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H0133..............................................................by BUSINESS
RESIDENTIAL CONSTRUCTION - Adds to existing law to set forth the "Notice and
Opportunity to Repair Act"; to define terms; to set forth procedures for
actions against construction professionals for defects in residential
construction; and to provide for limitations on damages.
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - to Bus
02/06 Rpt out - rec d/p - to 2nd rdg
02/07 2nd rdg - to 3rd rdg
02/11 3rd rdg - PASSED - 61-8-1
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Black,
Block, Boe, Bolz, Bradford, Cannon, Clark, Collins, Crow, Cuddy, Deal,
Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg,
Lake, Langhorst, Martinez, McGeachin, Meyer, Miller, Mitchell, Moyle,
Naccarato, Raybould, Ridinger, Ring, Roberts, Rydalch, Sayler,
Schaefer(Schaefer), Shepherd, Shirley, Skippen, Smith(30), Smith(24),
Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood, Mr. Speaker
NAYS -- Bieter, Kulczyk, Langford, McKague, Nielsen, Ringo, Robison,
Sali
Absent and excused -- Campbell
Floor Sponsor - Gagner
Title apvd - to Senate
02/12 Senate intro - 1st rdg - to Com/HuRes
03/10 Rpt out - rec d/p - to 2nd rdg
03/11 2nd rdg - to 3rd rdg
03/14 3rd rdg - PASSED - 32-0-3
AYES -- Andreason(Rouse), Bailey, Brandt, Bunderson, Burkett,
Burtenshaw, Calabretta, Cameron, Compton, Darrington, Gannon, Geddes,
Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai,
McKenzie, McWilliams, Noh, Pearce, Richardson, Schroeder, Sorensen,
Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Davis, Marley, Noble
Floor Sponsor - Goedde
Title apvd - to House
03/17 To enrol
03/19 Rpt enrol - Sp signed
03/20 Pres signed
03/21 To Governor
03/27 Governor signed
Session Law Chapter 133
Effective: 07/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 133
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE NOTICE AND OPPORTUNITY TO REPAIR ACT; AMENDING TITLE 6, IDAHO
3 CODE, BY THE ADDITION OF A NEW CHAPTER 25, TITLE 6, IDAHO CODE, TO PROVIDE
4 A SHORT TITLE, TO DEFINE TERMS, TO SET FORTH PROCEDURES FOR ACTIONS
5 AGAINST CONSTRUCTION PROFESSIONALS FOR CONSTRUCTION DEFECTS AND TO PROVIDE
6 FOR LIMITATIONS ON DAMAGES.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Title 6, Idaho Code, be, and the same is hereby amended
9 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
10 ter 25, Title 6, Idaho Code, and to read as follows:
11 CHAPTER 25
12 NOTICE AND OPPORTUNITY TO REPAIR ACT
13 6-2501. SHORT TITLE. This chapter shall be known and may be cited as the
14 "Notice and Opportunity to Repair Act."
15 6-2502. DEFINITIONS. Unless the context clearly requires otherwise, as
16 used in this chapter:
17 (1) "Action" means any civil lawsuit or action in contract or tort for
18 damages or indemnity brought against a construction professional to assert a
19 claim, whether by complaint, counterclaim or cross-claim, for damage or the
20 loss of use of real or personal property caused by a defect in the construc-
21 tion of a residence or in the substantial remodel of a residence. "Action"
22 does not include any civil action in tort alleging personal injury or wrongful
23 death to a person or persons resulting from a construction defect.
24 (2) "Association" means a homeowner's association, condominium management
25 body, unit owner's organization or a nonprofit corporation created to own and
26 operate portions of a planned community which has the power to assess unit
27 owners to pay the costs and expenses incurred in the performance of the
28 association's obligations.
29 (3) "Claimant" means a homeowner or association that asserts a claim
30 against a construction professional concerning a defect in the construction of
31 a residence or in the substantial remodel of a residence.
32 (4) "Construction professional" means any person with a right to lien
33 pursuant to section 45-501, Idaho Code, an architect, subdivision owner or de-
34 veloper, builder, contractor, subcontractor, engineer or inspector, performing
35 or furnishing the design, supervision, inspection, construction or observation
36 of the construction of any improvement to residential real property, whether
37 operating as a sole proprietor, partnership, corporation, limited liability
38 company or other business entity.
