2003 Legislation
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HOUSE BILL NO. 133 – Residentl constructn/defect/actions


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Daily Data Tracking History

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,
      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

Bill Text

  ||||              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
  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
  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-
  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
  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
  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 / Fiscal Impact

                         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
            Jeremy P. Pisca
                  Idaho Building Contractors Association
      STATEMENT OF PURPOSE/FISCAL NOTE                              H 133