PRIOR PRINTER'S NOS. 755, 1147 PRINTER'S NO. 1405
No. 656 Session of 2005
INTRODUCED BY GORDNER, PILEGGI, COSTA, WAUGH, BOSCOLA, ROBBINS,
WOZNIAK, ERICKSON, C. WILLIAMS, PIPPY, PUNT, D. WHITE,
M. WHITE AND LEMMOND, APRIL 29, 2005
SENATOR THOMPSON, APPROPRIATIONS, RE-REPORTED AS AMENDED,
DECEMBER 5, 2005
AN ACT
1 Providing for dispute resolution procedures relating to
2 residential construction defects between contractors and
3 homeowners or members of associations.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Residential
8 Construction Dispute Resolution Act.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "Action." A civil lawsuit, judicial action or arbitration
14 proceeding asserting a claim, in whole or in part, for damages
15 or other relief in connection with a dwelling caused by a
16 construction defect.
17 "Association." An association as defined under 68 Pa.C.S. §§
1 3103 (relating to definitions), 4103 (relating to definitions)
2 and 5103 (relating to definitions).
3 "Claimant." Any person who asserts a claim concerning a
4 construction defect. The term includes an association.
5 "Construction defect." The term shall have the same meaning
6 assigned by a written express warranty either provided by the
7 contractor or required by applicable statutory law. If no
8 written express warranty or applicable statutory warranty
9 provides a definition, the term shall mean a matter concerning
10 the design or construction of a dwelling or addition to a
11 dwelling or an appurtenance to a dwelling on which a person has
12 a complaint against a contractor. The term may include any
13 physical damage to the dwelling or any appurtenance, or the real
14 property on which the dwelling or appurtenance is affixed,
15 proximately caused by a construction defect.
16 "Consultant." An engineer, architect, contractor, inspector
17 or other person purporting to have expertise relating to
18 residential construction or having that expertise as a result of
19 training or profession.
20 "Contractor." A person, firm, partnership, corporation,
21 association or other organization that is engaged in the
22 business of developing, constructing or selling newly
23 constructed dwellings or constructing additions or appurtenances
24 to an existing dwelling. The term includes an owner, officer,
25 director, shareholder, partner or employee of a contractor. For
26 purposes of this act, the term also includes an industrialized
27 housing manufacturer. The term does not include a real estate
28 agent, broker or a contractor that installs a new device or
29 appurtenance which costs less than $2,000.
30 "Dwelling." A single-family house or duplex. The term
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1 includes a multifamily unit designed for residential use in
2 which title to each individual unit is transferred to the owner.
3 Under a condominium or cooperative system, the term includes
4 common areas and improvements that are owned or maintained by an
5 association or by members of an association. The term also
6 includes the systems, other components, improvements, other
7 structures and recreational facilities that are appurtenant to
8 the house, duplex or multifamily unit but not necessarily a part
9 of the house, duplex or multifamily unit. For purposes of this
10 act, the term also includes industrialized housing.
11 "Industrialized housing." A structure designed primarily for
12 residential occupancy, and which is wholly or in substantial
13 part made, constructed, fabricated, formed or assembled in
14 manufacturing facilities for installation or assembly and
15 installation on the building site so that concealed parts or
16 processes of manufacture cannot be inspected at the site without
17 disassembly, damage or destruction. The term does not include a
18 structure or building classified as an institutional building or
19 manufactured home, as defined by the National Manufactured
20 Housing Construction and Safety Standards Act of 1974 (42 U.S.C.
21 §§ 5401-5426).
22 "Industrialized housing manufacturer." A person, firm,
23 partnership, corporation, association or other organization
24 involved in the process of making, constructing, fabricating,
25 forming or assembling, in a manufacturing facility, for
26 installation or assembly and installation on the building site,
27 industrialized housing from raw, unfinished or semifinished
28 materials.
29 "Serve" or "service." For an individual, delivery by
30 certified mail, return receipt requested, to the last known
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1 address of an addressee. For a corporation, limited partnership,
2 limited liability company or other registered business
3 organization, the term shall mean delivery to the registered
4 agent or other agent for service of process authorized by the
5 laws of this Commonwealth.
