New Home Builder Breach of Contract: Wyman's Legal Options

New Home Builder Breach of Contract

When you’re looking to build a new home in Florida there’s a lot more to consider than just the purchase price. Most people either work with a tract home builder or a smaller custom home builder.

Tract builder is a term often used for bigger home-building companies that build entire new communities, like planned unit developments, where all the homes look more or less the same. Alternatively, when you’re looking to build a more personalized custom home you’d likely be working with a smaller custom builder.

Whichever type of builder you work with you’re going to be asked to sign a construction contract. Construction contracts identify your legal rights and responsibilities as well as your builder’s rights and responsibilities. And just like any other contract, a contract for a new home is susceptible to breach when one party doesn’t meet up to the contract standard stated.

A builder’s breach of contract is the last thing a new homeowner wants to deal with, but when you’ve made such a big investment it’s difficult to ignore without a fight. Nobody, including a builder, enters a legal agreement with the intention of breaking contract terms, but it happens, and often a breach of contract lawsuit can result.

In this article, we’re going to break down everything you need to know about new home builder breaches of builder contracts including how to avoid them, the advantages of a neutral third party, where breach of contract occurs, and what to do if you suspect you need a construction litigation attorney to pursue action against the breaching party.

What recourse do I have against a home builder in Florida?

When considering recourse against a home builder in Florida for breach of builder contracts, it will depend on where you are in your project, and of course the contract details. For example, if your home is already completed and you’re just dealing with issues of quality, you may pursue a warranty claim through your home builder’s warranty department.

If you’re outside of the warranty and still dealing with unresolved issues you still have rights. You may be able to pursue a construction defect lawsuit against your builder or pursue an alternative method of dispute resolution.

In Florida, there are laws and procedures you’ll need to follow to pursue that, which most often require assistance from experienced construction defect attorneys who are familiar with builder contracts and can negotiate with a builder’s attorney.

New Home Builders Breach of Contract


What factors should be considered before suing for breach of contract?

The first thing to consider before suing for breach of contract is the scope of your damages. If you’re dealing with small issues that you think the contractor should have gotten right you may consider an alternative dispute resolution because breach of contract litigation can be costly both financially and emotionally. So first talk with an experienced construction attorney to find out if suing is the best way forward.

The other thing to consider is if the builder is still in business. A lot of builders who breach contracts will close one business entity and then open up a brand-new company. They’ll take on a new project then rinse and repeat.

It’s much more difficult to sue a company that no longer exists. You still have recourse, but knowing what you’re dealing with and the ramifications is critical before jumping into litigation.

Once you’re in the litigation process you will not only need a lawyer, but you’ll need expert testimony, often from an engineer or other contractor who will testify to what’s wrong with your house and what should have been done differently. This is another cost factor to consider.

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How much compensation for breach of contract?

When a contract is breached, the measure of damages is called compensatory damages. Basically, that means you’d be seeking compensation to put you back in the position you’d be in if the contract hadn’t been breached.

So, in the context of a home build, where the contractor has breached the contract, your compensation amount will depend on where you are in the process. For example, there are times when a contractor is in the middle of a build, and due to their own financial mismanagement or other reason they abandon the job or are unable to finish.

So, if you’ve signed a contract for a one million dollar house and have already paid the builder seventy percent and he disappears, now you have to hire another builder who will charge you another seven hundred thousand and your million dollar home just increased to a $1.4 million dollar home.

In this hypothetical, that additional four hundred thousand becomes the measure of your recoverable damages. That’s the compensation you’d be able to recover from your original builder in that scenario. For some defects, a court may look at a change in market value due to the defects.

Breach of Contract New Home Builder


What action can a customer take if they have a problem with a new build in the first two years?

The most important thing here is what’s written in your agreement with your builder. Some larger home builders have warranties that are in tiers. For example, some things are covered under warranty for just one year, and those are usually more cosmetic and more superficial things.

Then there’s a portion of warranties that are good for five years, like certain plumbing and electrical systems. At a higher level, you may have a ten-year warranty on the structural areas of a new home.

So there’s nothing necessarily special about the two-year mark as many people assume, it’s really about the warranty on specific areas. But again, what’s most important is what’s written into your contract. That’s why it’s important to have it reviewed by a good construction attorney before moving forward on a new home build. Your construction attorney will be able to help you negotiate the best warranties and other legal rights.

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What is specific performance in a contract?

Specific performance is one of the legal remedies available when you’re talking about breaches of contract where sometimes instead of monetary damages, you can pursue something called specific performance. In essence, it means making the builder carry out what was promised under the contract.

In the context of construction contracts you shouldn’t expect a court to require a builder to come back and build your home. If there’s an option for the court to award you money damages instead, they’re always going to do that.

