The Importance of Addressing Construction Defects

Understand what to look for and how to proceed should a problem arise.

Construction defects — flaws or errors in a building’s design, materials or workmanship that cause damage or diminish its value — are among the most common and expensive risks faced by contractors, developers and property owners.

The Hyatt Regency Kansas City walkway collapse in 1981 is an extreme example and worst-case scenario of construction defects. The suspended walkways collapsed during an event, killing 114 people and injuring an additional 216. This tragedy occurred when changes were made in the design of the hanging walkways and approved by the engineer without running the proper calculations, resulting in the walkways being under strength and causing the box beams to split and pull through the suspension rods.

A more recent example of costly construction defects is San Francisco’s Millennium Tower, where the 58-story building tilts just under 29 inches due to foundation issues and has undergone a $100 million retrofit. In early 2024, it was reported that residents were asked to foot $6.8 million in repairs, which are said to be more than $20 million over budget, to address additional sinking issues. Foundation issues of this magnitude can cause other major problems, such as cracks and water intrusion.

The construction market is healthy overall, with year-over-year spending up 6.5% in 2024, according to the U.S. Census Bureau. That spending reflects a need for new and renovated infrastructure. At the same time, it is difficult for contractors to find skilled labor, with the industry needing to attract more than 450,000 additional workers on top of normal hiring to meet demand, according to Associated Builders and Contractors. Those two factors in combination will exacerbate construction issues.

Given this reality, developers, construction firms, building operators and facility managers must stay informed about construction deficiencies. This includes understanding how to identify defects and appropriately address them.

Causes of Construction Defects

Preventing construction defects requires diligence and attention to detail. Defect-free construction is difficult to achieve due to the challenges of multiple trades working together, the proliferation of new building materials and systems, and the market demand for expedited construction. Defects are most likely to originate from one of three areas (or some combination thereof):

Workmanship: Even when everyone strives for quality workmanship, labor market shortages, simple mistakes and improper trade collaborations can lead to construction defects. Deviations from the project plans and material specifications can also undermine the quality and performance of the finished structure.

Design: Errors in the architectural or engineering design phases, such as miscalculations, incorrect specifications or building code violations, can result in significant defects. These issues may lead to moisture intrusion, inadequate drainage, reduced service life and costly foundation failures.

Materials: Improperly selected materials or incompatible materials can compromise the integrity of building envelope components, often resulting in cracking or failure. Material defects frequently manifest as poor moisture management, which can cause material degradation and allow moisture intrusion.

Spotting Construction Defects

Some construction defects are immediately apparent, while others may be hidden and harder to identify until the issues have compounded over time. It is imperative to know the signs and symptoms of construction defects and to address them immediately before they worsen.

Water intrusion: Some water intrusion might seem like a nonissue, especially in a structure exposed to the elements, like a parking garage. However, this is one of the most serious signs of a construction defect in all built environments because water can cause severe damage to the structure, building materials and interior finishes. Finding the water source can be challenging, as defects may originate in the roof, walls, flashings, windows, doors, plumbing or drainage systems.

Grading and drainage: Soil has different attributes in every region of the country. Regardless of the soil type, grading it away from the structure and ensuring proper drainage is important to prevent water pooling around the foundation, which can cause foundation movement and building cracks. The structural damage done to a foundation will quickly lead to more issues throughout the building.

Cracks or gaps: Aside from foundation movement, material expansion and contraction within a building can cause cracks, which can indicate construction defects. When cracks or gaps are spotted, it is important to determine if they are growing and, if so, how quickly. How the crack or gap progresses will determine the severity of the issue.

The Legal Process

Construction defect laws vary by state, but it is important to understand the following aspects of the legal process:

Legal counsel: In all cases, it is paramount to seek legal counsel from an attorney who has experience with construction defect litigation. These attorneys will know the laws and case tactics and have access to forensic engineers and experts who are skilled at evaluating buildings for the purpose of supporting or defending litigation.

Forensic engineers: These engineers specialize in evaluating existing buildings to identify the root cause of an issue, the extent of the damage, the responsible parties, and the best methods of mitigating and repairing the building. Forensic engineers may start by evaluating an owner’s complaint but often transition to providing technical support to general contractors and developers when a subcontractor, material manufacturer, design engineer or architect failed to meet the standard of care for the project.

Statute of repose: This is the time limit wherein the deficiency must be identified after construction is finished and the buyer or building owner must file a lawsuit against the contractor or developer responsible for the construction defects. The statute of repose varies considerably from state to state but is generally six to eight years in length. Contractors and developers still have a limited exposure window to legal claims for construction defects beyond this time frame.

Statute of limitations: This is the time limit for an owner to file a claim against a builder once the construction deficiency has been identified. In many states, the statute of limitations is two years. Thus, once a deficiency or an issue with the construction is identified, the statute of repose is no longer the determining time limit; litigation must be initiated much sooner.

Notice of claim: Many states require a notice of claim and allow the contractor to repair a deficiency before litigation can be filed. For example, the notice of claim process for commercial property in Colorado requires owners to give a written notice of the defect and allow the contractor/developer the opportunity to inspect the property. The notice must include a description of the defect, its location and the type of damage or injury the defect caused. Once the contractor or developer has inspected the property, they can offer a settlement or propose a repair.

Legal stay: This is the suspension of the statute of limitations during the notice of claim process. In some states, the legal stay prevents the buyer from filing a lawsuit against the party responsible until the notice of claim process is completed, allowing further investigation into the suspected issue.

Best Practices

Lawsuits, claims, repairs and loss of reputation can result from construction defects. When turning dirt on a new real estate project, it is imperative to think about what could go wrong with the structure during the planning and design phase. Ensuring that codes, standards and specifications are being followed is critical.

Make sure design teams stay integrated throughout the construction project via shop drawings, request for information submittals, reviews and approvals, and make sure they are on-site to see how the construction systems are actually going together. Third-party peer reviews during the design and construction phases by forensic engineers and architects can also be extremely valuable. Selecting suitable materials to withstand the test of time and mitigate risks, taking into account soil and weather conditions, is essential. Similarly, it is crucial to inspect the property diligently to ensure materials and workmanship align with the design documents.

If signs or symptoms of construction defects, such as water stains or interior cracks, become apparent after building completion or in an existing building, identify the root cause before anyone tries to cover the issue with spackle or paint. Taking care of the issue and monitoring the building for any other underlying issues can keep small, relatively easy fixes from becoming major undertakings. 

Stanley Stoll is the CEO and principal engineer at Knott Laboratory.

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