39 (5) "Homeowner" means:
40 (a) Any person who contracts with a construction professional for the
41 construction, sale, or construction and sale of a residence; and
2
1 (b) An association as defined in this section.
2 "Homeowner" includes a subsequent purchaser of a residence from any homeowner.
3 (6) "Person" means an individual, an association as defined in this sec-
4 tion, or a corporation, business trust, estate, trust, partnership, limited
5 liability company, joint venture or other legal business entity.
6 (7) "Residence" means a single-family house, duplex, triplex, quadraplex,
7 condominium or a unit in a multiunit residential structure in which title to
8 each individual unit is transferred to the owner under a cooperative system.
9 (8) "Serve" or "service" means personal service or delivery by certified
10 mail to the last known address of the addressee.
11 (9) "Substantial remodel" means a remodel of a residence, for which the
12 total cost exceeds one-half (1/2) of the assessed value of the residence for
13 property tax purposes at the time the contract for the remodel work was made.
14 6-2503. NOTICE AND OPPORTUNITY TO REPAIR. (1) Prior to commencing an
15 action against a construction professional for a construction defect, the
16 claimant shall serve written notice of claim on the construction professional.
17 The notice of claim shall state that the claimant asserts a construction
18 defect claim against the construction professional and shall describe the
19 claim in reasonable detail sufficient to determine the general nature of the
20 defect. Any action commenced by a claimant prior to compliance with the
21 requirements of this section shall be dismissed by the court without prejudice
22 and may not be recommenced until the claimant has complied with the require-
23 ments of this section. If a written notice of claim is served under this sec-
24 tion within the time prescribed for the filing of an action under this chap-
25 ter, the statute of limitations for construction-related claims is tolled
26 until sixty (60) days after the period of time during which the filing of an
27 action is barred.
28 (2) Within twenty-one (21) days after service of the notice of claim, the
29 construction professional shall serve a written response on the claimant. The
30 written response shall:
31 (a) Propose to inspect the residence that is the subject of the claim and
32 to complete the inspection within a specified time frame. The proposal
33 shall include the statement that the construction professional shall,
34 based on the inspection, offer to remedy the defect, compromise by pay-
35 ment, or dispute the claim;
36 (b) Offer to compromise and settle the claim by monetary payment without
37 inspection; or
38 (c) State that the construction professional disputes the claim and will
39 neither remedy the construction defect nor compromise and settle the
40 claim.
41 (3) (a) If the construction professional disputes the claim or does not
42 respond to the claimant's notice of claim within the time stated in sub-
43 section (2) of this section, the claimant may bring an action against the
44 construction professional for the claim described in the notice of claim
45 without further notice.
46 (b) If the claimant rejects the inspection proposal or the settlement
47 offer made by the construction professional pursuant to subsection (2) of
48 this section, the claimant shall serve written notice of the claimant's
49 rejection on the construction professional. After service of the rejec-
50 tion, the claimant may bring an action against the construction profes-
51 sional for the construction defect claim described in the notice of claim.
52 If the construction professional has not received from the claimant,
53 within thirty (30) days after the claimant's receipt of the construction
54 professional's response, either an acceptance or rejection of the inspec-
3
1 tion proposal or settlement offer, then at anytime thereafter the con-
2 struction professional may terminate the proposal or offer by serving
3 written notice to the claimant, and the claimant may thereafter bring an
4 action against the construction professional for the construction defect
5 claim described in the notice of claim.
6 (4) (a) If the claimant elects to allow the construction professional to
7 inspect in accordance with the construction professional's proposal pursu-
8 ant to subsection (2)(a) of this section, the claimant shall provide the
9 construction professional and its contractors or other agents reasonable
10 access to the claimant's residence during normal working hours to inspect
11 the premises and the claimed defect.
