The Plaintiff Construction Defect Bar Speaks Up on ELR: Hoisted from the Comments

Brian Collins from Birmingham makes the pitch why homeowner's should have a negligence cause of action for construction defects, and that the ELR should not be used to deny damages for code violations and other defects that may not yet have caused property damage (e.g. Aas CA Sup Ct. 2000):

[P]resently we see the systematic opening and closing of [developer/builder] entities that were under-insured, under-capitalized and virtually judgment proof. [In] residential construction where performance bonds are rarely available or requested ... an enforcement of the ELR, and barring negligence to those who lack privity would leave the purchaser/homeowner with no means of recovery. Although construction defects are foreseeable and homeowners have opportunities to forego the contract, what are their options for protection? If all builders require the one year limited warranty significantly limiting claims, how may a homeowner protect for latent defects. If the builder closes shop immediately upon completion of the subdivision, where does a claimant turn?

The ability to collect a portion of their actual damages [in a negligence cause of action], after paying fees, expenses and costs through a lengthy litigation of three to four years at a minimum, is not a windfall to the homeowner and only provides a partial remedy with the tort claims. Take those away and you will effectively eliminate any meaningful options for an owner when a latent defect is discovered as a result of some subcontractor's lack of care....

A commercial setting could provide a completely different rationale but the educated parties in that context do not require the protection that should be afforded to inexperienced home purchasers. I believe a distinction must be made between actions against those in a commercial setting versus those in a residential setting. Until that is done, you will find compelling arguments on both sides of the issues that cannot be reconciled. 

The appropriate answer for this may be a statutory remedy.  Many states have enacted minimum standards for residential construction.  Provisions like California Civil Code Section 895 et. seq. (enacted in the wake of Aas) grant a cause of action to homeowners to enforce these standards directly against the developer, general contractor, subcontractors, suppliers, or architect without regard to privity of contract.  The presence of such a remedy obviates the need for a tort remedy.   

In states where no statutory remedy is available to homeowners, the burden of evaluating whether to grant a remedy in negligence continues to weigh heavily on the courts.