HB 469 – FINAL VERSION
HOUSE BILL 469
This bill regulates disputes between homeowners and building contractors relative to residential construction defects. The bill requires notice to contractors and opportunity to repair before taking further legal action.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT regulating disputes between homeowners and contractors relative to residential construction defects.
Be it Enacted by the Senate and House of Representatives in General Court convened:
359-G:1 Purpose. In order to encourage the out-of-court resolution of disputes between homeowners and contractors relative to residential construction defects, this chapter provides a framework for discussion about an alleged defect. As part of this process, RSA 359-G:4, IV allows a homeowner to provide access to the residence for an inspection. Since an inspection is likely to lead to the timely resolution of the problem, homeowners are encouraged, but not required, to provide access for an inspection.
359-G:2 Definitions. In this chapter:
I. “Action” means any civil lawsuit, judicial action, or arbitration proceeding asserting a claim, in whole or in part, for damages or other relief in connection with a residence caused by an alleged construction defect.
II. “Homeowner” means any person, company, firm, partnership, corporation, or association which contracts with a contractor for the construction, sale, substantial remodel or repair, or construction and sale of a residence. Homeowner includes, but is not limited to, an authorized assignee, agent, or subsequent purchaser of a residence from any homeowner.
III. “Construction defect” has the meaning assigned by a written, express warranty either provided by the contractor or required by applicable statutory law. If no written, express warranty or applicable statutory warranty provides a definition, then “construction defect” means a matter concerning the design, construction, modification, or repair of a residence about which a person has a complaint against a contractor. The term may include any physical damage to the residence, any appurtenance, or the real property on which the residence or appurtenance is affixed, proximately caused by a construction defect.
IV. “Contractor” means any person, firm, partnership, corporation, association, or other organization that is engaged in the business of designing, developing, or constructing a residence, modification or repair of a new or existing residence, or construction, alteration, addition, or repair of an appurtenance to a new or existing residence.
V. “Residence” means a single-family house, duplex, or multifamily unit designed for residential use in which title to each individual unit is transferred to the owner under a condominium or cooperative system and shall include common areas and improvements that are owned or maintained by an association or by members of an association. A residence includes the systems, other components, improvements, other structures, or recreational facilities that are appurtenant to the house, duplex, or multifamily unit at the time of its initial sale, but not necessarily a part of the house, duplex, or multifamily unit.
VI. “Serve” or “Service” means delivery by certified mail, return receipt requested, or in-hand service, to the last known address or place of business of the addressee.
359-G:3 Action; Stay Without Prejudice. If a homeowner files an action without first complying with the requirements of this chapter, on application by a party to the action, the court or arbitrator shall stay the action, without prejudice, until the homeowner has complied with the requirements of this chapter. The stay shall not exceed the 60-day period set forth in RSA 359-G:4, I, and no attachments against the contractor shall be granted until the stay expires.
359-G:4 Notice and Opportunity to Repair.
I. In every action subject to this chapter, the homeowner shall, no later than 60 days before initiating an action against a contractor, provide service of written notice of claim on that contractor. The notice of claim shall state that the homeowner asserts a construction defect claim and is providing notice of the claim pursuant to the requirements of this chapter. The notice of claim shall describe the claim in detail sufficient to explain the nature of the alleged construction defect and the result of the defect. In addition, the homeowner shall provide to the contractor any evidence in possession of the homeowner that depicts the nature and cause of the construction defect.
II. Within 30 days after service of the notice of claim by the homeowner required in paragraph I, each contractor that has received the notice of claim shall serve on the homeowner, and on any other contractor that has received the notice of claim, a written response to the claim or claims, which discloses any evidence in the possession of the contractor that depicts the nature and cause of the construction defect, and:
(a) Offers to settle the claim by monetary payment, the making of repairs, or a combination of both, without inspection;
(b) Proposes to inspect the residence that is the subject of the claim; or
(c) Wholly rejects the claim.
III. Notwithstanding any other provision of this chapter, if the contractor fails to respond to the homeowner under paragraph II, wholly rejects the claim, or will neither remedy the alleged construction defect nor settle the claim, the homeowner may immediately bring an action against the contractor for the claims described in the notice of claim without further notice except as otherwise provided under applicable law.
