REAL ESTATE AND THE LAW : Defective Home’s Buyer Has Emotional Distress

Robert and Nancy bought what was to be their “dream home” in Beverly Hills. Although the soils compaction report advised the builder to construct reinforced slabs, instead the house was built on a raised foundation with a subfloor 18 to 24 inches below the exterior grade. This created a basin for surface and groundwater.

The home buyers experienced flooding, standing water and ground saturation. Dampness caused the floors to buckle, wallpaper to peel and the house had a damp, dungy smell. Robert and Nancy moved out, leasing a condominium, until the water problem could be corrected.

They sued the builder for property damage. In addition, Nancy sued for emotional distress damages due to anxiety, tension and despair caused by the declining condition of the home. The home builder conceded its liability for the defective construction damages but not for Nancy’s emotional distress.

If you were the judge, would you rule Nancy can recover damages for her emotional distress caused by the defective home construction?

The judge said yes.

The issue is whether a home buyer’s emotional distress is foreseeable if the house was defectively constructed, the judge began. A buyer of a new home is entitled to rely on the skill of the builder, he continued, and its implied representation that the house will be built in a reasonably workmanlike manner fit for habitation.

Nancy was compelled to endure continuous apprehension about the safety, stability and comfort of her home, including moving to temporary quarters, the judge explained. “Emotional distress is patently within the ambit of the foreseeable risk when a home builder markets defective homes and is therefore a recoverable item of damage,” he emphasized. Therefore, Nancy is entitled to $50,000 emotional distress damages, the judge ruled.

Based on the 1993 California Court of Appeal decision in Salka vs. Dean Homes of Beverly Hills Inc., 22 Cal.Rptr.2d 902.