The burden shifts to defendants to present evidence of diminution in property value to challenge cost-of-repair damages in construction defect case.

The Pennsylvania Superior Court affirmed a trial court’s decision to award cost-of-repair damages to a homeowner that amounted to almost half of the market value of the homeowner’s new construction property. In calculating damages, the court determined that the plaintiff-homeowner was not required to present evidence of diminution of property value in a construction defect case, especially when the case does not involve a single builder-vendor defendant. Once a plaintiff-homeowner submits evidence of costs to remedy the construction defects, the burden shifts to the defendants to challenge the homeowner’s evidence and to show how each defect that is attributable to their work affects the market value of the homeowner’s property. The burden lies on each defendant to establish that the cost to repair the specific defect alleged against him or her is grossly disproportionate on its face to the reduced market value. It is only after the defendant provides such evidence will the court compare the individual defect and its cost to repair with the current market value of the property, without the alleged defect, to determine whether the diminution in value is significantly less than the damages claimed for the repair. This cost-of-repair vs. market-value analysis extends to breach of contract actions involving repairs or renovations to existing and new construction property and breach of implied warranty of habitability actions against builder-vendors involving new construction.

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