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Scorpions, Sagging, and Spreading – Just a Few of the Problems with Homeowners’ New Log Home


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Fisher

By Chase Fisher

Money pit
The couple, who lived in Indiana at the time, decided to move to Tennessee for their retirement and wanted to build a log home on a piece of land. They found and purchased the land and then hired a builder to build their log home. The log home and the property were purchased for $165,000.  Upon completion, the couple, who was still living in Indiana, gave their realtor the authority to perform the final walkthrough in their stead.  Following the realtor’s go-ahead, the couple closed on the log home in 2004 and lived there on a part-time basis until 2008, when they finally moved in full time.  

As with any custom home, the couple requested several changes to the plan and adjusted other parts of the plan to keep everything in budget (e.g., the couple traded having hand-hewn logs and chinking in order to obtain a full bath in the basement).  These requested changes appear to have contributed to several problems that followed.  Further, following their purchase, the couple noticed that several things had not been done to the house, so they began leaving punch lists for the builders.  

The couple experienced a laundry list of problems with the house including the following: a portion of the roof blew off; the floors were separating and buckling; the doors and windows did not open or shut; scorpions, geckos, bees, spiders and fire ants came into the house through cracks in the walls; the garage door beam was swagging considerably; and the house was moving away from the fireplace.  As a result, the couple filed a lawsuit against the builder.

The Cost of repair or replacement?
The jury awarded the couple $50,000 in damages, which the builder argued on appeal was significantly more than the price quoted by one of the experts used by the couple’s trial expert.  In fact, the couple’s expert testified that most of the problems could be fixed in a “patch and a fix” manner for $16,300. The court disagreed with the builder, however, as there was sufficient evidence that the cost of repair could range anywhere from simple fixes for $16,300 to the need to replace the entire house for $335,643.  

In particular, the court focused on Tennessee’s law of a general preference to award a measure of damages that will be the cost to repair the problems.  The court noted the other types of damages, such as awarding the full replacement value, are generally reserved for situations where repairs are not feasible or the cost of repair exceeds the replacement value.  Here, despite significant issues with the building structure, the log house was not beyond repair.  Thus, the court held that an award of $50,000 was very reasonable in light of the range of damages estimated between $16,300 and $335,643.

Takeaway
As in the case here, courts have several alternative means to calculate damages.  For example, the court could have based the damages on the difference between the value of the house at the time of the lawsuit versus the amount paid by the couple (which would have been approximately $90,000).  However, the damages awarded in this case were calculated based on the cost of the numerous repairs that the homeowners were able to prove needed to be performed based upon the builder’s breach of the implied warranty of habitability.  Contrary to popular belief, legal relief does not always result in a windfall.  It is intended to make the parties whole, not to enrich them.

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