Who To Phone When Trouble Calls - 9/1/2004 - Real Estate Home House Condo

Who To Phone When Trouble Calls
by Phoebe Chongchua

You've heard the horror stories -- buyers move into their newly purchased home and not long after, a huge catastrophe occurs. Maybe the plumbing goes bad, the roof leaks or electrical systems go awry.

In many cases, the buyers reach for the phone and call a lawyer first.

But the Home Builders Association is hoping that homeowners will take a different approach that could result in faster and better outcomes.

"In a number of sub-divisions builders were being sued by homeowners. And when the builders looked at their service logs [they] found that the homeowners had never contacted them. Never complained. Never even asked for anything," says Guy Bjerke, Chief Operating Officer of Home Builders Association of Northern California.

That has sparked a media campaign in San Francisco, urging homeowners who have problems with their houses to seek help directly from the builder first.

The TV commercials have aired in Northern California, but the message is being carried to other areas such as San Diego via the organization's websites.

Bjerke said builders were surprised that homeowners didn't try to get them to fix the problem before more severe action was taken. "They were kind of perplexed as to why all of the sudden these homeowners thought that there was something so seriously wrong with their homes that they decided to sue," says Bjerke.

Often the outcome is less than desirable and usually always costly.

"For every dollar that's spent on what we call indemnity or to fix a home, anywhere from $5 to $8 is spent in litigation costs," says Michael Strech, Director of Risk Management and Insurance for California Building Industry Association.

Homes have a 10-year statue of limitations, but some functionality standards are under 10-years (see chart for specifics). It's sometime during that decade that homeowners are typically approached by lawyers.

"What's been occurring in certain subdivisions in various parts of the state is there are about three or four law firms that will blanket a subdivision with flyers, almost generic, stating that, 'There's a neighbor somewhere in the subdivision that's found something wrong. There's probably something wrong with your house. Wouldn't you like to find out or have us sue on your behalf to protect your rights?'"

Calling the builder first is aligned with public policy. In January 2003 the FIX IT law went into effect providing the builder an opportunity to repair the home when a defect occurs.

"Most builders will stand behind their product -- will come out and find out what's going on, fix it if it needs a fix. And, generally speaking, the homeowner is going to be much better off having that kind of scenario play out rather than calling the lawyer and getting entangled in litigation," says Bjerke.

"All it does is get the right people involved in the process to get the home repaired as quickly and economically as possible," says Strech.

If you don't know who your builder is, Bjerke suggests asking neighbors or contacting the city planning department to find the building permit.

If you must file a legal claim Citizens Against Lawsuit Abuse suggest that homeowners ask the following questions:

 

• Can you show me the specific problems I have in my home, and tell me how much you will claim is necessary to repair them?
• How much money is likely to be awarded and where does it all go?
• How do you make your money?
• How much do you expect to pay for expert witnesses and testing?
• What happens if we receive less than the costs of the repair you claim are needed?
• When I sell my house, do I have to disclose this lawsuit, and that possibly not enough money was collected to fund the repair of the alleged defects?

Courtesy California Building Industry Association. For more information contact the association.