must provide the contractor a written notice of the alleged defects if the homeowner believes the contractor’s work is defective. Once this notice is delivered, the homeowner must wait at least 90 days before filing a lawsuit. Also, before filing suit, the homeowner must provide the contractor with the opportunity to repair or remedy the alleged defect.

Third, upon receiving the homeowner’s written notice, the contractor has 15 working days (or 25 days if the defect involves a window or door supplier) to serve on the homeowner either: (1) a written offer to make repairs or remedies at no cost; (2) a written offer for a monetary settlement; (3) a combination of options 1 and 2; (4) a written rejection; or (5) a proposal to inspect the alleged defect. If option 5 is selected the contractor has 10 days from the date of the inspection to chose between options 1 thru 4.

Fourth, if the contractor rejects the claim or inspects and then rejects the claim, the homeowner can file suit. If the contractor makes an offer to repair, a monetary offer, or a combination of the two, the homeowner has 15 days from the receipt of the offer to serve the contractor with written notice of acceptance or rejection. If the homeowner rejects, he or she must provide their reasons for rejecting.

Fifth, if the homeowner rejects the offer, the contractor may, within 5 working days, give a written supplemental offer; the homeowner then has an additional 15 working days to respond. If this final step fails to settle the dispute, the homeowner may file suit.

6. How long do I have to file a lawsuit?

All construction defect cases are covered by statutes of limitation.  Don’t try to analyze statute of limitations legal issues. They are very complex and require an expert legal opinion. Depending on the claim there are frequently different statute of limitations.  For example, The statute of limitations for tort and contract claims begin to run from dates.  In addition, there is a statute of repose, which cuts off the ability to bring a claim (known or unknown) after 10 years from the date the work was performed. Further, your ability to bring a claim might be limited by your specific contract.

If you discover a construction defect, act quickly to protect your rights and seek legal counsels’ advice if there is any question about statutes of limitations.

7. How much will a lawsuit cost?

The total cost of prosecuting a lawsuit will depend on a number of factors, including the nature and amount of damages, the number of parties, and the attitude of the parties or their attorneys. Some lawsuits are settled within a relatively short period of time, while others are not resolved until just before trial. Lawsuits can be expensive, and close cooperation between the clients and attorney is necessary to contain the costs as much as possible. One of the major costs is the cost of expert consultants; these costs are usually recoverable in the lawsuit. Experts’ costs will depend upon the nature and extent of defects and the size of the project. Attorneys generally either bill by the hour or take a percentage of any recovery. If the attorney charges by the hour, expect to pay between $250 and $450 or more per hour for one with substantial experience.

8.  How do I recover if the builder/developer is out of business or is insolvent?

Property owners and their attorneys should carefully assess the contractor’s ability to pay damages.  As we tell our clients, a big judgment on paper doesn’t help repair their home.  Although the ability to take discovery of potential assets to satisfy a judgment is limited, there are ways to assess whether filing a lawsuit makes economic sense.

One consideration is often the availability of insurance coverage. Even if the builder is insolvent, the builder’s insurance companies must defend and pay claims that are covered under the policy(s). An experienced construction lawyer should be able to determine whether there are aspects of the claim that would be covered by insurance.

9. Will the homeowners’ insurance company cover damages caused by construction defects?

It depends. The language in most owner insurance e policies excludes coverage for faulty design, the workmanship of materials. However, ensuing loss from construction defects may be covered.  For example,  if a contractor neglected to properly install roof flashing, the cost of the flashing and installing the flashing would not be covered.  The ensuing damage caused by the rainwater that infiltrated the home because of the missing flashing may be covered.

10. Am I required to make repairs while the lawsuit is pending, and can I recover those costs in the lawsuit?

You are required to mitigate your damages, which means you need to take all reasonable steps to protect the property from sustaining additional damage. These costs are normally recoverable in the lawsuit. Carefully review any temporary

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