IV. If a proposal for inspection is made pursuant to subparagraph II(b), the homeowner may, within 15 days of receiving a contractor’s proposal, provide the contractor and its subcontractors, agents, experts, and consultants prompt and complete access to the residence to inspect the residence, document any alleged construction defect, and, if authorized in writing by the homeowner, perform any destructive or non-destructive testing required to fully and completely evaluate the nature, extent, and cause of the claimed defect and the nature and extent of any repairs or replacements that may be necessary to remedy the alleged defect. If destructive testing is authorized in writing by the homeowner, the contractor shall give the homeowner advance notice of such tests and shall, after completion of the testing, return the residence to a condition as close as reasonably practicable to its pre-testing condition. If any inspection or testing reveals a condition that requires additional testing to allow the contractor to fully and completely evaluate the nature, cause, and extent of the construction defect, the contractor shall provide notice to the homeowner of the need for such additional testing and, if the homeowner consents in writing to such additional testing, the homeowner shall provide access as provided under this section. If a claim is asserted on behalf of owners of multiple residences, or multiple owners of units within a multi-family complex, then the contractor shall be entitled to inspect each of the residences or units, with the written consent of the unit owner.
V. Within 15 days following completion of the inspection and testing under paragraph IV, the contractor shall serve on the homeowner a response disclosing any inspection or testing records in the possession of the contractor that depict the nature and cause of the construction defect, and:
(a) A written offer to fully or partially remedy the construction defect at no cost to the homeowner. Such offer shall include a description of any additional construction necessary to remedy the defect described in the claim, and an anticipated timetable for the completion of such construction;
(b) A written offer to settle the claim by monetary payment;
(c) A written offer including a combination of repairs and monetary payment; or
(d) A written statement that the contractor will not proceed further to remedy the defect.
VI. If a homeowner accepts a contractor’s offer made pursuant to subparagraph V(a), (b), or (c) and the contractor does not proceed to make the monetary payment or remedy the construction defect within the agreed timetable, the homeowner may bring an action against the contractor for the claim described in the notice of claim without further notice except as otherwise provided by applicable law. In such situation, the homeowner may also file the contractor’s offer and homeowner’s acceptance, and such offer and acceptance will create a rebuttable presumption that a binding and valid settlement agreement has been created and should be enforced by the court or arbitrator.
VII. If a homeowner receives a written statement that the contractor will not proceed further to remedy the defect, the homeowner may bring an action against the contractor for the claim described in the notice of claim without further notice except as otherwise provided by applicable law.
VIII. If the homeowner rejects the offer made by the contractor to remedy the construction defect or to settle the claim by monetary payment or a combination of each, the homeowner may serve written notice of the homeowner’s rejection on the contractor.
IX. If the value of the offer that the homeowner rejects under this section is greater than any judgment awarded in an ensuing civil proceeding, then the contractor shall be deemed the prevailing party for the purpose of determining the taxation of costs in the proceeding.
X. Any homeowner accepting the offer of the contractor to remedy a construction defect shall do so by serving the contractor with a written notice of acceptance within a reasonable period of time after receipt of the contractor’s settlement offer, but no later than 30 days after receipt of the offer. If no response is served upon the contractor within the 30-day period, then the offer shall be deemed rejected.
XI. If a homeowner accepts a contractor’s offer to repair a construction defect described in a notice of claim, the homeowner shall provide the contractor and its subcontractors, agents, experts, and consultants prompt and reasonable access to the residence to perform and complete the construction by the timetable stated in the settlement offer.
XII. Service of a written notice of claim pursuant to this chapter shall automatically toll the expiration of an applicable limitations period for a period of 60 days. This paragraph shall not be construed to:
(a) Extend any tolling of expiration beyond 60 days;
(b) Revive any statute of limitation that expired prior to service of a notice of claim; or
(c) Extend any applicable statute of repose.
