Cutting corners always seems to catch up with you.

Think of the uproar surrounding every instance of poisoning from undercooked food. Consider the dire consequences of sloppy legal representation. Remember the dozens of hidden camera investigations that caught service providers slacking on the job.

Then consider this: If it can happen there, it can happen at your house. A study reported by the California Department of Real Estate estimates that one-third of new residential and commercial construction has a significant structural defect.

"The problem is, the developer accepts the lowest bid from the contractor," said Thomas Miller, co-author of "Home and Condo Defects: A Consumer Guide to Faulty Construction." "You get what you pay for. They're not going to give you the quality and the materials and the supervision that you would expect in your home."

Miller should know. He is the majority owner of The Miller Law Firm in Newport Beach, Calif.; his daughter Rachel is the only partner. Together, they have built up a practice based on helping homeowners whose homes didn't live up to their expectations.

Miller said low construction bids are one root of the problem. The lowest responsible bidder--one who makes an accurate assessment of costs--might be undercut by a lower bid that's designed to get the job at any cost. Miller said the low bidder will then cut corners to try to make a profit on the job.

In one case, a builder saved money by using regular nails instead of galvanized roofing nails on the roofs of a subdivision. The nails rusted, the roofs leaked, the houses rotted and the developer was forced to pay millions to replace all of the roofs.

Shortly after World War II, builders used aluminum wiring for electrical systems and galvanized piping for plumbing and even natural gas lines. When the metals corroded, homes burned down, natural gas leaked and sewage spilled.

It's difficult for home inspectors to spot defects in new homes, Miller said. How can they check for leaks in the roof and water intrusion in the basement if the house hasn't weathered at least a few rainy seasons?

"You have to go through three or four seasons to see how a home performs," said Rachel Miller, co-author of "Home and Condo Defects." Although some builders give homeowners a warranty detailing what they will fix--with plenty of exclusions--this does not limit their liability.
"The only defense the builder has is time," Rachel Miller said of construction defects. In Oregon, homeowners have to take the builder to court within 10 years of substantial completion of the home and two years from the date they discover the defect.

That means homeowners can, in some cases, force the builder to fix their house years after they move in if the problem is related to faulty workmanship. The Millers specialize in construction defects and most of their clients have lived in their homes more than five years.

"Some homeowners believe their time is up, but just because the builder's warranty has expired doesn't limit their [homeowner's] rights," Thomas Miller said.

Many homeowners erroneously believe that their insurance policy will protect them if their roof springs a leak. But in the last 10 years, Thomas Miller said, insurance policies have gradually excluded coverage of faulty construction or materials.

"All you end up with is a fire policy," he said. Recently, insurers have excluded "sick building syndrome" and other environmental claims.
So how can consumers protect themselves from faulty construction? One option is constant supervision of laborers and more than a dozen subcontractors who work on each home.

"It's almost impossible [to ensure quality by yourself] unless you have construction experience yourself and go there while the home is being built," Thomas Miller said. He suggests asking a skilled contractor to check the home before it's drywalled and painted--affording a view of the "guts" of the home.

For people who live in a subdivision that includes houses built by the same general contractor and subcontractors, the Millers suggest speaking with neighbors about past problems with their houses. They also recommend working together if they have to sue a builder.

"It's generally smarter for a group of people to get together because these cases become very expensive to investigate," Thomas Miller said.

Liability for home defects is spread among the builder, the seller and the inspector. The seller is required to disclose defects a reasonable person would find, as well as facts that would affect the value of the home. But a seller's failure to disclose a defect doesn't absolve the builder of his or her liability, Miller said.

Inspectors can find leaks and cracks, but homeowners might save themselves the price of an inspection by noticing water stains on the ceiling or around the windows--evidence of leaks.

Miller said inspectors include a lot of disclaimers in their contracts, such as pointing out that they did not look under the carpet or behind counters for leaks. He advises homeowners to check that the inspector has liability insurance and check the contract for an abundance of exclusions.

"If they don't meet your standards, there's nothing that says you have to hire an inspector," Miller said. A good, licensed general contractor or an architect could also provide an inspection.

"Homeowners are educating themselves more these days when they go to buy a home," Rachel Miller added. "People go on the web, because there are so many resources there, and they're more aware of the issues. The big issue now is mold with water intrusion. A lot of people are calling us because they're sick or their kids are getting sick."