How to Avoid the Problem
Although there's no way to ensure your new home won't have serious defects, there are prudent steps homeowners can take when buying directly from a builder, experts say.
- Get references. Talk to people who own homes the builder constructed at least three years earlier. You want to know how they stand behind their product. The National Academy of Building Inspection Engineers has good resources.
- Review the purchase contract. "A lot are boilerplates prepared by Fortune 500 companies that do not offer any protection to the buyer," says Konopka, the attorney. Make sure the purchase contract specifies that you can recover attorney fees.
- Hire an independent contractor. "We tell all clients buying a home, 'Get an inspection and get a good inspection,'" Morgan, the Florida Realtor, says. Being involved in the building process can prevent issues from popping up later.
- Check your state's laws.. In general, most states require builders to cover the cost of doing permanent repairs on defects. But California and Nevada are considered to be the most consumer-friendly, says Ross Feinberg, an attorney with Feinberg Grant, a firm that specializes in defect litigation. Nevada law provides that the homeowner can recover the cost to repair defects, interest on repairs, reasonable costs for investigation and attorney fees. Plus, if there are structural problems, the owner can recover lost value for the home.
- Communicate with developers. Most states require homeowners to work with their developers on defect issues before filing lawsuits. This arbitration period can take up to six months. "I don't know a homeowner who has ever recovered an adequate amount of money to do repairs on their homes through these mandatory arbitration services," says Nancy Seats, president of Homeowners Against Deficient Dwellings.
- Check for local issues. Expansive soil is a huge problem in Arizona, Texas and California. In Florida, watch out for roof issues that could become a big problem in a hurricane.
Coming up next: Budgeting for maintenance and repairs.
Nicholas Yulico
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