A construction defect is generally defined as a defect or deficiency in the design, the construction, and/or in the materials or systems used on a project that may not be readily observable and results in a building, structure or component that is not suitable for the purpose intended. The term “construction defect” includes both design and construction defects that result in financial harm (either property damage or personal injury) to the owner or to a third party.
According to the Insurance and Risk Management Institute, a construction defect is generally speaking, a deficiency in the design or construction of a building or structure resulting from a failure to design or construct in a reasonably workmanlike manner, and/or in accordance with a buyer's reasonable expectation. The most dangerous defects have the capacity to fail, resulting in physical injury or damage to people or property. However, many defects present no increased risk of injury or damage to other property but nevertheless cause harm to the property owner in the form of loss of use, diminution in value, and extra expenses incurred while defects are corrected. This latter type of defect is often referred to as a passive defect.
Many states have more specifically defined the term "construction defect" for purposes of applying statutes that dictate processes for remedying and litigating construction defect claims. These statutory definitions vary by state. Nevada, for example, uses the term constructional defects and defines it as follows:
“Constructional defect” means a defect in the design, construction, manufacture, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance and includes, without limitation, the design, construction, manufacture, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance:
1. Which is done in violation of law, including, without limitation, in violation of local codes or ordinances;
2. Which proximately causes physical damage to the residence, an appurtenance or the real property to which the residence or appurtenance is affixed;
3. Which is not completed in a good and workmanlike manner in accordance with the generally accepted standard of care in the industry for that type of design, construction, manufacture, repair or landscaping; or
4. Which presents an unreasonable risk of injury to a person or property.
Whether, and to what to extent, coverage applies in liability policies for claims alleging construction defects is a matter of serious debate both in insurance circles and in the courts. We wrote few weeks ago about some earthshaking decisions reached by the majority of the jurisdictions during 2013 and 2014, finding construction defect coverage under a contractors’ CGL policy. These policies, however, are subject to numerous exclusions and Anti-Indemnification Statutes, Right to Repair/Cure and Statutes of Limitations and Repose. In fact, the defendants in many of these cases have been successful in defeating claims using the defenses of the statutes of limitations and repose.
Among the more frequently addressed exclusions are the so-called “business risk” exclusions, which include the “damage to property”; “damage to your property”, and “damage to your work” exclusions. Other potentially applicable exclusions concern prior work; contractual liability; EIFS; mold; owned property; earth movement, and known or continuing injury or damage. Claims for damages resulting from defective drywall began to appear in about 2005, and courts have frequently addressed whether the standard pollution exclusion, in addition to the above-mentioned exclusions, bars coverage for such claims.
Basic Categories of Construction Defects
There are several categories of construction defects depending on the area of the building or foundation that was affected by defective construction.
· Site Defects
· Building Envelope Defects
· Structural Defects
· Heating, Ventilating, and Air Conditioning Defects
· Electrical and Plumbing Defects
· Fire/Life Safety System Defects
Types of Construction Defects
There are two types of construction defects, latent and patent defects. Latent defects are those defects that are concealed and are often not obvious or readily observable upon reasonable inspection. Even with the most comprehensive on-site inspections, sometimes defective construction may go unnoticed. After construction is complete, Latent Defects are unknown and generally undiscoverable and will only appear after the passage of time.
Examples of Latent Defects are:
Soils that were not properly compacted.
Improperly installed flashing and/or the total lack of flashing within the building envelope assembly.
Lack of reinforcing in structural concrete footings, walls and/or slabs.
Lack of brick ties and/or masonry reinforcement in a brick/masonry veneer wall.
An improperly installed weatherproofing system.
Improperly installed stucco or EIFS exterior wall system.
Improperly consolidated concrete.
Reinforcement not fully embedded in the concrete structure.
Patent Defects are those defects that are known or would be readily obvious upon reasonable inspection. Examples of Patent Defects are:
· Weep holes not installed in brick veneer walls.
· Handrails omitted in stairways.
· Missing control and/or expansion joints.
· Cracking and/or signs of distress in the building envelope.
· Lack of roof drainage and/or roof slope.
· Lack of proper roof/attic ventilation.
An important distinction to understand in the analysis of construction defects is the difference between the “defect” itself and the “manifestation” of the defect, although in general terms, both the defect and the manifestation of the defect must ultimately be corrected. At times these concepts are erroneously considered to be the same and are discussed as if they were synonymous.
In fact, the manifestation of a particular defect is the apparent visible condition of the building, structure or component that gives the observer notice of the possible existence of, and most likely results from, a defect in construction. For example, a crack in a brick veneer wall may be considered to be a defect, but, in fact, it is only the manifestation of a defect. The actual defect may be the result of the failure of one or more components of the brick veneer wall system such as improperly installed or missing flashing; improperly installed or missing expansion joints; improperly installed and/or missing reinforcement; lack of or improperly installed vapor barrier; and/or the improper installation of the brick veneer wall itself.