12 (b) Within fourteen (14) days following completion of the inspection, the
13 construction professional shall serve on the claimant:
14 (i) A written offer to remedy the construction defect at no cost to
15 the claimant, including a report of the scope of the inspection, the
16 findings and results of the inspection, a description of the addi-
17 tional construction necessary to remedy the defect described in the
18 claim and a timetable for the completion of such construction;
19 (ii) A written offer to compromise and settle the claim by monetary
20 payment pursuant to subsection (2)(b) of this section; or
21 (iii) A written statement that the construction professional will not
22 proceed further to remedy the defect.
23 (c) If the construction professional does not proceed further to remedy
24 the construction defect within the agreed timetable, or if the construc-
25 tion professional fails to comply with the provisions of subsection (4)(b)
26 of this section, the claimant may bring an action against the construction
27 professional for the claim described in the notice of claim without fur-
28 ther notice.
29 (d) If the claimant rejects the offer made by the construction profes-
30 sional pursuant to subsection (4)(b)(i) or (ii) of this section to either
31 remedy the construction defect or to compromise and settle the claim by
32 monetary payment, the claimant shall serve written notice of the
33 claimant's rejection on the construction professional. After service of
34 the rejection notice, the claimant may bring an action against the con-
35 struction professional for the construction defect claim described in the
36 notice of claim. If the construction professional has not received from
37 the claimant, within thirty (30) days after the claimant's receipt of the
38 construction professional's response, either an acceptance or rejection of
39 the offer made pursuant to subsection (4)(b)(i) or (ii) of this section,
40 then at any time thereafter the construction professional may terminate
41 the offer by serving written notice to the claimant.
42 (5) (a) Any claimant accepting the offer of a construction professional
43 to remedy the construction defect pursuant to subsection (4)(b)(i) of this
44 section shall do so by serving the construction professional with a writ-
45 ten notice of acceptance within a reasonable time period after receipt of
46 the offer and no later than thirty (30) days after receipt of the offer.
47 The claimant shall provide the construction professional and its contrac-
48 tors or other agents reasonable access to the claimant's residence during
49 normal working hours to perform and complete the construction by the time-
50 table stated in the offer.
51 (b) The claimant and construction professional may, by written mutual
52 agreement, alter the extent of construction or the timetable for comple-
53 tion of construction stated in the offer including, but not limited to,
54 repair of additional defects.
55 (6) Written or oral statements made by a claimant or by a construction
4
1 professional in the course of complying with the procedures required or autho-
2 rized by this section shall not be considered an admission of liability and
3 shall not be admissible in an action subject to this section.
4 (7) Nothing in this section shall be construed to prevent a claimant from
5 commencing an action on the construction defect claim described in the notice
6 of claim if the construction professional fails to perform the construction
7 agreed upon, fails to remedy the defect or fails to perform by the timetable
8 agreed upon pursuant to subsection (4)(b) or (5)(b) of this section.
9 6-2504. LIMITATION ON DAMAGES. (1) In a suit subject to section 6-2503,
10 Idaho Code, the claimant may recover only the following damages proximately
11 caused by a construction defect:
12 (a) The reasonable cost of repairs necessary to cure any construction
13 defect, including any reasonable and necessary engineering or consulting
14 fees required to evaluate and cure the construction defect, that the con-
15 tractor is responsible for repairing under this chapter;
16 (b) The reasonable expenses of temporary housing reasonably necessary
17 during the repair period;
18 (c) The reduction in market value, if any, to the extent that the reduc-
19 tion is due to structural failure; and
20 (d) Reasonable and necessary attorney's fees.
21 (2) If a construction professional fails to make a reasonable offer as
22 required under section 6-2503, Idaho Code, or fails to make a reasonable
23 attempt to complete the repairs specified in an accepted offer, or fails to
24 complete, in a good and workmanlike manner, the repairs specified in an
25 accepted offer, the limitations on damages and defenses to liability provided
26 for in this section shall not apply.
