Damages resulting from construction defect need to be proven in order to warrant consideration for recovery in construction defect claims. Recoverable damages can include cost of repairs, reduction in market value, loss of intended use of residence and lost profits, expenses for temporary housing during repairs, prejudgment interest, and in some cases, emotional distress and punitive damages if the buyer has a sympathetic jury or arbitrator and can establish fraud, malice or willful and wanton conduct on the part of the builder/developer or vendor.
It is advisable to put language in the construction contract providing for the right to withhold payments or take an offset, or deduction, against the contract sum if the builder quits or fails to repair to code. Some states have a contractor’s board that regulates the contractors and may have procedures where a claim could be filed against the builder, or his bond. Check your local state laws.
Before signing any contract, check with your local contractor licensing board. It should tell you whether the contractor’s license is valid, whether a bond is in place, and perhaps whether there have been any claims filed against the contractor.