New Laws Take Aim at Lawsuits

This article first appeared in the PB June 2003 issue of Pro Builder.

Notice and Right-to-Repair Laws Passed in 2003
State	Bill	More Information
Colorado	HB 1161	Colorado Association of Home Builders, 303-691-2242
Florida	SB 1286	Florida Home Builders Association, 850-251-1835
Idaho	HB 133	Building and Contractors Association of Southwest Idaho, 208-377-3550
Indiana	SB 451	Indiana Builders Association, 317-236-6334
Kansas	HB 2294	Kansas Building Industry Association, 785-267-2936
Kentucky	HB 289	Home Builders Association of Kentucky, 502-875-5478
Montana	SB 389	Montana Building Industry Association, 406-442-4479
West Virginia	SB 440	Home Builders Association of West Virginia, 304-342-5176

It is a sad state of affairs when legislation is required to resurrect basic civility and common sense. But that is what is now in the offing, and builders stand to benefit.

The tendency to litigate against builders, developers and trade contractors for even minor repairs has risen to such a level that state legislatures have been taking action. New laws, known by various names - "right to repair," "right to cure" and "notice and opportunity to repair" - were enacted last year in California, Washington and Arizona. This year, nearly identical bills were enacted in Colorado, Florida, Idaho, Indiana, Kansas, Kentucky, Montana and West Virginia, says Clayton Traylor, senior staff vice president with the NAHB.

The hope, says Traylor, is that the legislation will reduce the number of construction defect cases that have resulted in higher insurance rates and risk, particularly for builders of attached or condominium projects where a defect in one unit can result in an action by the entire homeowner's association.

"Until we change the environment in which builders and insurance carriers are operating," Traylor says, "we are not likely to see much change in the availability or price of insurance for builders."

This is particularly true in California where, for years, very little attached housing was built as a result of legal peril. But that changed on Jan. 1 when its version of the law, SB 800 took effect.

"Builders are now planning attached projects once again," says Mick Pattinson, past president of the California Building Industry Association and CEO of Barratt American in Carlsbad, Calif. "What we went through in the late '90s was that builders would not even invest in mapping and planning attached communities whereas now they are. So as SB 800 takes hold, the condo will return to California."

Staying on the Timeline
Similar to right-to-repair laws in other states, California's new law prescribes a set period of time for dealing with an aggrieved homeowner and fixing a problem to their satisfaction before legal action can be taken. The total time elapsed from the time a homeowner notifies the builder of a defect and the deadline for completion of repairs is 300 days. Along the way there are various deadlines for inspections and assessments and commencement of work that must be met. If the builder misses one of those dates, the homeowner can then go to court.

The following are highlights of the California law as set forth by Bill Peters and Sandy Kaplan, partners with the San Francisco-based law firm of Gordon & Rees who represent a number of builders, designers and contractors in the residential development industry.

The law applies only when there are defects detected by the owner of a new home or condominium sold after the date of the law's enactment. It does not include condominium conversions.

Defect definitions. The law states the types of things that can and cannot be considered defects. Water intrusion near windows, doors and roofs is generally viewed as a defect, as is anything that "materially im-pairs the use of the structure by its inhabitants."

Statute of limitations. As set forth by the law, home buyers cannot initiate a repair process or bring any action after 10 years. Some specific items such as painting items (five years), steel fences (four years) and others have shorter statutory time frames.

Upon completion of a repair, the builder is not released. In fact a builder cannot obtain a release or waiver in exchange for the repair, which has the same statute of limitations as original work.

California's Right-to-Repair Process

Day 1: Homeowner notifies builder of defects.
Day 14: Builder must acknowledge homeowner's claim.
Day 28: Builder completes preliminary inspection.
Day 30: Deadline for request for second inspection.
Day 45: Builder must complete repair assessment.
Day 75: Builder must make offer to repair.
Day 105: Deadline for homeowner to consider builder's offer.
Day 140: If homeowner objects, builder must provide names of three other contractors.
Day 154: Contractor must commence repair work.
Day 300: Deadline for completion of repairs.

Source: Gordon & Rees, LLP

There are many other aspects and permutations to the California law. For a complete list of the Gordon & Rees highlights of the law, you can go to www.HousingZone.com/repairlaw.

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