South Carolina
New Construction Buyer Guide
South Carolina's legal landscape for new construction homebuyers is shaped by a state Supreme Court that has, in several notable cases, been protective of homebuyer rights. The court's holdings in Smith v. D.R. Horton (2016) and Damico v. Lennar (2022) reflect a willingness to scrutinize builder contract provisions and to find certain clauses unconscionable when they disproportionately disadvantage the buyer. These decisions distinguish South Carolina from many other states where courts have taken a more deferential approach to builder-drafted agreements.
South Carolina has a right-to-cure statute that requires homeowners to provide 90 days of written notice to the builder before initiating litigation over construction defects (S.C. Code Section 40-59-840(A)). This pre-suit requirement gives the builder an opportunity to inspect and repair the alleged defect, and failure to comply with the notice provision can result in dismissal of the homeowner's claims. The statute creates a structured framework for dispute resolution, though it also imposes a waiting period on homeowners seeking to litigate.
The volume of builder-related litigation in South Carolina has increased in recent years. As documented by Hunterbrook, almost half of the 198 complaints filed against D.R. Horton in South Carolina courts over the last decade were filed in just the last two years. D.R. Horton has also paid a 16.1 million dollar class action settlement for construction defects in the state. These figures underscore the frequency and scale of construction-related disputes in the South Carolina market.
Key Protections
The South Carolina Supreme Court has applied the unconscionability doctrine to strike down certain builder contract provisions. In Smith v. D.R. Horton (2016), the court found habitability waiver and no-damages clauses unconscionable, establishing that builders cannot use form contracts to eliminate fundamental buyer protections.
In Damico v. Lennar (2022), the South Carolina Supreme Court found an arbitration provision unconscionable as a contract of adhesion, signaling that arbitration clauses in builder contracts are not automatically enforceable and will be evaluated for fairness.
South Carolina's right-to-cure statute (S.C. Code Section 40-59-840(A)) requires homeowners to provide 90 days of written notice before filing suit. While this creates a waiting period, it also compels builders to engage with defect claims in a structured manner.
South Carolina courts have recognized implied warranties in new residential construction and have demonstrated a willingness to enforce them even when the builder's contract attempts to disclaim or limit such warranties.
The South Carolina Residential Builders Commission oversees builder licensing and provides a mechanism for consumer complaints. Builders found to have violated licensing requirements or engaged in substandard practices may face disciplinary action.
Key Risks
The right-to-cure statute's 90-day notice requirement can delay a homeowner's ability to pursue litigation. During this period, the builder controls the repair process, and the homeowner may have limited recourse if the builder's proposed cure is inadequate.
Builder contracts in South Carolina commonly include deposit forfeiture provisions. While the state's courts have shown willingness to examine fairness, not all forfeiture clauses have been challenged or found unconscionable.
Builder contracts in South Carolina frequently reserve the right to substitute materials and finishes. Unless the substitution rises to the level of a habitability issue, buyers may have limited recourse for changes in specifications.
While the Smith v. D.R. Horton decision struck down a no-damages clause, not all limitation-of-damages provisions have been tested. Contracts may still include caps on recoverable amounts that have not yet been challenged in court.
Notable Cases
The court found that the builder's contractual waiver of the implied warranty of habitability and a no-damages clause were unconscionable, holding that a builder cannot use a form contract to eliminate fundamental protections that homebuyers are entitled to under South Carolina law.
The court found the arbitration provision in Lennar's purchase agreement unconscionable as a contract of adhesion, holding that the clause was presented on a take-it-or-leave-it basis and unreasonably favored the builder.
D.R. Horton agreed to a 16.1 million dollar class action settlement to resolve claims of widespread construction defects in South Carolina developments, one of the larger builder settlements in the state's history.
Advice for South Carolina Buyers
- 1Review your purchase agreement with an understanding that South Carolina courts have been willing to find certain builder contract provisions unconscionable. However, not every unfavorable clause has been tested, so careful review remains essential.
- 2Be aware of the 90-day right-to-cure notice requirement under S.C. Code Section 40-59-840(A). You must provide written notice to the builder and allow 90 days for inspection and repair before filing a construction defect lawsuit.
- 3Document all defects thoroughly with photographs, dates, and written correspondence. The structured nature of South Carolina's dispute resolution process places a premium on clear, contemporaneous records.
- 4Examine your arbitration clause in light of the Damico v. Lennar decision. While the South Carolina Supreme Court has found certain arbitration provisions unconscionable, each clause is evaluated on its specific terms.
- 5Consider consulting a South Carolina construction defect attorney before signing the purchase agreement. An attorney familiar with the Smith and Damico holdings can advise on which contract provisions may be vulnerable to challenge.
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