Construction defect litigation is expensive and time-consuming. Construction defects refer to issues with design, material and/or substandard workmanship. Only parties and privies to contracts can bring claims for breach of contract.
When a developer is the party signing the purchase and sale agreement with the purchaser, the developer will be held responsible for the inferior workmanship of the general contractor and subcontractors. Accordingly, it is crucial for the developer to have a written contract with the general contractor which also includes an indemnity clause. The indemnity clause protects the developer from costs associated with damages that result from the poor work of contractors. Generally, indemnity clauses require the indemnifier to indemnify, defend and to hold harmless the developer.
In this case, the developer’s contract with the contractor was a handshake deal and a verbal commitment which complicated the litigation. Many of the problems associated with an oral contract can be avoided by use of a well- drafted written contract.
Mark Kimball has been practicing construction and real estate development law for more than thirty years. That work includes both contract review and drafting as well as litigation.