SINCE THE NAHB AND ITS HIGH PRODUCTION Home Builders Council (HPHBC) joined forces on the Civil Justice Reform Initiative last October, there has been steady progress toward easing the construction defect litigation crisis across the nation. State legislatures have been the battleground for our offensive against out-of-control lawsuits, and in almost half of them we now have Notice-and-Opportunity-to-Repair (NOR) laws on the books. This is a common sense solution to a problem that has inflicted enormous costs on builders, insurers, and worst of all, consumers. NOR laws simply require homeowners to notify builders of alleged construction defects before filing a lawsuit. Builders then have the opportunity to inspect the defects and offer to make repairs—or settle the claims through monetary payment. If no satisfactory resolution can be found, homeowners can go to court.
NOR laws are designed to bring speed, fairness, and predictability to the dispute resolution process. The laws recognize that this is a customer service problem and that litigation may not be the consumer's best option for finding a satisfactory solution.
While we have clearly turned the corner in restoring sanity to this major consumer issue, we still have a lot of work ahead. The news media trumpets large verdicts and settlements, but we know that behind the headlines homeowners depicted as big winners are lucky if the amount they receive even covers repairs after paying legal expenses and dividing the pot with other plaintiffs. While we suspect that many consumers who count on lawyers instead of builders to solve their defect problems are getting a raw deal, what we really need are hard facts to demonstrate how this is a frustrating experience for most of them. Our council is completing research to substantiate for the public, policymakers, and insurers that NOR laws provide quantifiable benefits—data that shows who benefits the most from defect lawsuits and whether litigation is the best way for consumers to resolve legitimate problems.
Another action item on the council's reform to-do list is to educate the judiciary on the intricacies of the home building process. This way, when technical construction issues come before the court, judges will have the expertise on claims that are being made. Law schools don't provide instruction on load-bearing walls, indoor air humidity, water penetration, and other building issues, so it is up to our industry to ensure that people who preside over these cases are familiar with the home building process. Partnering with the Brookings Institution, we have put together such a program, and about 250 trial judges are expected to participate early next year.
As a home builder, I know that the quality of the homes we build and the reputations we establish in our communities are more important than ever in today's sophisticated housing marketplace. We work hard to keep an open line of communication with our customers from the day they first visit our sales office because we understand that a satisfied home buyer is our best assurance for success. In an undertaking as complicated as building a home, things can go wrong, even when we have done everything right. When something does need to be fixed, that's our opportunity to prove to our customers that we take pride in the homes we build. We can't afford to miss that opportunity, and our Civil Justice Reform Initiative is helping to ensure that we don't.
Editor's Note: This column is a forum provided to the CEOs of America's largest home builders in cooperation with the NAHB. Address responses to BIG BUILDER'S editor at email@example.com.