North Carolina commercial real estate contractors know that, despite best efforts to comply with contractual requirements and meet the demands of discerning clients, there is always a possibility that a customer will allege deficiencies. Generally, construction defects fall into four categories:
- Flawed design;
- Subpar materials;
- Defects in workmanship; and,
- Problems with the subsurface at the construction site.
However, unlike many other US states, North Carolina has not enacted a statute specifically targeting construction defects. There are no procedural requirements that an aggrieved party must meet before filing a lawsuit, so you may not have an opportunity to cure or resolve the dispute. Instead, customers typically pursue contractors through a breach of contract lawsuit.
If you find yourself in a position where you need to defend your company against claims of construction defects, it is crucial to reach out to a North Carolina commercial real estate attorney right away. You may be able to take advantage of various strategies to fight the allegations, such as:
Statute of Limitations: One of the most basic defenses to construction defect allegations is noncompliance with the strict deadlines that apply to any breach of contract action. The North Carolina statute of limitations for lawsuits based upon a written document is three years, which is measured from the date that the breach allegedly occurred. If a customer does not file a lawsuit in court by the time the statute expires, the claim is barred.
Statute of Repose: There is a rule similar to a statute of limitations, essentially imposing an additional deadline on a party claiming commercial real estate construction defects. North Carolina’s statute of repose is six years, starting from the point at which the flaw was discovered. This rule exists to account for situations where the customer could not have found a hidden defect that was not obvious from a reasonably diligent inspection.
Liquidated Damages: If you included a liquidated damages clause in the contract for commercial real estate construction, you may raise this provision as a way of defeating a court-based action for separate compensation. Courts will usually uphold liquidated damages clauses where:
- The damages would be different to ascertain;
- The amount is a reasonable estimate or somehow proportional to the damages that would probably result from a breach.
Negligence: North Carolina does recognize a claim for negligent construction, which means a customer could seek damages from a contractor by alleging failure to exercise reasonable care in carrying out the terms of the contract. However, it is rare that a claimant will prevail in such a case because there is no recovery for purely economic losses under negligence-based liability principles. The customer’s remedy is through breach of contract, so the economic loss rule may serve as a solid defense.
Strict Liability: When the construction defect falls under the subpar materials category, your customer may proceed with legal action through strict liability instead of breach of contract. Such a case does not require a showing of fault, so the materials manufacturer and all other entities within the distribution chain may be liable. Therefore, you can dispute a strict liability case through evidence that your company did not manufacture, distribute, or take on another role in the chain of distribution.
Our North Carolina Commercial Real Estate Lawyers Will Defend Your Interests
These options for fighting claims of commercial real estate construction defects may help you gain an edge in a dispute, but keep in mind that there are other strategies for protecting your company. For more information, please contact Mullen Holland & Cooper P.A. to set up a consultation at our offices in Gastonia, NC. You can speak to one of our commercial real estate attorneys by calling 704.864.6751 or visiting us online.