6 Section 3. Notice and opportunity to repair.
7 (a) Notice.--In every action subject to this act, the
8 claimant shall, no later than 75 days before initiating an
9 action against a contractor, provide service of written notice
10 of claim on the contractor. The notice of claim shall state that
11 the claimant asserts a construction defect claim or claims and
12 is providing notice of the claim or claims pursuant to the
13 requirements of this act. The notice of claim shall describe the
14 claim or claims sufficiently to explain the nature of the
15 alleged construction defects and the results of the defects.
16 (b) Service.--Service of the notice of the claim shall be
17 the equivalent of service of a lawsuit or demand for arbitration
18 with respect to imposing on the contractor a legal obligation to
19 pay as damages the cost of any repairs and/or monetary payment
20 made to settle the claim.
21 (c) Evidence.--In addition, the claimant shall provide to
22 the contractor any evidence known to the claimant or in the
23 claimant's possession that depicts the nature and cause of the
24 construction defect, including expert reports, photographs and
25 videotapes, if the evidence would be discoverable under the
26 State's evidentiary rules. If, after proper request, the
27 claimant fails to provide such evidence, the claimant shall not
28 be permitted to introduce any evidence not produced as evidence
29 in any action.
30 Section 4. Personal injury or death claims.
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1 This act shall not apply to any claim for personal injury or
2 death.
3 Section 5. Procedure.
4 (a) Contents of notice.--
5 (1) In an action under this act, the claimant shall, at
6 least 75 days before initiating the action against a
7 contractor, provide service of written notice of claim on the
8 contractor. The notice of claim shall:
9 (i) State that the claimant asserts a construction
10 defect claim and is providing notice of the claim
11 pursuant to the requirements of this act.
12 (ii) Describe the claim sufficiently to explain the
13 nature of the construction defect and the result of the
14 defect.
15 (iii) Include any evidence that describes the
16 construction defect that the claimant possesses.
17 (2) Service under this subsection shall toll all
18 applicable statutes of limitation until 75 days after receipt
19 of notice of the claim.
20 (b) Response.--Except as otherwise provided for under
21 subsection (g), within 15 days after service of the notice of
22 claim, the contractor that has received the notice of claim
23 shall serve on the claimant and on any other contractor that has
24 received the notice of claim a written response to the claim
25 which:
26 (1) offers to settle the claim by monetary payment, the
27 making of repairs or a combination of both, without
28 inspection, including a timetable for the making of the
29 payment or repairs;
30 (2) proposes to inspect at the contractor's expense the
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1 dwelling that is the subject of the claim within 15 days; or
2 (3) rejects the claim.
3 (c) Inspection of dwelling.--
4 (1) If the contractor requests the opportunity to
5 inspect the dwelling under subsection (b)(2), the claimant
6 shall provide the contractor and its consultants reasonable
7 and timely access to inspect the dwelling in order to
8 document the defect and perform any destructive or
9 nondestructive tests necessary to evaluate the claim. If
10 testing is performed, the contractor shall return the
11 dwelling to its pretesting condition.
12 (2) If an inspection reveals a condition that requires
13 additional testing, the contractor shall provide prompt
14 notice to the claimant of the need for the additional
15 testing, and the claimant shall provide reasonable and timely
16 access to the dwelling. Additional testing, if necessary,
17 shall be completed within 15 days of the notice.
18 (3) If a claim is asserted on behalf of owners of
19 multiple dwellings or multiple owners of units within a
20 multifamily complex, the contractor shall be entitled to
21 inspect each of the dwellings or units for which a defect has
22 been claimed.
23 (d) Process following inspection.--Within 15 days following
24 completion of an inspection or testing under subsection (c), the
25 contractor shall serve a written response on the claimant which:
26 (1) offers to settle the claim by monetary payment, the
27 making of repairs or a combination of both, including a
28 timetable for making the payment and/or repairs; or
29 (2) rejects the claim.
30 (e) Notice of claimant's response.--
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1 (1) The claimant shall accept or reject an offer by a
2 contractor under subsection (b)(1) or (d)(1) within 30 days
3 of receipt of the offer.
4 (2) If the claimant rejects the settlement offer made by
5 the contractor under subsection (b) or (d), the claimant
6 shall provide written notice of the claimant's rejection to
7 the contractor and include the specific reasons for the
8 claimant's rejection
9 (3) If the claimant fails to respond as required under
10 paragraph (1), the contractor's offer of monetary payment or
11 offer to repair shall be deemed to be rejected.