XIII. A homeowner and a contractor may alter, by written mutual agreement, the procedure for the notice of claim process described in this section. The altered process may follow customer dispute resolution guidelines outlined by recognized third party insured warranty programs licensed or approved by the state of New Hampshire.
XIV. In an action relating to a residence involving a construction defect, a contractor shall not be liable for any portion of a homeowner’s damages caused by:
(a) Normal shrinkage due to drying or settlement of construction components within the tolerance of normally accepted building industry standards or standards agreed upon in the contract between the homeowner and the contractor.
(b) The contractor’s reasonable reliance on written information relating to the residence that was obtained from official government records or provided by a government entity.
(c) The contractor’s reasonable reliance on applicable building codes in effect at the start of the construction, except to the extent the homeowner and the contractor had agreed in writing to exceed the construction standards set forth in the applicable building codes.
(d) Any construction defect that was known by or disclosed to a homeowner in writing prior to the homeowner’s purchase of the residence, and that was not caused to worsen or otherwise exacerbated by acts or omissions of the contractor.
(e) If the homeowner is not the first owner of the residence, any construction defect known by the homeowner or that could have been discovered by the homeowner through the exercise of reasonable diligence prior to the homeowner’s purchase of the residence, and that was not caused to worsen or otherwise exacerbated by acts or omissions of the contractor.
(f) Refusal of the homeowner or homeowner’s agent to allow the contractor or contractor’s agents to perform their warranty service work.
(g) Normal wear, tear, and deterioration of building components.
(h) Comparative negligence or failure to perform normal and reasonable maintenance of the residence on the part of the homeowner.
(i) Alteration of contractor’s work by homeowner without contractor’s written consent.
359-G:5 Additional Construction Defects; Additional Notice and Opportunity to Repair Required. A construction defect that is discovered after a homeowner has provided a contractor with the initial claim notice and is substantially related to the factual circumstances, acts, or omissions giving rise to the construction defects alleged in the initial notice may be alleged in an action involving the claims alleged in the initial notice without following the notice of claim procedure provided in RSA 359-G:4.
359-G:6 Release. If a homeowner accepts an offer made in compliance with this chapter and the contractor fulfills the offer in compliance with this chapter, the homeowner shall thereafter be barred from bringing an action for the claim.
359-G:7 Contract of Sale.
I. Upon entering into a purchase agreement or contract for the construction or improvement of a residence in which the contract amount exceeds $5,000, the contractor shall provide written notice to the owner of the residence of the contractor’s right to resolve alleged construction defects before a homeowner may commence litigation against the contractor. Such notice shall be conspicuous and may be included as part of the contract.
II. Contracts providing third party insured warranty programs must provide homeowners with warranty documents and claim procedures at or before closing or first occupancy.
III. The notice required by paragraph I shall be in substantially the following form:
NEW HAMPSHIRE LAW, RSA 359-G, CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT OR OTHER ACTION FOR DEFECTIVE CONSTRUCTION AGAINST THE CONTRACTOR WHO CONSTRUCTED, REMODELED, OR REPAIRED YOUR HOME. SIXTY DAYS BEFORE YOU FILE YOUR LAWSUIT OR OTHER ACTION, YOU MUST SERVE ON THE CONTRACTOR A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE. UNDER THE LAW, A CONTRACTOR HAS THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR AND/OR PAY FOR THE DEFECTS. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT OR OTHER ACTION.
359-G:8 Miscellaneous; Applicability of Chapter.
I. Nothing in this chapter shall create any cause of action on behalf of any homeowner or contractor.
II. This chapter shall not apply to a contractor’s right to seek contribution, indemnity, or recovery against a subcontractor, supplier, or design professional for any claim made against a contractor by a homeowner.
III. This chapter shall not apply to a claim brought by a person or entity subrogated to the rights of a homeowner on account of a payment made under an insurance policy.
IV. Nothing in this chapter shall prohibit a homeowner from taking such actions as necessary to prevent unsafe conditions or further deterioration of a residence.
155:2 Applicability. This act shall apply to all contracts entered into after the effective date.
155:3 Effective Date. This act shall take effect January 1, 2006.
(Approved: June 21, 2005)
(Effective Date: January 1, 2006)