27 (3) If a claimant denies a request to inspect as provided for in section
28 6-2503, Idaho Code, unreasonably rejects an offer to remedy the construction
29 defect or does not permit the construction professional a reasonable opportu-
30 nity to repair the defect pursuant to an accepted offer of settlement, the
31 claimant may not recover an amount in excess of:
32 (a) The reasonable cost of the offered repairs which are necessary to
33 cure the construction defect and which are the responsibility of the con-
34 struction professional; or
35 (b) The amount of a reasonable monetary settlement offer made under sec-
36 tion 6-2503, Idaho Code; and
37 (c) The amount of reasonable and necessary attorney's fees and costs
38 incurred before the offer was rejected or considered rejected.
39 (4) The total damages awarded in a suit subject to this chapter may not
40 exceed the greater of the claimant's purchase price for the residence or the
41 current fair market value of the residence without the construction defect.
42 (5) A builder, under the principles of comparative fault pertaining to
43 affirmative defenses, may be excused, in whole or in part, from any obliga-
44 tion, damage, loss or liability if the builder can demonstrate any of the fol-
45 lowing affirmative defenses in response to the claimed construction defect
46 action:
47 (a) An unforeseen act of nature caused the structure not to meet the
48 standard. For purposes of this section, an "unforeseen act of nature"
49 means a weather condition, earthquake or man-made event such as war, ter-
50 rorism or vandalism, in excess of the design criteria expressed by the
51 applicable building codes, regulations and ordinances in effect at the
52 time of original construction.
53 (b) The homeowner unreasonably failed to minimize or prevent those dam-
54 ages in a timely manner. Such failure includes the failure of the
5
1 homeowner to allow reasonable and timely access for inspections and
2 repairs under this chapter or to give timely notice to the builder after
3 discovery of a construction defect, but does not include damages due to
4 the untimely or inadequate response of a builder to the homeowner's claim
5 of a construction defect.
6 (c) The homeowner or his or her agent, employee, subcontractor, indepen-
7 dent contractor or consultant failed to follow the builder's or
8 manufacturer's recommendations or commonly accepted homeowner maintenance
9 obligations. In order to rely upon this defense as it relates to a
10 builder's recommended maintenance schedule, the builder must show that the
11 homeowner had written notice of these schedules and recommendations and
12 that the schedules and recommendations were reasonable at the time they
13 were issued.
14 (d) The damage or loss was caused by the homeowner's or his or her
15 agent's or an independent third party's alterations, ordinary wear and
16 tear, misuse, abuse or neglect, or by the structure's use for something
17 other than its intended purpose.
18 (e) The time period for filing actions bars the claim.
19 (f) The action relates to a particular claim for which the builder has
20 obtained a valid release.
21 (g) The builder's repair was successful in correcting the particular
22 claimed construction defect to the applicable standard.
23 (6) All applicable affirmative defenses are preserved for causes of
24 action to which this chapter does not apply.
STATEMENT OF PURPOSE
RS 12445C1
Relating to residential building construction, this legislation gives
contractors a right to cure construction defects before a lawsuit
relating to the defect is filed.
Contractors in Idaho have seen significant increases in insurance costs
over the last year and some contractors have found that insurance is
unavailable or that coverage options are limited due to nationwide
litigation relating to residential building construction. This
legislation provides that a contractor shall receive notice of
construction defect claims, and be given the opportunity to repair such
defects before a lawsuit is filed. This legislation also provides a
process for the contractor and the property owner to reach an agreement
on a plan to cure construction defects prior to the filing of a
lawsuit. If the contractor does not follow the statutory process for
reaching an agreement with the property owner or does not fulfill an
agreement to cure such defects, the property owner may bring suit.
This legislation does not apply to, limit, or otherwise affect lawsuits
alleging personal injury or wrongful death resulting from construction
defects. The legislation places a limit on the damages that can be
awarded in a construction defect lawsuit to the actual cost to fix the
defect and other closely related costs.
FISCAL NOTE
There is no identifiable fiscal impact on the state or local
government. The purpose of the legislation is to reduce litigation.
Such a reduction would, in theory, have a positive impact on both state
and local government through a reduction in the costs associated with
operating the court system. However, the amount of any actual reduction
is speculative.
CONTACT: John Eaton
Building Contractors Association of Southwestern Idaho
377-3550
Jeremy P. Pisca
Idaho Building Contractors Association
336-7930
STATEMENT OF PURPOSE/FISCAL NOTE H 133