Construction Defects and How to Address Them in Court – or Prevent Them from Occurring

For an owner/developer, construction defects in projects can lead to headaches in a number of ways: the expense of remedying the defects, delays in completion, disputes among stakeholders, or liability once the project is completed and tenants have begun moving in. In fact, defects may not become apparent until long after the project is finished. William H. “Bill” Barfield, a partner with Porter Law Firm in Houston, has focused on construction defects and commercial litigation for much of his career. He provided Connect CRE with insights on the scope of construction defects and how to address them in court, whether as a plaintiff or a defendant.

Q: To begin, what are the different types of construction defect? Do they generally become evident only after a project is completed?

A: There are numerous types of construction defects that commonly occur in projects in our region:

• Foundation Flaws: Through poor soil preparation, inadequate reinforcement or improper concrete curing, owners can see cracks in the foundation, water intrusion, structural instability and other problems, long after the project is complete.

• Framing Failures: Misaligned load-bearing walls, substandard materials or incorrect framing installation can result in bowed walls, sagging ceilings, structural weaknesses or a roof that could eventually collapse.

• Roofing Failures: Incorrect shingle installation, poor flashing around vents and chimneys, or inadequate ventilation can lead to leaky roofs, mold growth, wood rot, diminished energy efficiency and the risk of total roof failure.

• Plumbing Pitfalls: Improper pipe installation, incorrect pipe slopes or incompatible materials can cause leaks, mold and mildew, extensive water damage or even flooding that could completely ruin the building.

• Electrical Hazards: These most often come in the form of faulty wiring, overloaded circuits or failure to adhere to electrical codes, and they pose a risk of electrical fires, frequent breaker trips, appliance damage and a building that’s simply unsafe to be in.

• HVAC Issues: Systems that are incorrectly sized, poorly installed ducts or inadequate insulation around ducts are likely to lead to inconsistent temperatures, skyrocketing energy bills, an uncomfortable living environment and premature system failure.

• Insulation and Energy Efficiency Failures: Due to insufficient or uneven insulation, gaps in vapor barriers, or poorly installed windows and doors, a structure might experience high energy consumption, uncomfortable indoor climates and an ongoing drain on your utility budget.

• Waterproofing and Drainage Failures: Inadequate foundation waterproofing, poorly graded landscaping or improper drainage system installation gives rise to flooded basements, damaged foundations, mold growth and weakened structural integrity.

• Window and Door Installation Issues: Poorly sealed or incorrectly installed windows and doors, or those that were manufactured incorrectly, can bring about air and water leaks, higher energy costs, operational difficulties and potential security risks.

• Exterior Siding and Cladding Problems: Incorrect siding installation, insufficient caulking, or use of low-quality materials increase the possibility of water infiltration, wood rot, mold growth, and the rapid deterioration of your building’s exterior.

• Flooring Defects: Inadequate subfloor preparation, improper installation techniques or the use of inferior materials can lead to uneven, squeaky, or buckling floors that diminish a building’s aesthetic appeal and pose tripping hazards.

Construction defects may surface at various stages throughout the construction process, and it is not unusual for these defects to become apparent only after the building is completed and occupied by tenants. Once the sheetrock is installed, it can conceal many previously identified defects, leaving them undiscovered until a significant failure or accident occurs. Even when such defects are identified earlier—during routine inspections—it may be late in the construction timeline, resulting in costly project delays, increased expenses, or disputes between building owners, contractors, and other stakeholders.

Q: What are some of the reasons that construction defects may occur (negligence, human error, etc.)?

A: Construction defects can arise from numerous causes, ranging from ordinary human error to negligence or failure to adhere to industry standards. One common factor is the pressure to meet tight deadlines, leading to rushed or substandard work. Additionally, a lack of expertise in specific construction processes can result in improper installation or incomplete work. Subpar materials, often due to cost-cutting measures or supply issues, are another frequent cause of defects. Insufficient supervision or oversight during construction can exacerbate these issues, preventing defects from being noticed until later stages.

Other potential contributing factors include:

Negligent hiring or supervision: Contractors may fail to hire qualified workers or provide sufficient oversight, resulting in mistakes or improper work.

Design errors or omissions: Faulty architectural or engineering designs can lead to defects in the construction process, particularly if they fail to account for local building codes or site-specific challenges.

Failure to comply with building codes or regulations: Non-compliance with applicable local, state, or federal building codes can result in defects that compromise a building’s safety, structural integrity, or longevity.

Q: Do construction defects tend to occur more frequently when there is an especially high volume of development and construction occurring in the region?

