Construction Defect Claims: A Primer on Kentucky and Ohio Law - Part 1
Construction Defect Claims: A Primer on Kentucky and Ohio Law – Part 1
The following is part 1 of a two part series on construction defect claims in Kentucky and Ohio. Part 1 will address Kentucky law and Part 2 will address Ohio law.
Part 1 – Kentucky Law Regarding Construction Defect Claims
Perfection is hard to find and the construction, repair or substantial rehabilitation of a house is sometimes less than satisfactory to the home owner. Defects in a residence may be aesthetic or structural. Repairs may be simple or complex. And while most defects can be remedied, there have been tragic events stemming from improper construction or a construction defect
On the one hand, the claimed defect might stem from a failure to follow construction plans, or a building code violation, or just poor workmanship. On the other hand, the condition may result from poor maintenance. From the builder’s standpoint, claims by home owners may come too long after construction to be reasonable complaints. A home owner might not know of latent defects that can take years to reveal themselves. For either of them, litigation can be lengthy and expensive.
Legislatures have intervened to create a method for resolution of construction defect claims, and both Kentucky and Ohio have statutes of which contractors and disgruntled home owners should be aware.
In Kentucky, the Notice and Opportunity to Repair Act, KRS § 411.250 to 411.266, governs the claim procedure for any construction defect claim. A construction professional entering into a contract to build a residence is required to give a notice to the home owner about how claims of defect are to be handled. (KRS § 411.260) The notice is to be conspicuous (the statute uses all capital letters) and can be included in the contract or be a separate document. Inserting it into the contract would probably forestall claims that it wasn’t received. The notice has to tell the home owner certain things:
1. That if any construction defects are found, the contractor has the right to offer to cure the defects before the home owner can sue;
2. Before the home owner can sue, he must deliver to the builder a written notice, setting out the alleged defects and giving the builder the opportunity to make an offer to repair or pay for the defects;
3. Advise the home owner that he doesn't have to accept any offer the builder may make, but that state law imposes certain time limits and procedures for suing, and that failure to follow them may affect the home owner’s rights.
There has been no real analysis of how often the notice actually appears in a contract, but it is probably seldom done. From the home owner’s standpoint, its absence is not critical, as the statute provides that failure to give the notice does not bar any suit against the builder.
But before homeowners file a law suit, they have certain obligations to the builder. They must send a written notice to the builder, listing the alleged defects and describing the claims in reasonable detail. Within twenty-one (21) days after service of the notice the contractor must serve a written response by registered mail or personal service. (KRS§ 411. 258) Note that the contractor has to respond by registered mail or by handing the home owner the response, while no mention is made of that being required of the home owner. Ostensibly, ordinary mail is sufficient for service on the builder.
What kind of response is to be made by the contractor? The contractor can say that he wants to inspect the house and then make a decision as to what he wants to do. Or he can forego the inspection and offer to settle, even to the extent of buying the house and relocating the owner. Or he can simply reject the home owner’s demand.
The statute details the procedure for response by the homeowner to any offer by the builder, opportunities to inspect by the builder, the effect of negotiations breaking down and the like, and the statute should be reviewed for the details of all this. If the parties do not resolve their differences the owner has the right to file suit.
KRS § 411.256 sets out some defenses the contractor may have. While the construction professional is liable for his acts or omissions or the acts or omissions of his or her agents, employees or subcontractors, he is not liable for any damages caused by someone else, or someone else’s failure to reduce the damage or maintain the property. Normal wear, tear, deterioration, shrinkage, swelling, expansion, or settlements are also excluded. The contractor can also protect himself by noting any existing conditions in the property and getting a signed statement from the owner acknowledging that the contractor is not responsible for that pre-existing condition.
The value of this procedure to both sides is the possibility of resolving their differences in an economical way. An additional benefit to the owner is that until the process fails, the statute of limitations to assert the claim or statutes of repose are tolled (suspended). (KRS § 411.264)
Whether there is a lawsuit or not, the home owner should enlist the aid of a professional contractor to advise him or her on the nature and cost of the necessary remedies and to ensure that he has the necessary expert testimony if the case does go into the courts.
This article gives only the highlights of the statutory procedures available for the resolution of disputes and the statutes should be reviewed carefully for their application to a particular situation.
Arnold Taylor is the Senior Partner of O'Hara Ruberg. He is a 1965 graduate of the University of Kentucky College of Law, focusing his practice on litigation. He is the Chair of the Ethics Committee of the Kentucky Judiciary.