Real Cases in Real Estate By Andrea Lee Negroni, Esq. – February 29th, 2012 Update

Real Cases in Real Estate By Andrea Lee Negroni, Esq. – February 29th, 2012 Update

Real Cases in Real Estate is a weekly update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

Followers of Real Cases in Real Estate will learn and be entertained by lawsuits involving nuisance, trespass, zoning violations, deed restrictions, title insurance, public utilities, mechanics liens, construction defects, adverse possession, foreclosure and eviction, divorce and marital property rights, tenants' rights, and more. Real Cases in Real Estate uncovers the unpredictable, amusing, and sometimes outrageous disputes between next-door neighbors, contractors and homeowners, condo boards and residents, real estate brokers and homebuyers, and zoning administrators and developers.

Each fully cited case summary highlights the essential law of the case and explains the principal legal theories and concepts relevant to the outcome. Plain language treatment makes Real Cases in Real Estate accessible to lawyers and laymen alike.

Whether you follow real estate law professionally or as a hobby, you'll find something new and useful every week in Real Cases in Real Estate.

Updates for the Week of February 29th, 2012

The Tennessee Consumer Protection Act protects the purchaser of a new home from a builder.

The construction litigation that followed Scott and Sandie Campbell's purchase of a $240,000 home from father-and-son builders Junior and Terry Teague led the Tennessee Appeals Court to review the applicability of the consumer protection act to residential real estate purchases. The Campbells wanted a well-built new home because Mrs. Campbell had a fear of tornados. The Teagues contracted with them to build the home and offered a one-year builder's warranty. The problems with the home were evident from the start, but the Campbells closed anyway and relied on the Teagues to correct problems after closing. Despite their promises, the Teagues did not respond to the Campbells' many requests for repairs.

A construction expert testified at trial about the five major construction problems, including moisture infiltration, mildew and decay, bad construction of the main floor, bad construction of the roof and attic, and mineral streaking on the main floor. The Campbells sued the Teagues in 2004 and reached a partial settlement in 2006, requiring the builder to buy back the home. The Campbells reserved the right to seek consequential damages and attorneys fees under the Consumer Protection Act. At the trial, the Campbells were awarded $169,000 in damages for losses ranging from lost wages to moving expenses, including mortgage interest, interest on their down payment, repairs they made to the home, and other items. The builder was awarded $29,841 in setoffs of the award, most of which was attributed to a rental fee of $700 per month for the Campbells' period of occupancy.

The builder argued that the Consumer Protection Act (TCPA) should not apply because they bought back the home. The appeals court disagreed, interpreting the law liberally to protect the consumers of the state. The court declared the unworkmanlike construction both deceptive and unfair because it caused substantial injury to the consumers that were not reasonably avoidable by them. Moreover, the court held that the Teagues, whose license permitted them to build homes up to $200,000 in value, were in automatic violation of the TCPA when they built a home for $240,000, because they were not properly licensed to build the home they contracted for.

The case reviews the implied warranty of good workmanship and materials applicable to newly built dwellings in Tennessee. This principle warrants to the initial buyer of a new home that the home and its fixtures have no major structural defects and the construction is workmanlike, meeting standards of workmanlike quality prevailing at the time and place of construction. The implied warranty applies only when the home construction contract is silent on warranty terms; it may be waived by the buyers, or altered by contract. However, a waiver of the implied warranty is ineffective if it does not give express notice to the buyers of the implied warranty they are waiving.

The lawsuit revealed that the Teagues breached their contract with the Campbells, built a sub-standard home for them, repeatedly failed to respond to their requests for repairs, were improperly licensed, and the buyers' consequential and incidental damages were reasonably foreseeable. The Campbells used the Tennessee Consumer Protection Act to secure a broad range of consequential damages from the Teagues, plus attorney fees for their lawsuit and its appeal.

Campbell v. Teague, 2010 Tenn. App. LEXIS 239 (March 31, 2010) [enhanced version available to subscribers].

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