Filing a Lawsuit Against a Home Builder/Developer: During Construction

Lawsuits against a home builder/developer during construction occur when the builder/developer breaches the contract terms.  If there are repairs or work that has not been completed, you may be able to hold back payment if your contract terms provide for this remedy. Check your contract first to find out what other actions you may take against the builder/developer.  

However, you should consult with a real estate attorney before you take any action.   The attorney can contact the builder/developer to find out whether they plan on finishing the job or not. You may also have the right to sue any subcontractors directly for the work they did not complete.  Most builder/developers stand behind their work so the majority will come back and finish it since they want to do business in the area, and they don’t want to ruin relationships with clients. If all else fails, you may have to hire another builder to finish the work. This action could be very costly, and you may suffer damages. As a result you may have to sue the home builder or developer or go to arbitration or mediation at the very least.    

Recovering Damages

You may be able to recover the following damages:

  • Return of deposits and cancellation of contract
  • Out of pocket costs
  • Reasonable attorney’s fees
  • If the home builder or developer goes out of business, you may be able to recover damages from their insurance company

If you put a deposit down on your new home, and the home was not completed, you may be entitled to cancel the contract and get your deposit back from the builder/developer.   You may be able to recover your damages for out of pocket costs and reasonable attorney’s fees as a result of the builder’s/developer’s breach of contract. These matters can get expensive if you have to litigate them so be sure the amount of money you are out of pocket justifies the litigation costs. Keep in mind though that there are no punitive and/or emotional distress damages that are awarded to homeowners when the builder/developer breaches the contract. If your home builder/ developer goes out of business, you may be able to sue their insurance company and get damages from them.

Only Deal with Reputable Home Builders/Developers

One way to protect yourself is to only deal with reputable home builders and developers that have been building homes in the area for awhile and have an established relationship in the community. Check out the builder/developer’s reputation and see if any complaints have been filed against them with the better business bureau. Find out what percentage of their homes are finished on schedule, and if they were within budget. Educate yourself to recognize shoddy construction. By taking a pro active role in the construction of your home, you can help to minimize any problems.

Importance of Using an Attorney

It is important to contact a construction attorney if you have a problem with a home builder/developer construction breach of contract matter.   An attorney can negotiate a resolution with the builder/developer or file a lawsuit on your behalf. The attorney is experienced in the law and can advise you regarding your legal rights and remedies.    

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