Court ruling may create loophole in defective home construction cases
A state Supreme Court ruling last week has some area lawyers worried the court has created a loophole that could lead to more property owners building their own homes to skirt responsibility for defects... The case worked its way up to the Supreme Court, which ruled against Smith. The court said that since Breedlove was not a professional and had not planned to sell the house, he has no obligation to honor a warranty on the home. Breedlove had never previously been employed in the construction industry nor done business as a general contractor, the documents said.

Court ruling may create loophole in defective home construction cases

By TIM DONNELLY
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 Wednesday, April 30, 2008

 

• Photo: Danielle Smith's Windmill Harbour home is at the center of a state Supreme Court ruling that said the home's builder is not liable for the shoddy construction work Smith discovered after she bought it. Some lawyers worry the ruling will create a loophole in state construction law.  Kristin Goode/The Island Packet

A state Supreme Court ruling last week has some area lawyers worried the court has created a loophole that could lead to more property owners building their own homes to skirt responsibility for defects.

The court ruled a Hilton Head Island property owner who built his own home is not liable for shoddy construction work discovered by the next owner.

That ruling has drawn fire locally.

"Anyone who builds a home should be held to the same standard of care that applies to other parties," said D.H. Fraser, a Hilton Head attorney who serves as legal adviser and member of the board of directors of the Home Builders Association of Hilton Head. "To relieve them of any negligence liability ... I think opens the door for the problems."

The case dates back to 1993 when Joseph Breedlove built a home in a vacant lot he owned in Windmill Harbour. Breedlove decided not to hire a general contractor and instead hired his own subcontractors for the construction. Breedlove and his wife had planned to stay in the home for the rest of their lives. But in 1998, they sold it to Danielle Smith and her then-husband. The Breedloves wanted to be near their sick son in Atlanta, according to court documents.

A few years later, Smith tried to sell the house, but a potential buyer conducted a moisture report and discovered defects with a synthetic stucco insulation, according to the documents. The stucco was rotting, the house had a slight mold scent to it, and her dehumidifiers filled up within hours, Smith said.

The repairs would have cost about $300,000 at the time and Smith said she felt the builder should be responsible for the cost. She filed suit in 2002 against Breedlove, alleging negligence and breach of implied warranty of workmanship.

"With that beautiful house being four years old, you don't think that there's going to be any problems," she said. "If I didn't have to live in the house and I could afford to live somewhere else, I would have done so years ago." She paid about $590,000 for the house, according to Beaufort County property tax records.

The case worked its way up to the Supreme Court, which ruled against Smith. The court said that since Breedlove was not a professional and had not planned to sell the house, he has no obligation to honor a warranty on the home. Breedlove had never previously been employed in the construction industry nor done business as a general contractor, the documents said.

"[T]he crucial undisputed fact is that Breedlove, when he constructed the residence, did not build or plan to build the home for anyone but his family," Justice Costa M. Pleicones wrote in the decision. "He simply did not owe a duty to any future purchaser when no such sale was reasonably expected."

Joseph Barker, the Hilton Head attorney who represented Breedlove, said the Smiths had a chance to hire a professional inspector but relied on the review by her husband, who worked in home construction at the time.

The court agreed that a person building their own home shouldn't be held to the same standard as a professional building a home for sale, Barker said.

"He was a person who was building a house for himself without any intent to sell it," Barker said.

But Smith's attorney, Glynn Capell of Hilton Head, questioned how anyone could be sure if someone plans to permanently live in the house.

"I think that's the biggest ramification of it all," he said. "If you own a lot, you can build on your own lot and say you intend to live there, but if something happens and you sell that house down the road, you're not liable for the construction defects."

The house was checked by building code inspectors, but they usually have immunity in such cases, the attorneys said.

Fraser, of the Home Builders Association, said anyone who builds a house for their family should have an expectation that someone else, even in the distant future, will live in it. The association hasn't met to take an official position on the case, but generally it supports high licensing standards, he said.

"They want people engaging in that industry to be held to a reasonable standard that protects the public," he said. "I don't really understand the Supreme Court's reasoning."

Capell said he's filing a petition for the court to rehear the case, which could happen this summer. Smith said she is stuck with the home until she can afford the repairs -- which now would cost her about $700,000 -- or sell it.