NEW CONSTRUCTION INSPECTION
Should you hire an independent inspector?
If you hired an architect to design the home, you should always require the architect to conduct phased or progress inspections with written reports. Now, your architect and your builder are equally responsible for correction of latent defects in design and workmanship. It is especially important to conduct regular progress inspections on complex or high value homes and your architect is best suited to conduct the inspections. You should expect to pay for this service and to grant the architect full authority to access the site in the contract with your builder.
If you purchased plans from an independent provider or you have purchased a home being built to plans provided by the builder, you are wise to hire an independent inspector. Many people mistakenly believe the municipal building inspections protect them but they do not. Municipal inspections are code inspections only; they address proper setbacks, elevations, energy ratings , material compliance to code specifications and installation of materials as they relate to code. They do not address quality of workmanship, soil density testing, materials testing, construction oversight, protection of the work, progress draw inspections, lien waivers, product finish selections and many more important tasks. Further, you have no legal recourse against a municipal building department if they do make a mistake.
The builder told me not to worry – the State of Florida requires them to give me a warranty. Florida law requires the builder to provide a one year warranty on workmanship and up to four years for structural defect claims. There is no coverage for components such as appliances, exhaust fans, water heaters, or light fixtures beyond the manufacturer’s warranty – typically 90 days. Workmanship typically covers roof coverings, wall cladding, electrical, plumbing, windows, doors and trim.
The warranty for structural or latent defects requires specific notices by the homeowner to the builder under Chapter 558. One important notice generally overlooked by homeowners is the requirement to notify the builder of your claim within 60 days of first noticing the defect. The court may also determine when you made claim v. when you should have made claim. Further, there is a difference between statute and case law.
Many homeowners mistakenly believe they have up to ten years to file a claim against the builder. Some builders do provide a limited structural warranty for ten years but you should make sure you understand the terms and conditions of this promise. It is rarely what you perceive it to be.
What is the builder’s obligation under a structural warranty? First, the builder does not have to restore the home to like new condition. He is obligated to restore the home to its pre-existing condition prior to your notice of claim. Second, structural claims are limited to load bearing portions of the home. Third, structural claims are limited to those defined as major structural defects; cracks in stucco, brick, concrete, and drywall are not covered.
The builders warranty does not cover personal expenses you may incur as a result of the defect. This may include the cost of temporary housing, food, transportation, laundry, pet care or other related expenses you may incur while repairs are being made.
Another important condition you should understand is most builders do not provide the warranty but rather they provide a 3rd party warranty through a warranty provider. In effect, you agree to pursue any claims through the 3rd party provider rather than the builder. These providers further require you to waive your right to sue in court by accepting binding arbitration should you and the warranty provider not agree. In most cases, the homeowner must bear their side of the costs in pursuing arbitration and this could cost several thousand dollars. If repairs are made, the warranty provider will select the contractors and it most likely will not be the original builder. You do understand most builders do not actually employ the trades anyway; they subcontract the work.
Does my builder have to allow independent inspections? Yes. If you purchased a home/lot package (the builder controls the land until closing) the builder may require the inspector provide sufficient proof of insurance coverage (equal to their minimum subcontractor requirements only) as a condition of granting access to the property. The builder has the right to schedule the progress inspections and to have a representative present. If you own the land (not subject to closing), you have the right to indemnify the builder from any risk associated with your inspector and the inspector would have greater access so long as the builders work is not interfered with. This is not meant as legal advice and if you encounter an issue with the builder refusing to grant independent inspections, you should consult an attorney who specializes in real estate law.
Why do builders object to independent inspections? There are many reasons but assuming the builder is reputable and is genuinely concerned with providing a good product, here are some reasons they may object to your inspection/inspector:
1. You have hired an unqualified home inspector as your representative. The typical home inspector who has never built a home has very little understanding of the building process; they only report on things which they see that are obvious such as a vent pipe which has not be terminated; but they may not understand the roofer will do this in a later stage. In other words, they may create unnecessary controversy due to their lack of understanding of the building process.2. Your inspector has no knowledge of the contract you executed with the builder. The typical builder’s contract allows for tolerances within the specifications. Again, the inspector may create controversy where none is due
3. You fail to provide proper notice to the builder of your intent to utilize an independent inspector. Generally, we find clients decide to have their home inspected at the final walk-through. This is typically too late to uncover real issues which are most likely covered up. The final walk-through should be related to cosmetic findings rather than mechanical/structural findings or your opportunity to confirm repairs/changes were made from previous inspections. Typically, the closing is scheduled shortly after the final walk-through and delays incurred due to “last minute” objections can become disruptive and controversial. False or misleading claims may even result in claims by the builder against you for delay or carrying costs.
4. The inspector uses an inspection report which does not relate to the builder’s inspection protocol, the schedule or the drawings. Home inspectors are notorious for issuing “home inspection reports” developed for the inspection of existing homes. These reports are worthless in delivering a professional inspection of construction in process and they fail to relate to the specifications and their compliance to local codes or the contract. New home construction reports should relate to the Construction Standards Institute , the International Building Code or the documents within the American Institute of Architects, as applicable.
When should I hire an independent inspector? Again, if you are not utilizing your own architect, consult with a professional inspector before you sign the contract with the builder. The inspector will review the plans and propose the number and type of inspections/testing based upon the complexity of the design, the duration of the project and the materials proposed. There is no standard and your inspections should relate to the home.
What should I expect to pay a professional inspector? Each project will differ based again on its complexity and the types of independent materials testing needed. Site inspections typically include:
1. Materials testing or documentation of testing. Soils density/ compaction, concrete core sampling, stucco mix testing/verification, product/materials verification, and others may be needed as independent site visits.
2. Progress or schedule compliance inspections.
3. Contractor or bank draw inspections to verify payment requests.
4. Completed work or As-Built inspections for insurance or engineering certifications.
5. Final inspection and contract close-out inspections.
6. Owner lien release management to verify payments to materialmen/suppliers by the prime builder.
If you want representation for your protection, you should expect to pay about 1% of the total contract price for a complete service by an Owner’s Representative.
What qualifications should a new home inspector/Owner’s Representative have? Any of these qualifications should suffice provided they are accompanied by proven home building experience.
* Certified General Contractor license.
* Certified Construction Manager or equivalent experience in managing construction projects.
* ICC Commercial/Residential Building Inspector certification.
* Licensed Registered Architect
* Registered Professional Engineer
* OSHA 30 Hour Certified
The selected inspector should provide $1,000,000 in professional Errors & Omissions insurance.
It’s your investment. Nobody will force you to hire a representative to protect it and, in fact, nobody will bring the subject up. Sometimes, you just have to do things that are good for you on your own.
85% of new homes do not have structural defects so why would you worry about it? Because the National Association of Home Builder’s reports that 15% do.