In recent years, it has become increasingly common to see stucco siding and EIFS (exterior insulation finish system) used on the facades of new homes across Clark County. Homeowners often select stucco treatments for their new homes because of its aesthetic appeal and perceived lack of maintenance. Unfortunately for contractors building or selling stucco homes, increased prevalence --together with our damp climate-- seems to be resulting in a boom of stucco and EIFS related defect claims and lawsuits. Adding insult to injury, the damages sought by homeowners are remarkably high. And, if builders or contractors are not careful to protect themselves, they can get stuck footing the bill.
In many of the cases I've encountered, defect claims have involved allegations that the applicator failed to comply with manufacturer specifications or with industry standard when applying the stucco. Stucco is a cement product, and like cement, it cracks. Although cracks aren't a structural issue and are little more than cosmetic, homeowners are increasingly being targeted by stucco "experts" and encouraged to have the damage inspected. In many cases these "experts" will provide homeowners with a biased and self-serving report that frightens them into removing and replacing the entire stucco system. In addition, this "expert" may prompt the homeowner to file a lawsuit against the contractor that built or sold the home citing one of many common complaints including: lack of expansion joints resulting in cracks, improper flashing, improper caulk joints and stucco coming into contact with dissimilar materials.
It is because of these "experts" that builders of stucco-clad homes should take these four precautions to protect themselves and reduce chances of potential claims and lawsuits.
1) First, builders should take care to include provisions in all contracts that limit the extent of their liability and reduce the time in which a homeowner can bring claims related to construction defects. Washington State specifies a statute of limitation on the time in which someone can file a lawsuit. For instance, for a breach of contract, the statutory limitation period is six years. However, parties can agree to a different, and shorter, limitation period. In fact, construction contracts should include a limitation that is substantially shorter than six years. As long as the limitation period is not unconscionable, Washington courts should enforce the provision. These types of contractual provisions are recommended for any construction contract, but particularly where stucco is involved.
2) In addition to a contractual limitation, construction contracts should contain a claim limitation period. This limitation period would require that the homeowner provide notice of a claimed defect within a specific period of time, usually one year. If notice of the claim is not given within the claim notice period, the claim should be barred by the provision.
3) Third, a sensible contractor will also include a contract provision for a limitation of homeowner remedies or repair-- usually a warranty of limited duration of one to two years.
4) Fourth, become familiar with the warranty of habitability law. This warranty applies when a builder constructs a home for profit and sells it to its first intended occupant. The law implies that the home will be livable, meaning that there will be no structural defects that render the house uninhabitable. Mere cracks in the stucco alone, although unsightly, would not make the house uninhabitable. A homeowner doesn't need to move out in order to claim violation of warranty, but the livability of the home must be seriously restricted.
State case law suggests that a builder/vendor may waive the implied warranty of habitability, as long as an alternative warranty is provided. For instance, if the agreement provides that the builder/vendor warrants the residence for one year, a homeowner that discovers a construction defect affecting the habitability of the residence more than one year after the sale may be precluded from successfully suing the builder/vendor.
These four tips may limit a builder's exposure to stucco and construction related defect lawsuits, but the very best way to avoid litigation is for a builder to ensure that the contractor applying the stucco is doing so according to manufacturer specifications and to industry standards. In addition, individuals looking to purchase a home or enter into a construction contract should address the construction process and professionalism of the subcontractors before construction or before closing the purchase.
By taking the four relatively simple precautionary and proactive steps outlined above, builders can protect themselves from opportunistic "experts" and from the costly legal and remediation efforts that frequently follow.