12 (f) Claimant's ability to bring an action.--If the
13 contractor:
14 (1) rejects the claim;
15 (2) does not respond to a notice of claim within the
16 time frames under this section; or
17 (3) does not make monetary payment or repair within the
18 proposed timetable of an accepted offer, the claimant may
19 bring an action against the contractor for the defect
20 described in the notice of claim without further notice,
21 notwithstanding the 75-day time period set forth under
22 subsection (a).
23 (g) Construction defects involving physical safety of
24 occupants.--
25 (1) If a construction defect poses an imminent threat to
26 the physical safety of the occupants of the dwelling, the
27 notice shall so advise the contractor, and the deadline for
28 the contractor's initial response under subsection (b) shall
29 be seven days after receipt of the notice.
30 (2) If the contractor's response under subsection (b)
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1 contains a request to inspect the dwelling, the contractor
2 shall arrange for the inspection within five days.
3 (3) If the contractor determines there is an imminent
4 threat to physical safety, the contractor shall provide the
5 claimant with a proposal for a monetary offer or offer to
6 repair within three days of the determination.
7 (4) Prior to the submission of an offer by the
8 contractor under this subsection, either the claimant or
9 contractor may take interim repair steps to maintain the
10 structural integrity of the dwelling without prejudicing the
11 claimant's or contractor's claims or defenses.
12 (h) Right of action.--If a claimant rejects a reasonable
13 monetary offer or reasonable supplemental monetary offer or does
14 not permit the contractor to repair the defect pursuant to an
15 accepted offer to repair under subsection (e), the claimant may
16 not recover an amount in excess of:
17 (1) the fair market value of the offer to repair the
18 construction defect or the actual cost of the repairs,
19 whichever is less; or
20 (2) the amount of the monetary offer of settlement.
21 (i) Reasonableness of monetary offer or offer to repair.--
22 (1) For purposes of this section, the trier of fact
23 shall determine the reasonableness of a monetary offer or
24 offer to repair. If the claimant has rejected a reasonable
25 monetary offer or offer to repair, the claimant may not
26 recover costs or attorney fees incurred after the date of
27 rejection.
28 (2) If the contractor, through no fault of the claimant,
29 fails to make a reasonable offer, this act shall not limit
30 the remedies available to a claimant.
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1 (j) Timely access for repairs.--If a claimant accepts a
2 contractor's offer to repair a construction defect, the claimant
3 shall provide the contractor and its subcontractors, agents,
4 experts and consultants reasonable and timely access to the
5 dwelling to complete the repairs within the timetable set forth
6 under this section.
7 (k) Agreement between claimant and contractor.--Following
8 service under subsection (a), a claimant and a contractor may
9 alter the procedures under this act, including the tolling of
10 the statute of limitations, by mutual written agreement.
11 (l) Limitation of liability.--In an action involving a
12 construction defect, a contractor shall not be liable for
13 damages caused by:
14 (1) Normal shrinkage due to drying or settlement of
15 construction components with the tolerance of building
16 standards.
17 (2) The contractor's reasonable reliance on written
18 information relating to the dwelling that was obtained from
19 official government records or provided by a government
20 entity.
21 (3) Refusal of the claimant to allow the contractor or
22 the contractor's agents to perform their warranty service
23 work.
24 Section 6. Additional construction defects.
25 A construction defect that is discovered after a claimant has
26 served notice under section 3(a) (relating to notice and
27 opportunity to repair) may be alleged in an action provided the
28 claimant complies with the requirements of section 5 (relating
29 to procedure) with respect to the defect.
30 Section 7. Right of action for association. <--
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1 (a) General rule.--An association may bring an action
2 against a contractor to recover damages resulting from
3 construction defects in any of the common elements or limited
4 common elements of a common interest community.
5 (b) Restrictions.--The action may be maintained only after:
6 (1) A majority of the board of directors of the
7 association and the contractor have met in person and
8 conferred in a good faith attempt to resolve the
9 association's claim, or the contractor has definitively
10 declined or ignored the requests to meet with the board of
11 directors of the association. Notice of a meeting under this
12 paragraph shall be provided to all board members and to the
13 contractor.
14 (2) The association has complied with section 5
15 (relating to procedure).
