If you are a building contractor, homeowner, subcontractor or lender, you know that a construction dispute can arise at any stage of the construction process, from commitments at a project’s start to fundamental disputes over performance after its completion. The litigation over a construction dispute is often high-risk with significant amounts of money at stake, as well as the personal and professional representations of the parties.
What notice must be given prior to filing a lawsuit related to a construction dispute?
In both Kansas, new home construction is governed by a unique set of laws and there are specific requirements regarding the notice that needs to be provided to builders prior to filing a lawsuit related to a construction dispute. Kansas law requires that a contractor who built a new residential structure be provided with ninety-day notice prior to the filing of a suit. The notice must be written and explicitly list the defects being alleged by the homeowner. The contractor must then be provided an opportunity to respond to the notice and offer a resolution to the homeowner. The homeowner is not required to accept the proposed resolution.
Do you represent contractors or homeowners?
I represent both homeowners and contractors in construction disputes. By representing both sides of these disputes, I am able to provide my clients with a perspective that may not be available when hiring an attorney that focuses on only one side of these disputes.
When must a claim for a construction dispute be brought?
In Kansas, a suit related to a construction dispute must be brought within three years of the home being built. In Missouri, a homeowner has five years to bring suit.
How much money will a homeowner be entitled to for construction defects?
There are several ways to measure damages in a construction dispute case, including the actual costs of repairs, the diminution of value in the home due to the defects, and/or the value of any incidental costs you incurred due to the defects. Depending on the terms of the contract with the builder, the homeowner may also be able to recover attorney’s fees and court costs. However, since this is a contract dispute, the homeowner will likely not be able to receive an award for punitive damages. As there are many factors that could affect the ultimate decision of the court on damages, the best method for determining the potential value of the case is to schedule a consultation with an experienced real estate attorney who can discuss the possible outcomes.
How long does a construction defect case take?
Cases involving a construction dispute can be time-consuming and expensive. Both parties will need to retain experts to testify to the quality of the work and the potential damages. Moreover, the parties may wish to conduct depositions (or interviews) with each of the parties involved to determine the exact terms of the contract and quality of the work. For these reasons, it is important to fully discuss your situation and to consider the relative costs of litigation and repairing the defects. If the issues with the home can be cured with $2,000 in repairs, it probably makes sense to avoid a lawsuit. However, if the damages are significant, litigation of a construction dispute can be a critical option.
What if there are different issues with the construction?
In addition to defects, there are many other disputes that could arise between a builder and homeowner. For example, the work may not be performed on-time or the builder could fail to deliver something that was a part of the contract (e.g., the contract specifies granite countertops, but the contract installs laminate counters). In these instances, homeowners may wish to pursue litigation to receive compensation for the diminution of value or lost use of the home during the time the construction was being completed.
How can a contractor make sure he or she gets paid by the homeowner?
The best way to ensure prompt payment is to request payment for materials upfront and regular timely payments for services. If the customer falls behind on payments, stop the work until they have made payments. Don’t let yourself get too far ahead on work that the customer has not paid for. If you do have a customer that does not pay, you can file a mechanic’s lien statement against the property. These statements can be filed by both general and subcontractors, but there are specific notice provisions that must be followed to ensure the lien is enforceable. If the lien filing alone does not motivate payment, you have the option of filing an action to foreclose on the lien. Theoretically, if you foreclose on a mechanic’s lien, the property will be sold at auction to pay the contractor. I included the word theoretically because it is rare that a mechanic’s lien action is taken this far as usually an agreement can be reached with the homeowner for payment before having to sell the home on the court steps.
What should be included in a construction or home improvement contract?
Let’s begin by stating what should not be in your contracts. That is an agreement that the customer will waive claims for the contractor’s negligence or wrongdoing as both Kansas and Missouri prohibit such waivers. Moreover, in Missouri, your entire contract may be considered void if it contains these waivers. What should be included in the contract is the details about the job including the projected start and completion dates, the work to be performed and the full payment schedule. Also, it is to the contractor’s benefit to keep accurate records of all work performed, any changes requested by the consumer and any modifications from the initial contract. If the homeowner later sues based on the claim you performed the work poorly, this documentation can help you to defend against these claims.