Damages for Defective Construction

What are a property owner’s damages for defective construction?

In Gray v. Mark Hall Homes, Inc. Florida’s Second District Court of Appeal held that the proper measure of damages for a defective construction contract is “all unavoidable harm that the builder had reason to foresee when the contract was made, less such part of the contract price that has not been paid and is not still payable.”  2016 WL 459436 (Fla. 2d DCA 2016).

A property owner can recover the following for defective or unfinished construction:

  1. the reasonable cost of construction and completion in accordance with the contract, if possible and does not involve unreasonable economic waste; or
  2. the difference between the value that the product contracted for would have had and the value of the performance that has been received by the owner, if construction and completion would involve unreasonable economic waste.

In Gray, the owner and contractor entered into a contract to build a new home.  The home was completed.  When Gray moved into the home she found many defects — including lack of flashing which caused damage throughout the house due to water intrusion.  Gray sued the contractor.  The jury awarded the owner damages totaling the contract value between the owner and the contractor to build the house.  Witnesses testified that the house was worthless and that salvaging the house may not be economically feasible, and that Gray might be better off demolishing it and rebuilding.  Accordingly, the jury could reasonably find the house valueless and could support the jury’s award to the homeowner.