A construction defect is any condition on a property whether commercial or residential that not only reduces the value of the property but also compromises the integrity of the structure. The party must identify a deficiency in the construction process itself, a failure in the structure, or serious damage to a person or property.
These types of defects can be caused by multiple situations, but some of the most common are:
When distinguishing between the types of construction defect, each issue can be divided into two types: patent or latent defects. Patent defects are easily identifiable and often discovered during or soon after a project is completed. They are usually found during initial or standard inspections. Latent defects are a bit less obvious – they will most likely be missed during inspections and can cause larger, deeper issues for projects. A latent defect can be something like water intrusion, subsidence, or something that occurs years after the building process was completed
Once a defect is classified as patent or latent, it is then subdivided even further into a defect category. The three most common defects are design, material, and workmanship defects.
Design Defects: A design defect stems out of the inability of a construction organization to produce accurate or usable construction documentation. Errors usually require redesign and can often be addressed by a change in the scope of work.
Workmanship Defects: These types of defects often caused by human error – displaying as simple aesthetic issues or something as serious as structural integrity. Identifying who failed to follow the proper standard of care in these situations can prove challenging.
Material Defects: Usually the fault of a manufacturer, material defects arise when faulty materials are unknowingly incorporated into a project.
When a construction defect is identified, the process of construction defect litigation often follows. The construction defect litigation process is long, costly, and very complicated. Some of the biggest challenges include communicating with numerous defendants, identifying varying insurance policy coverages, anti-indemnity statutes, and fact-intensive discovery procedures. It is important to note that each state has a statute of limitations when it comes to construction defect litigation and in some states the stature can run as long as 10 years.
JDi Data provides the #1 industry solution for construction defect litigation. Our Vendor Cost Control solution is designed to simplify the billing process by providing transparency into reconciliations. During litigation, the VCC team pays all vendors, experts, legal and defense costs. Initial reconciliation determines current financial status among all participants to facilitate an allocation plan of action to secure funding. Share allocation, risk calculation and funding cycles ensure prompt payment from participating carriers. Vendors/experts and law firms have real-time portal visibility. Recalcitrant payers are easily identifiable and the VCC collection activities are focused on reasons for nonpayment which could include inadequate reserves, not enough information or coverage issues.