Didn’t Build? Why Are you Being Sued for Defects?

SAN DIEGO-In today’s market, broken residential projects make attractive targets for real estate investors seeking to take advantage of low prices for distressed properties. However, these projects come with a hidden cost that might not surface for years: construction defect liability. Residential projects in California are notorious for being the target of construction defect claims. If a purchaser of a residential project does not consider and properly prepare for potential homeowners’ defect claims, any profits can quickly vanish.

Even after the enactment of SB800, California’s “right to repair” law, some potential homeowners’ defect claims do not expire for 10 years. Professional residential developers are very aware of these risks and plan accordingly from the inception of a project. However, often buyers of  broken projects are real estate investors who plan to perform only a bit of cosmetic “refreshing” before selling units, or who intend to complete only minor construction on nearly completed units before selling them, and as a result may not consider the potential for later claims by homeowners.