I work in the insurance brokerage business specifically dedicated to construction clients. Most of my clients are big subcontractors that do a lot of work for all the major national builders. I will tell you that both the subcontractors and the builders have dramatically improved the quality of construction over the last 5+ years. With the legal climate (especially in CA), both builders and subcontractors can not afford to build homes with “construction defects.” Most of my residential subs took (and continue to take) a pounding for work they did in the late 90’s and early part of the 2000’s. Greedy lawyers and homeowners have wrecked havoc on the industry by filing suits naming every sub that stepped foot on a residential project and suddenly you have a drywall contractor having to defend himself for an alleged roof leak or cracked stucco, etc.
The way it works is that in CA the statute of limitations is 10 years for a homeowner to seek compensation for these “construction defects” for new construction. Lawyers will literally wait in the wings 6-8 years after a development is built to pursue homeowners associations in an effort to make a class action suit against the builder. The longer they wait during this 10 year window, the more homeowners they can canvince to jump on board. By the subcontract agreement between the builder and the subs who worked on the project, the builder tenders the claim to the insurance carrier of all the subcontactors who worked on the project. Before you know it, you have dozens of lawyers defending these subcontractors…many times for issues that did not involve them.
“Construction defects” are alive and well. As long as there are lawyers, there will be CD lawsuits. One study claimed that 7 out of every 10 dollars an insurance carrier spends on a CD claim goes to defense costs. 70%!!! It is a very lucrative buisiness for these lawyers. Believe me they will find “defects” even though none may exist.
As I stated above, the quality controls the builders and subs now use have, in my opinion, improved the quality of construction. Many things have been done including many insurance carriers requiring independent companies to provide quality inspections during the building process to ensure the subs do not “skimp on the number of studs they put in walls,” stricter requirements in the selection of subcontractors, and legislation allowing subs to correct the defect before a suit is filed just to name a few. There will undoubtedly be CD claims in the years to come given the boom in building the last few years.
All this being said, there are times where legitimate construction defects exist. Rest assurred that in the 10 years after a home is built, you will have homebuilders bending over backwards to make sure that your allegation is addressed and corrected.