16 Section 8. Destructive tests.
17 No association may employ a person to perform destructive
18 tests to determine any damage or injury to a unit, common
19 element or limited common element caused by a construction
20 defect unless reasonable prior notice and opportunity to observe
21 the tests are given to the contractor against whom an action may
22 be brought as a result of the test.
23 Section 9. Contractor employed by association.
24 The board of directors of an association may, without giving
25 notice to the unit owners, employ a contractor and such other
26 persons as are necessary to make such immediate repairs to a
27 unit or common element within the association as are required to
28 protect the health, safety and welfare of the units' owners.
29 SECTION 7. DESTRUCTION TEST. <--
30 NO CLAIMANT MAY EMPLOY A PERSON TO PERFORM DESTRUCTION TESTS
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1 TO DETERMINE ANY DAMAGE OR INJURY TO A DWELLING CAUSED BY A
2 CONSTRUCTION DEFECT UNLESS REASONABLE PRIOR NOTICE AND
3 OPPORTUNITY TO OBSERVE THE TESTS ARE GIVEN TO THE CONTRACTOR
4 AGAINST WHOM AN ACTION MAY BE BROUGHT AS A RESULT OF THE TEST.
5 SECTION 8. CONTRACTOR EMPLOYED BY CLAIMANT.
6 A CLAIMANT MAY, WITHOUT GIVING NOTICE TO THE CONTRACTOR,
7 EMPLOY A CONTRACTOR AND SUCH OTHER PERSONS AS ARE NECESSARY TO
8 MAKE SUCH IMMEDIATE REPAIRS TO A DWELLING AS ARE REQUIRED TO
9 PROTECT THE HEALTH, SAFETY AND WELFARE OF THE OCCUPANTS.
10 Section 10 9. Construction. <--
11 Nothing in this act shall be construed as establishing a
12 cause of action on behalf of any claimant or contractor.
13 Section 11 10. Notice required at time of contracting. <--
14 (a) Form of notice.--Upon entering into a contract to
15 construct a dwelling, the contractor shall give the owner or
16 buyer a written notice worded substantially as follows:
17 NOTICE CONCERNING CONSTRUCTION DEFECTS
18 Pennsylvania law contains important requirements you must
19 follow before you may file any action for defective
20 construction against the contractor who constructed your
21 dwelling. Pennsylvania law requires you to deliver to the
22 contractor a written notice by certified mail of any
23 construction conditions that you believe are defective,
24 with an opportunity to repair, before you file any
25 action, and you must provide your contractor:
26 (1) The opportunity to make an offer to repair or
27 pay for the alleged defects.
28 (2) With any evidence in your possession that
29 described the defect. If you do not disclose such
30 evidence you will not be allowed to use the evidence in
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1 any action.
2 You are not obligated to accept any offer made by the
3 contractor, but failure to accept a reasonable offer, as
4 determined by a court or other trier of fact, may limit
5 your recoverable damages. There are strict deadlines and
6 procedures under State law, and failure to follow them
7 may affect or impair your ability to file an action or to
8 seek recovery for any defects. There may also be
9 requirements which must be followed in a written
10 warranty. It is recommended that you consult with an
11 attorney of your choosing before entering into any
12 agreement.
13 (b) Additional requirements.--The notice required under
14 subsection (a) shall be in 10-point bold type or greater and
15 shall be included within the contract between the contractor and
16 potential claimant.
17 (c) Failure to include notice.--Failure to include the
18 notice shall deprive the contractor of the benefits of this act.
19 Section 12 11. Applicability. <--
20 This act shall apply as follows:
21 (1) This act shall not affect a contractor's right to
22 seek contribution, indemnity or recovery against a
23 subcontractor, supplier or design professional for any claim
24 made against the contractor by a claimant.
25 (2) This act shall apply regardless of the date of sale
26 or substantial completion of a dwelling, consistent with 42
27 Pa.C.S. § 5536 (relating to construction projects).
28 (3) This act shall not restrict, modify or alter or
29 otherwise interfere with the obligations, terms or conditions
30 of an insurance policy.
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1 (4) This act shall not apply to an insurer asserting a
2 claim against a contractor for payments made by the insurer
3 pursuant to an insurance policy covering the dwelling. A
4 claim under this paragraph shall not be prejudiced, reduced
5 or otherwise modified because of the failure of the claimant
6 to comply with this act.
7 Section 13 12. Effective date. <--
8 This act shall take effect in 60 days.
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