However, you’ll sometimes see specific performance in real estate contracts where you’re looking to buy a specific piece of property, because all real estate is considered unique, and if the seller isn’t selling you the property as promised, there are times when you can sue and the court may rule that the seller must sell you that specific piece of property. A real estate attorney should be aware of this.

New Home Builder Breach of Contract Construction


Can a construction payment dispute cause a breach of contract?

Yes. There are times when people won't comply with a contract, and it’s not something the law would consider to be a material breach, or important. However, there are material breaches of contract that can lead to legal actions. Payment disputes are one of those things.

A well-drafted construction contract will have very clear terms that tell the homeowner how much they’re supposed to pay and how they’ll make the payments from beginning to end. If you don’t make those payments that will lead to a breach of the contract as the owner.

However, there are some times that you may choose to withhold payments when the agreement says it’s otherwise due because of something the contractor or the builder did or didn’t do correctly. In these cases, you should consult with a construction attorney before you decide not to make payment under a construction contract.

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How do I know if there’s been a breach?

The best way to determine if there’s been a contract breach or material breach or contract is to consult with a lawyer who can accurately interpret the contract and assess the situation through the lens of the law. With construction, there are a lot of unique features that can be difficult to understand in a legal sense.

So if you’re building a home and think the contractor is the breaching party and has breached the contract or is not performing in some way, you’re best off taking it to a construction attorney and having it reviewed. If you’re wrong, then you can maintain a positive relationship with your builder, and if you’re right you can get the full breakdown of your rights and which course of action will give you the best results in your unique situation.

A construction lawyer can let you know if you can kick them off the job, or if you must give them an opportunity to cure the breach. These are all terms that should be laid out in a well-written construction contract between two or more parties. The best way to hold your builder to their legal obligations is by negotiating a well-written contract with a dispute resolution clause. Again, a construction attorney can help you with this.

New Home Builder Breach of Contract Action Plan


Can you sue a home builder for taking too long?

Again whether or not you can sue a home builder for taking too long will depend on your contract. A lot of new home contracts will stipulate a set amount of time for the builder to reach a particular milestone on the build, which is called “Substantial Completion” of the project. Sometimes it’s just a guideline and sometimes it’s a hard deadline.

It all depends on whether or not your contract indicates a specific time and how strongly the language is worded around it.

Often homeowners will seek legal recourse after a contractor or builder has taken way too long and the owner has given the builder multiple opportunities to finish the job, and it’s months over the deadline.

As frustrating as it is, you better have a strong written contract or you may be faced with having to give the contractor even more time before litigation can take place.



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How do you hold a builder accountable?

It all starts at the beginning of the relationship. It’s really not you that holds your builder accountable, it’s your contract. The contract is the accountability enforcer. A construction contract holds your builder accountable to a schedule, price, quality, safety, and many other variables that go into a frictionless home build experience.

You can’t wait until there’s a problem to hold a builder accountable and count on the best possible outcome. Sure, you have rights, and can and should pursue compensation when you’re wronged under the law.

However, the best way to hold your builder accountable is by negotiating a detailed construction contract with contract terms that protect everyone involved. A good builder or general contractor will appreciate a fair agreement that protects you and the contractor equally. If you present a potential builder with a fair agreement that was drafted by a construction lawyer and they reject it, then you’ve likely saved yourself a lot of headache, time, and money - you can move on to a new builder that you can trust.

New Home Builder Breaching of Contract


Uncompleted punch list work

Uncompleted punch list work can get a little tricky in breach of contracts. At this point, you’ve likely already paid the contractor anywhere from ninety to one hundred percent of the price agreed upon under the contract even though the work hasn’t quite been finished.

This is where a lot of jobs fall apart because the contractors have received almost all of their money and there’s not a lot of work left to provide. So instead of finishing strong, they tend to start focusing on the next job coming through the door.

This can be a great source of frustration for a homeowner because the punch list is the stuff you see when you’re walking around the home. For example, the tiles might not be straight, the paint doesn’t have enough coats, or the drywall surface is uneven. These things don’t qualify as defects like leaking water, so the builder has more leeway to blow you off.

The only way to mitigate these risks is, you guessed it - to get it in the contract. Don’t hope the contractor will do the right thing for you. It’s not even that they all have bad intentions, they just may be over-leveraged, and if they’re not being held accountable by a strong contract, they’ll do what’s in their best interest.

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Wyman Legal Solutions specializes in construction law and property damage claims in Florida. With 20+ years of legal action experience and thousands of satisfied clients. Get started with a consultation with one of our experienced attorneys to see if we might be a good fit to solve your contractor issue or assist you in negotiating a construction contract or agreement.

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