A: Yes, construction defects tend to occur more frequently during periods of high development activity. When there is a significant surge in construction projects, there is often increased pressure on contractors and subcontractors to complete projects quickly and meet heightened demand. This can lead to several problems:

Labor shortages: Due to a lack of skilled labor, contractors may hire less qualified or inexperienced workers, increasing the risk of mistakes and defects.

Overextended contractors and subcontractors: With a large number of ongoing projects, contractors may be stretched too thin, resulting in reduced oversight and quality control on individual projects.

Material shortages or cost-cutting: High demand can cause shortages of essential construction materials, leading contractors to substitute lower-quality or inappropriate materials to stay on schedule, further increasing the risk of defects.

A: What are some of the challenges in litigating a construction defect case? Conversely, what are some challenges in defending against a construction defect suit?

A: Challenges in Litigating a Construction Defect Case:

Proving causation and liability: Plaintiffs must demonstrate that the alleged defect caused damage or loss, which can be complicated by the multiple parties involved in the construction process (e.g., architects, engineers, contractors, and subcontractors). Each party may attempt to shift blame, making it challenging to determine responsibility.

Statute of limitations and repose: Construction defect claims are subject to strict statutes of limitations and repose, which dictate the timeframe within which a lawsuit can be brought. Plaintiffs must carefully assess when the defect was discovered or should have reasonably been discovered to ensure they file within the allowable timeframe.

Complex technical evidence: Construction defect cases often require expert testimony to establish that a defect exists, explain its impact, and link it to the damages. This necessitates the use of expert witnesses, such as engineers, architects, or building inspectors, which can increase the complexity and cost of the litigation.

Challenges in Defending Against a Construction Defect Suit:

Proving compliance with industry standards: Defendants may find it challenging to demonstrate that their work met all relevant codes, standards, and contractual obligations. This often requires detailed documentation, expert testimony, and careful analysis of the construction process.

Contributory negligence or third-party liability: Defendants may need to prove that other parties (e.g., subcontractors or design professionals) were responsible for the defect or that the plaintiff’s actions contributed to the defect or worsened its impact. Identifying and bringing in all necessary parties through third-party claims can be complex and time-consuming.

Warranty limitations or disclaimers: While some construction contracts include warranties that limit the contractor’s liability, plaintiffs often challenge these provisions, particularly if they are not clearly worded or do not comply with statutory requirements. Defending the enforceability of such provisions can be a significant hurdle.

Q: For a plaintiff, what are some guidelines in initiating a construction defect lawsuit?

A: When initiating a construction defect lawsuit, plaintiffs should adhere to several critical guidelines:

1. Document the defect and damages: Plaintiffs should thoroughly document each defect and its resulting damage, including photographs, inspection reports, and any correspondence with contractors or developers. This evidence is essential for establishing the existence and extent of the defect.

2. Consult experts early: Engaging construction experts early in the process is crucial for assessing the defect, identifying its cause, and determining the appropriate remedy. These experts can provide testimony that is key to establishing the plaintiff’s case.

3. Comply with statutory notice requirements: In Texas, plaintiffs must provide notice of the alleged defect to the builder or contractor before filing a lawsuit, allowing them to inspect and possibly repair the issue. Failure to comply with these pre-suit notice requirements can result in dismissal or delay of the claim.

4. Timely filing: Plaintiffs must ensure they file their claim within the applicable statute of limitations or repose period. The timeframes for these statutes can vary based on jurisdiction and the nature of the defect, so plaintiffs should act promptly to ensure critical deadlines are met.

Q: How can an owner or developer reduce the risk of construction defects occurring on their project?

A: There are several measures owners and developers can take to minimize the risk of construction defects:

Engage legal and technical experts early: Consulting with experienced real estate attorneys, architects, and construction experts during the design and planning phases can help identify potential risks and ensure compliance with relevant codes and regulations.

Careful selection of contractors and subcontractors: Vetting and hiring qualified contractors with a proven track record of success can significantly reduce the likelihood of defects. Owners should conduct due diligence, review references, and ensure contractors are licensed and insured.

Comprehensive contract documentation: Well-drafted contracts that clearly outline the scope of work, quality standards, and dispute resolution mechanisms can help avoid misunderstandings and reduce the risk of defects. Including provisions for regular site inspections and performance reviews can also help ensure ongoing quality control.

Regular inspections and quality control: Conducting regular on-site inspections throughout the construction process can help catch potential defects early before they become larger issues. Using third-party inspectors or experts to verify building code compliance and plan compliance can further mitigate risks.

By taking these proactive steps, owners and developers can reduce their exposure to construction defect claims and ensure higher-quality construction outcomes.

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