Examples of the manifestation of a defect include:
· A total or partial collapse of the structure.
· The inability of the structure to prevent water intrusion.
· Cracking, selling or subsidence of concrete flat work.
· Cracking, settling or tilting of walls.
· Doors that are out of plumb and do not fit into the frame.
· Windows that do not operate.
· Foundations that settle crack or subside.
The importance of distinguishing between the manifestation of the defect and the defect itself is critical as the manifestation may provide clues that a Latent Defect exists and further investigation is warranted and necessary. The manifestation of a defect may be the first indication to the owner of a potential problem. Depending on the length of a warranty and in light of the time limitations imposed by a State’s statutes of repose, quick action, notification and possible litigation may be necessary to protect the owner’s rights.
CAUSES OF FAILURES OF BUILDING ENVELOPES
One can think of a building envelope as being similar to envelopes used to mail packages through the postal service. A standard package mailing envelope is used to protect the interior contents from moisture, wind and damage while in transit. The building’s envelope acts like a mailing envelope by protecting the structure from rain, sleet or snow.
A building’s envelope includes the walls, siding, flashing, roof, foundation and so forth. These systems should work together by providing a barrier between the interior of the structure and the exterior environmental elements such as rain and moisture. The installation materials and methods used in the building’s construction will determine how heat, air and moisture travel through the structure.
This year, the construction industry is rapidly approaching the $1 trillion mark. Based on past damage claims, we would expect that there will be about $100 to $200 billion worth of construction defect-related claims. The risks causing these damages include design risks, material risks, construction risks, maintenance risks, and weather-related risks.
Based on extensive analysis of the construction defects over the past 100 years, we can safely say that wall design, wall material, construction and maintenance practices are the most significant factors responsible for the occurrence of the building envelope defects.
Below, we present a number of construction defect photos, illustrating some of the property damage caused by such defects.
DETAILS OF A TYPICAL, PROPERLY CONSTRUCTED, RESIDENTIAL BRICK WALL DRAINAGE SYSTEM
Flashing at the Bottom of Brick-Veneer Walls
Improper through-wall detailing and installation. No weep holes, and the flashing did not extent enough on either direction. Also, the caulking is deficient. As a result, the steel angle lintel corroded and there was a collapse as well.
This is an example of properly shingled through-wall flashing system. As you can see here, the black flashing is on top of the brick ledge. It goes up onto the framing, and is behind the weather-resistive barrier(WRB) (white sheet folded out of the way near top of photo). When the WRB is folded down, it will protect the sheathing from moisture damage due to capillary action.
Failed sealant in need of replacement
Improper design and installation
Damage due to improper installation
This picture clearly displays a problem that we call mortar bridging. This occurs when sloppy workmanship results in mortar getting behind the brick. The problem is that this prevents water from freely draining out of the wall system. In fact, it even bridges the gap between the brick and the framing, allowing water to wick into wood materials, causing lots of problems.
Building codes require that weep holes - holes placed at the base of a masonry wall - be spaced every 16 to 32 inches on center. Here you can see that these weep holes (where the holes are at) are placed directly above the through-wall flashing. If water gets behind this brick, it can freely drain down and be wicked out through these ropes to daylight.
Failed sealant, allowing water to infiltrate the wall
This picture shows what happens when the weep holes get plugged. You can see here that there is water trapped at the base of this brick-veneer wall. It will eventually leak through the building paper and cause moisture problems.
An improper installation of a stainless steel flashing is shown in this image. The edge is held back from the face of the wall. This will allow water that collects on the flashings to run around the edge of the flashings and back into the wall.
An improper installation of flashings and rope wick weeps in a wall system is shown above. Note that the flashings do not meet and obviously cannot be lapped and sealed. The rope wick weep is laid in a mortar joint approximately 3/8 inch above the flashings, meaning that any water collecting on the flashings will not be able to be picked up by the rope wick until it reaches the height of the rope wick on the interior of the wall.
As you can see here there is no air space between the brick and the weather-resistive barrier (WRB), which means there is no pathway for water to freely drain out. Water can easily get trapped behind here, leading to moisture damage. There should be at least a 1-inch airspace between the brick and the WRB.
