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Second owner of building could sue builder for defects

The second owner of a building could sue the builder for construction defects that led to the development of mold, the Iowa Supreme Court has ruled. The case involved a home that was built in 1995. In 2000, the original owners sold it to another family. The second family then discovered water damage and mold. They claimed the mold was the builder’s fault, but that the defects that caused the mold were hidden and couldn’t have been discovered until after their purchase.

This is a question that has divided courts across the country. The first owner of a building can often sue the builder for defects, because the first owner and the builder typically have a contract or a business relationship. But the second owner of a building doesn’t usually have any relationship with the builder. Nevertheless, the Iowa court said that second owners could sue (and presumably third and fourth owners, etc.).

The reason? Suppose a builder builds two houses, and is careless in doing so. The defects are hidden and can’t be discovered for five years. One of the houses is sold within five years; the other is not. Should the builder’s responsibility for its mistakes turn on the luck of the draw as to how quickly the houses were sold – something it has no control over? The Iowa court answered “No.” It said a builder’s legal responsibility for the quality of its workmanship should not depend on how fast a “for sale” sign appears on the property.

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