Construction defects can impact virtually all aspects of a commercial or residential building project. From issues with a building’s concrete foundation to issues with doors, windows, trim, and finishing touches, all types of defects have the potential to lead to costs, dissatisfaction, and litigation. When a defect issue arises, one of the first questions that need to be answered is: Who (or what company) is liable for the defect? Determining who is responsible is necessary not only for a plaintiff to pursue a successful claim, but also for potential defendants and their insurers to protect themselves against undue liability.
Establishing Liability for Construction Defects in Washington
In many cases, the nature of the defect will suggest, if not conclusively identify, the party that is responsible. For example, if the composition of the concrete used to pour a building’s foundation is flawed, this would seem to point to the concrete manufacturer as the liable party. On the other hand, is it possible that the engineers responsible for assessing the construction site made a mistake? Was there an error in transcription between the general contractor and the supplier? Construction defect cases often involve heavily fact-intensive inquiries, and under no circumstances should liability ever be presumed.
Broadly speaking, the parties that may be liable for construction defects include:
- Property owners and developers
- Builders and general contractors
- Materials suppliers and manufacturers
- Engineers and architects
- Subcontractors in all trades
- Building inspectors
Notably, however, Washington does not recognize a specific cause of action for construction defects except in cases involving homeowners’ claims against contractors. As a result, in cases involving commercial properties (and homeowner lawsuits against parties other than contractors), any claims must be based upon breach of contract, breach of warranty, or other non-defect-specific causes of action.
In any case, in order to identify the responsible party and establish liability, it is important that all allegations of construction defects be subject to prompt and thorough investigations. Each party facing potential liability should conduct its own independent investigation. Each of these parties may have an obligation to notify its insurer of any potential exposure as well; and, similar to other types of claims, construction defect claims, contract, and warranty-based claims, and other defect-related claims are often resolved through the insurance claims process.
Depending on the nature of the allegations involved, an investigation may involve a physical inspection of the premises, or it may necessitate the analysis of samples or standards of professional responsibility. Contracts, communications, receipts, and other records may all help point to the party that rightly holds liability as well. In any case, this investigation should be conducted promptly, as quickly initiating efforts to resolve the dispute can often significantly mitigate the financial and practical burdens involved.
5 Key Considerations for Resolving Construction Defect Claims
Let’s assume that you have conducted an investigation, and the investigation has revealed that your company could be at risk for contractual, statutory, or common law liability due to a construction defect. What do you need to know?
1. Washington Law Establishes Procedural Requirements for Residential Construction Defect Claims
Under Chapter 64.50 of the Revised Code of Washington (RCW), residential property owners and buyers must satisfy certain procedural requirements in order to pursue construction defect claims. Specifically, they must provide written notice of the alleged defect at least 45 days prior to filing a lawsuit in court. However, it is important to note that this requirement does not apply in all cases—Chapter 64.50’s notice requirement applies only to new construction and remodels of residential property costing more than 50% of the tax-assessed value of the property.
Once the owner or buyer provides notice, then the party to whom the notice is provided has 21 days to inspect the property and either offer to repair the defect, offer a compromise, or dispute the claim. It is then up to the owner or buyer to determine what to do with the offer or denial of liability.
2. Contractors Do Not Have a Right to Cure
As suggested by the foregoing discussion, when served with notice of a construction defect, a residential contractor (or other party) does not have a right to cure under Chapter 64.50. The contractor (or other party) can offer to repair the defect, but the owner or buyer does not have to accept the offer.
3. Mediation and Arbitration are Potential Alternatives to Litigation
When a dispute regarding an alleged construction defect arises, mediating or arbitrating the dispute may be preferable to courtroom litigation. Both of these forms of alternative dispute resolution (ADR) offer their own benefits (and come with their own limitations), and both are commonly used in the construction context. Even if a dispute is not subject to mandatory ADR pursuant to the terms of the parties’ contract, it may be in both parties’ financial interests to pursue one of these litigation alternatives.
4. There are Several Potential Causes of Action in Defect-Related Litigation
When assessing a party’s potential exposure as the result of an alleged construction defect, it is important to evaluate all potential causes of action. For example, as referenced above, in addition to the RCW referenced above, various contract-based claims may be viable as well. This includes claims based upon representations, warranties, and other contractual provisions. It is also important to assess any applicable insurance provisions, as well as the applicability of any provisions that may limit potential claims or place a cap on potential damages.
5. Contract Terms May Shift Liability
Even in situations where a builder, engineer, contractor, subcontractor, or other party is potentially at risk, that party’s liability may be limited by the terms of its agreement with another entity. For example, an indemnification clause may protect a general contractor in a situation where the claimed defect is the result of poor workmanship by a subcontractor. If the issue involves a defective product, the subcontractor could also be protected under its contract with the product supplier. Oftentimes, there will be multiple parties in the chain of liability, and the liability-shifting provisions in the parties’ various agreements will dictate which entity is ultimately left holding the bag.
Contact the Construction Defect Lawyers at Bolan Law Group.
If you have questions about construction defect liability, contractual liability, warranty claims, or any other type of construction-related liability in Washington, we encourage you to contact us to arrange a confidential initial consultation with one of our attorneys. To schedule an appointment at our law offices in Tacoma, please call (253) 470-2356 or inquire online today.