Summary of Arizona’s Construction Defect Laws
- The Legal Duties of Your Builder?
- When the Builder Breaches Those Duties
- The Damages You Can Recover
- Time Limits for Legal Action (Statute of Limitation and Statute of Repose)
- Breach of Express Warranty or Breach of Contract
- Breach of Implied Warranty
- Building Codes
In Arizona claims against the builder frequently include breach of contract, breach of express warranty, and breach of implied warranties. Arizona statutes require that the builder be given notice of the defects and an opportunity to inspect and make repairs prior to the filing of a lawsuit.
Some purchase contracts in Arizona contain a binding arbitration agreement which attempts to limit a property owners ability to file a construction defect claim in a court of law by requiring the dispute to be settled by an arbitrator or a panel of arbitrators. If arbitration is used to resolve the matter, the decision that is made is as binding as one made by a court of law.
Arizona law states that your builder or developer has a basic duty to construct a building in a good and workmanlike manner. This includes following the construction documents, including building plans, applicable building codes, the manufacturers installation instructions for pre-manufactured items (such as windows, air conditioning systems, roofing, etc.), and industry standards. The Arizona Supreme Court has said that the purpose of the implied warranty is to “protect innocent purchasers and hold builders accountable for their work”. When construction has been completed, a certificate of occupancy should be presented for a well constructed building that is free of defects. Unfortunately, this is not always the case.
If your developer or builder does not fully perform the duties discussed above, the builder or developer may have failed to meet the legal obligations to you and could be in breach of a legal duty. In Arizona, the Purchaser Dwelling Act requires that the builder be given notice of the defects and an opportunity to repair the defects prior to the filing of a dwelling action. This statute is complicated and obtaining qualified legal advice prior to putting the builder on notice of any defects is recommended. In addition, the Act also requires HOA’s to comply with the Alternative Dispute Resolution procedures contained in most CC&R’s. HOA’s are also required to have a meeting of its members before filing a dwelling action.
By filing a lawsuit against the builder or developer, you have completed the first step towards recovering money to compensate you for your damages or loss. Arizona courts recognize that a property owner may recover money for the following types of damages:
- The reasonable cost to repair the defects and any property damage the defect might have caused
- The loss of use of your property during the repair process
- The loss in property value resulting from the negative perceptions associated with property that has had construction defects, even after the defects are repaired
- The cost of hiring experts to investigate the defects affecting your property; and,
- The cost of hiring legal counsel to prosecute your construction defect claim
Often a builder or developer claims that the building has a warranty of one or two years. Arizona law specifically provides a longer period of time for a property owner to identify any construction defects and expects the builder to make appropriate repairs. If the developer or builder does not satisfy a request to make repairs, and as long as the discovery of the defect and request is made within specified time limits, a lawsuit may be filed. These specified time limits are known as Statutes of Limitation and Repose. These laws can be very difficult to understand and interpret, and a law firm whose practice focuses on construction defect litigation could assist in explaining the rights of a property owner and the timing aspects of filing a lawsuit.
A breach of contract is the violation in the performance of or a failure to perform an obligation created by a promise, duty, or law. In construction defect cases, the breach refers to the failure of the property owner to receive the benefit of a defect-free building. The expected result of a breach of contract claim in a construction defect law suit is the recovery of the cost of repairs.
The implied warranties of workmanship and habitability have long been recognized in Arizona. The rationale underlying the doctrine of implied warranties is based on the recognition that builders are skilled professionals, that today’s construction practices are complex and regulated by many governmental codes, and that property owners are generally not experts in the various structural components of designing and constructing a building. The implied warranty of workmanship requires buildings to be constructed in a reasonably skillful and workmanlike manner, so that the work is equivalent with that done by a reasonable worker of average skill and intelligence. The implied warranty of habitability requires that the building structure be reasonably suited for its intended use, and not simply occupied. The proof of a defect due to improper construction, design or preparation is sufficient to establish the liability of the builder or developer. This liability exists whether the developer sells the property directly to the current property owner or the current owner has purchased the property from a prior owner which is not the developer. Again, the expected result of damages due to breach of implied warranties is the cost of repairs.
The International Building Code and other building codes dictate how a builder or developer constructs a building. The purpose of the Code is to provide minimum standards to safeguard life or limb, health, property and public welfare. Modifications of the Code are permitted only when unusual, unreasonable, and/or impractical physical difficulties arise in the implementation of the literal provisions of the code. Municipalities engage building inspectors whose job description is to see that certain standards of safety and structural quality are being met in buildings. The municipalities building inspectors do not perform quality control for contractors, nor do they assume responsibility for defects because permits have been issued and/or certificates of occupancy have been provided. Inspectors inspect or approve construction in good faith and without malice. The building code does not relieve or lessen the responsibility of the builder or developer for damages from defects in construction even though building inspectors issue certificates of occupancy. Thus, the builder or developer should be a property owners first line of defense in overseeing the proper construction of buildings and protecting the property value.