Failed sealant allowing water to infiltrate
Failed terracotta window surround
EPDM thru-wall flashing membrane is a flexible EPDM rubber membrane that forms a moisture retarder in cavity wall construction by redirecting water to a building exterior
Misaligned rigid board insulation exposes this airspace to water bridging
The mortar bridging and impaction in this two-inch airspace are unacceptable
Flashing for Wood and Fiber-Cement Siding
All cladding systems leak. It's not a matter of if, it's a matter of when. It's important to understand that proper moisture management dictates that when water gets through penetrations, we want this water to drain down the wall freely, and exit the wall at the base of the siding. That's why the detailing and integration of flashings are so critical to building long-lasting, durable buildings.
In this photograph we can see that this home has cement-board siding over foam board sheathing. Even though foam board sheathing is not affected by moisture, codes still require that we have a weather-resistive barrier (WRB). As you can see here, the butt-joint of this siding lines up perfectly with the seam in the foam. So in a wind-driven rain, it would be very easy for water to penetrate this seam, get in between the foam into the wall cavity where it can cause lots of damage. It's critical to have a properly shingled WRB that directs the water downward, where it can exit freely.
This photograph shows an example of improper drainage at the base of the wall in conjunction with cement-board siding. The moisture build-up in the siding shows that the wall is not getting free drainage. One of the problems here is there is not enough space between at the bottom of the siding and that through-wall flashing. There should be at least 1/8 inch gap to prevent capillary action. And it's important that the flashing be properly integrated behind the weather-resistive barrier for proper shingling of water away from the house.
In the photograph on the left, we can see that we have T-111 siding. These T-111 siding panels may not be long enough to side the entire structure without a seam. So here for example, we have two pieces of T-111 siding covered by a trim board. In the photo on the right, we can see there is a substantial amount of damage due to water leaks at the seam where these two pieces of T-111 plywood meet. You can also see that there was a thin piece of metal Z-flashing, but it was not adequately sized, nor properly integrated with the weather-resistive barrier to provide free drainage to the base of the wall.
It's fairly typical for wood or cement-board siding to be installed tightly up against the building wrap, and this can restrict drainage. So manufacturers have created rain-screen materials and drainage wraps. The photo on the left shows a rain-screen product. This is a plastic matrix that is about 1/4-inch thick that facilitates drainage, and provide an air space that helps prevent capillary action, so water can drain down the wall system and exit at the base of the siding. The product on the right is a drainage wrap material. These are different than an standard building wrap in that they have a texture, or in this case, plastic deposited on the surface to create a space for drainage. It doesn't take much or an air space to create better drainage.
Early Deterioration and warping. Note fungus growing on bottom edge.
Edge Checking and swelling. Although each manufacturers product varies slightly the bottom edges should be around 7/16" thick with no swelling present. This area has swelled to over 9/16".
Flashing at the Bottom of Stucco Walls
Stucco is a popular cladding material because it can be durable and long lasting, and it doesn't require a lot of maintenance. However, it is important to follow a few building science principles relating to water management to ensure that the stucco does not trap water or let water into the wall assembly.
A couple things are wrong in this picture: The stucco runs all the way to grade, and there is no weep screed. The bottom of the stucco must have a weep screed to allow water to drain out of the wall system, and this screed should be at least 8 inches above grade. If the stucco runs all the way to grade, moisture from capillary action can wick up into the stucco, and transfer to wood framing.
This picture illustrates how important it is to have a good water management system behind stucco. You can see that rain water has been absorbed into the cracks. Now all stucco cracks; that's fairly common. But that's why it is so important to have a good water management system. Most building codes requires two layers of building wrap, or building paper, and that must be integrated with a weep screed flashing at the base of the wall.
This is a picture of properly integrated flashing at the base of the wall. You can see the stucco screed is perforated - has holes in it - so when the stucco is troweled over the top, it has the capacity to allow moisture to drain through it. What's important to note here is that the back flange on the screed goes up behind the paper, so any water that does get behind the stucco will hit the paper, run down, hit the stucco screed and drain down through the perforations.
In this picture, the stucco screed is reverse shingled at the base of the wall. You can see that the metal flashing is actually in front of the black paper. To be properly shingled, the black paper should overlap the metal stucco screed. That way, when water gets behind the stucco, it runs down the paper onto the metal flashing and is diverted to the exterior.
It's a fairly common building practice to integrate multiple types of cladding on a single wall. For example, here we have stone at the base, with a cap, and then we have stucco at the top. The problem in this photograph is where the stucco interfaces with the capstone: There's no through-wall flashing. Any water that gets behind the stucco, can run down the wall and get trapped by the stone. Note there are no weep holes in the stone, so there's no way for the water to get out. It's always best practice to put through-wall flashing where you have this transition between one cladding system and another.
