In Alabama, each new home built comes with a "Warranty of habitability." This warranty is supplied to virtually every new home built in Alabama excluding manufactured homes and some custom built homes, through the common law.

A warranty of habitability provides that each home built in Alabama shall be fit for its intended purpose-that is being used as a residential dwelling for at least one year. Historically, what makes a home "livable" or "habitable" has been taken on a case by case basis by our courts.

Generally, the construction defects have to rise above the average punch-list complaints. Items such as a roof leaking each time it rains, windows which cannot be open or shut, doors which cannot be locked, a home which cannot be heated or cooled effectively and especially anything which would effect the health, welfare or safety of the people within.

Structural defects are also generally included if they are significant enough. Another common occurrence is improper grading or preparation of the foundation which causes standing water to accumulate or excessive moisture in a slab foundation.

Under the Alabama warranty of habitability law, a defect generally must make itself apparent within one year of the home being occupied. At that point, it is incumbent upon the homeowner to notify the builder, in writing, of the defect. This firm recommends the use of certified mail for notification.

After notifying the builder, the homeowner has up to five (5) years to bring a lawsuit after noticing the defect for the first time. Other claims for negligence or misrepresentation are often included in actions over the same defects. However, the statute of limitations for those claims can expire as early as the second anniversary of the sale being closed.

The damages which can be recovered for a breach of the warranty of habitability, negligence and misrepresentation vary widely depending on the nature of the defect. Claims often include demands for the cost of making a house livable again, effecting all of the necessary repairs, the cost of having to vacate any or all of the residence for a period of time, any loss of re-sale value, any medical expenses which resulted and damages for the stress or distress of having lived though the experience.

These cases are often difficult because most builders are "judgment proof" or have no significant personal assets. The insurance coverage purchased by builders is often underwritten by a company which attempts to avoid any payment under the policy according to the terms of the fine print.

Homeowners should be able to expect the home they purchase to be fit to live in and that their builder will be capable of handling defects when they arise. Unfortunately, this is often not the case.

Although you may be reading this page only after having purchased a home and are currently experiencing a problem with your builder, there are some things you can do to try and limit the potential for ending up with a new home defect:

1. Ask your builder for references-lots of them. Then take the time to call these people.

2. Check to see if your builder builds home within the city limits of where you live. City inspection departments often have more stringent requirements which marginal builders will avoid. County inspection requirements (if there is a county inspection department at all) are generally more lax. A builder who does not build inside the city limits may do so for this reason.

3. Ask to see proof of liability insurance. Make sure the policy will extend through the time it takes to complete your construction. Insist that the policy limits exceed the entire contract value of the house you are building. Policies issued or underwritten through Zurich Insurance Company have been especially problematic in the past.

4. Call the Alabama Home Builders Licensure Board. They have lists of complaints filed by consumers. While the Licensure Board will not tell you any details about the complaints, any builder who has complaints against him at that level should be viewed with more scrutiny.

5. Refuse to sign an arbitration clause. Any builder who insists on an arbitration clause should be viewed with great scrutiny. No one thing prevents more homeowners from being able to make a builder accountable for their mistakes than an arbitration clause.