The answer is simple. A few plaintiffs' lawyers have discovered that construction defect litigation can be very profitable. They are actively soliciting new cases and fueling a growing litigation industry that is costing home builders and insurance companies billions of dollars.
In the end, the biggest losers are the very homeowners that these plaintiffs' lawyers claim to be protecting. Consumers lose because they end up bearing most of the cost of these construction defect lawsuits—lawsuits that could easily be avoided.
Litigation is an inefficient way to settle construction defect disputes. It is slow and costly. It clogs overburdened state courts. Litigation pushes up the cost of homes, and since attorneys' fees and expert witness fees chew up much of a settlement, litigation can lead to inadequate recovery, meaning the homeowner does not receive enough money to cover the cost of correcting the defect under dispute.
Fortunately, there is a better way to settle construction defect disputes. It's called “notice and opportunity to repair.†The idea is that builders should have an opportunity to respond to a consumer complaint and correct the problem before the matter is litigated.
Many states have passed laws enabling this sort of opportunity-to-repair dispute resolution process. The opportunity to repair turns a litigation issue into a customer service issue. It's a win for home builders and for homeowners.
Over the past three years, notice-and-opportunity-to-repair bills have been passed by legislatures in 21 states, including Alaska, Arizona, California, Colorado, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Mississippi, Missouri, Montana, Nevada, Oregon, South Carolina, Texas, Tennessee, Washington, and West Virginia. Opportunity-to-repair laws have been on record for several years in Michigan, Louisiana, and Virginia.
This legislative remedy has gained acceptance across the country because it has been recognized as a practical solution to a growing problem.
Typically, these laws require a homeowner to give the builder written notice of a defect claim. The builder then inspects the alleged defect. The builder can then offer to make a repair, settle the claim with cash, or reject the claim. The homeowner retains the right to sue if the builder rejects the defect claim.
The building industry has developed a three-part strategy to address the construction defect litigation problem:
Working to improve the legal environment for builders and homeowners through the adoption of notice-and-opportunity-to-repair laws.
Helping builders improve their construction and customer satisfaction practices so that they can reduce their exposure to litigation. The NAHB Research Center has a very active program designed to help builders reduce construction defects.
Working with the insurance industry to gain a better understanding of the loss experience of the residential construction industry.
Over time, these initiatives can make a big difference for the home building industry and homeowners. Fortunately, the solution to the construction defect litigation problem is relatively simple. And credit is due to the many elected officials who have recognized opportunity to repair as a good, common-sense solution.
The bottom line is that construction defect litigation is a costly, time consuming process. A well-crafted customer service solution—and opportunity to repair is a customer-service solution—allows the homeowner to have the problem solved without resorting to litigation.
Opportunity to repair works well for home builders and the customers we serve. Its time has come.
Editor's Note: This column is a forum provided to the CEOs of America's largest home builders in cooperation with the NAHB. Address responses to BIG BUILDER'S editor at
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