Water-Managed Adhered Concrete Masonry
Adhered concrete masonry is a term used to describe synthetic stone. Synthetic stone is different than real stone in that it's lighter weight and therefore can be supported by the existing wall system. However, to make it lighter weight, it is much more porous and is considered to be a "reservoir" cladding system (i.e. it holds water). That's why it's important to have a good drainage, particularly at the base of the wall.
The construction sequence is as follows: Typically you have your exterior sheathing, two layers of weather-resistive barrier and perhaps a drainage mat. Then you have you mortar base, your wire lath and your synthetic stone.
These photographs describe the drainage space, or drainage mat, mentioned previously. This is installed over the weather-resistive barrier to create a space that allows any moisture that gets in behind the stone to drain freely down the wall system and out the flashing at the base of the wall.
For adhered concrete masonry veneer to work properly, you have to have adequate drainage at the base of the wall. This means proper integration of your stucco screed, your flashing and your weather-resistive barrier at the base of the wall. You can see that this stucco screed is at the base of the wall and that the weather-resistive barrier is shingled over the top of it.
It's common practice to use other cladding systems with adhered concrete masonry veneer. Here we have a transition point at the base of the siding where it meets the base of the capstone. Below that we have our synthetic stone. It's critical that we have good water management here to divert water away at these siding-to-stone transitions. We want to have through-wall flashing here that diverts water away from the siding to the exterior.
The moisture damage on this home was a direct consequence of improper detailing of the synthetic stone. There are a couple problems: If you look at the photograph on the left, you can see that the synthetic stone runs all the way to grade (in fact, on this home it ran below grade). Also note that at the cap stone at the base of the siding, there was no through-wall flashing to divert water out, before it got into the stone wall. If you look at the photograph on the right, you can see that water got in at the top near the cap stone, ran down the wall, was absorbed by the sheathing and then rotted out the framing and the sheathing at the base of the wall. This is all the direct result of not having adequate flashing at the base of the wall.
Improper design and installation
Improper detailing and installation resulting in trapped water
Water-Managed Vinyl Siding
Because vinyl siding has an air space behind it, it acts like a rain screen. As you can see from this photograph, the water tracks down the foundation wall indicates how freely this siding can drain. In fact, you do not need flashing at the base of the wall with vinyl siding because it has weep holes at every course, allowing for free drainage. You do need to use a weather-resistive barrier. Also, you would need to use flashing at the base of the wall if that siding transitions to a trim board or to another type of cladding.
At first glance, vinyl siding may not appear to be a very water-tight cladding system. But if used with a weather-resistive barrier can be quite effective. The beauty of vinyl siding is that it hangs loosely on the wall, and creates a fairly good air space between the vinyl and the weather-resistive barrier, allowing water to drain freely from the wall system.
Weep holes are at every course of siding. As you can see here, water can freely flow out of the weep holes, rather than being trapped inside the wall system.
Can you spot what's wrong with this picture? The workers are installing vinyl siding but there is no weather-resistive barrier behind it. Building codes now require that there be a weather-resistive barrier behind all exterior claddings.
Common callback: This damage was caused by a leak at the base of wall cladding that did not include proper through-wall
flashing. Typically, these wall leaks are caused by missing flashings, or poorly executed flashing details at the following:
windows and doors
transitions between different claddings when more than one cladding is used at the bottoms of exterior walls where cladding systems interface with the foundation.
The key to eliminating costly leaks is more than just applying a piece of flashing. You need to create a functional wall assembly
Deflects water away from sheathing, framing and floor-to-foundation intersections.
Drains water as fast and freely as possible to prevent water from being trapped and absorbed by building components.
Dries. Select building materials that allow the wall to dry out when it gets wet, and avoid materials that have the ability to trap moisture.
We are effective negotiators and work hard to resolve cases in a manner that avoids the additional time and expense of a trial. We help both insurers and insureds with water damage claims regarding:
Stucco: When a builder improperly installs stucco or the building paper behind it, water can seep in and cause damage to the building's framing and sheathing.
Siding: When a builder improperly installs vinyl or steel siding or the housewrap behind it, water can seep in and cause damage to the building's framing and sheathing. Additionally, poor installation may cause the vinyl or steel siding to warp or buckle.
Leaky roofs: Roof leaks are often caused by faulty construction, including poor shingle installation, failure to install kickout flashing and the use of defective shingles.
Foggy, leaky, or improperly installed windows: Improperly installed flashing can allow water to seep around and through the windows and into a property. This can damage the windows, causing them to rot. It can also cause damage to the building's framing and sheathing.
Water leaks can quickly damage and ruin property. And, left uncorrected, water leaks can lead to pervasive mold growth. We assist our clients in addressing these construction defect and property damage claims against their builders to repair these problems. From our offices in several Northeast and Midwest states, we assist clients facing construction defect issues across a ten state coverage area.