Structural Defect Laws in the Carolinas: Understand Builder Rights – Part I

September 1, 2021

Structural Defect Laws in the Carolinas: Understanding Builder Rights Mountaintop cabins. Beach bungalows. Everyday suburban houses. Regardless of design, more people are calling the Carolinas home. New permits are up 18.3% with housing starts increasing by 21.6% from June 2020 in North Carolina. Just across the border is even busier. Residential permitting activity rose 54.2% with housing starts 58.5% higher than a year ago in South Carolina. This corner of the U.S. holds many opportunities—and challenges—for builders. While the state names sound similar, the legal systems are not. Builder protections in one state likely differ in the other. For companies operating in both locations, understanding key laws addressing construction defects is critical for building homes rather than legal defenses.

 

Check out part II of this series detailing additional laws affecting construction defect litigation in the Carolinas.

 

Breach of Contract

Homeowners allege breach of contract when they believe the builder did not construct a home as promised. If proven, the builder becomes legally responsible for damages. Breach of contract lawsuits are common when buyers purchase homes before construction is complete. Here the homeowner and builder rely on the contract plus documentation including photos, floor plans, and descriptions of materials, finishes, and appliances to agree on the expectations for the home.Structural Defect Laws in the Carolinas: Understanding Builder Rights

     North Carolina – A three-year statute of limitations exists in North Carolina for legal action against breach of contract. A statute of limitations ensures builders are not forever liable for homes. In general, the clock begins at the completion of construction giving enough time for homeowners to recognize defects. Homeowners must file claims within this time or they are barred from litigation. However, an exception exists for when a homeowner could not have reasonably discovered the flaw until after the expiration date. For example, improper soil compaction leading to foundation cracking might not be discovered within three years. In this instance, the statute of limitations clock begins when the homeowner discovers the defect.

     South Carolina – The statute of limitations in South Carolina mirrors North Carolina with one major difference. Homeowners have three years to file a breach of contract claim against builders. That timeline extends to 10 years for purchasers wanting to bring legal action against the architect or engineer whose design created a defect. After either three or 10 years from construction, or three years from reasonable discovery of a latent defect, the statute of limitations expires.

 

Right to Cure

Right to cure statutes give builders the legal opportunity to remedy a defect before a homeowner can file a lawsuit. The builder benefits from allotted time to cure the issue before being subjected to expensive and lengthy legal action. Fixes may include financial restitution or actual repairs.

     North Carolina – Predefined right to cure construction statutes do not exist in North Carolina. State courts rely on the terms of the contract instead. Therefore, both the builder and buyer must agree to a right to cure timeline and process in the written agreement. Should the clause not exist in the contract, homeowners have the right to immediately take legal action without giving the builder time to respond to the defect.

     South Carolina – Builders have an automatic right to cure defects in South Carolina by law regardless of the contract terms. The statute requires homeowners provide written notice of a claim to the builder within 90 days of discovering an issue related to the design, construction, condition, or sale of a home. The letter must outline the defect and the resulting problems. The builder then has 30 days to inspect the property using its own employees or a contractor. Upon evaluation of the defect and its probable cause, builders have three options: offer a financial settlement, repair the defect free of charge, or deny the claim. The homeowner determines how to proceed. Only if the builder denies the claim or fails to respond within 30 days can the homeowner pursue legal action.

It is important for homeowners to note that completing repairs themselves without giving the builder 30 days to respond may bar any future legal action. In McIntire v. Seaquest Development Company, et al., 2016, the courts ruled against homeowners lodging the defect suit because they had substantially completed repairs without giving Seaquest time to respond. The court found the homeowner’s actions removed evidence and did not comply with the law.

 

Avoid the Legalese and Operate More Effectively with PWSC

If you want to focus on construction rather than the courtroom, start by using Professional Warranty Service Corporation’s Quality Construction Pledge (QCP). Part of the ClearView Risk Services program, the pledge provides specific building performance standards for builders and owners. The QCP comes with a detailed process for resolving disputes efficiently without the need for legal intervention. If the issue must extend beyond QCP mediation, PWSC mobilizes a neutral construction expert to evaluate and arbitrate the claim. This unique program element keeps claims out of court and leverages industry experts to create solutions fair to both the builder and homeowner. Learn more about why many of America’s top builders use the QCP as their first resource for defect resolution.