By Iris Richmond. States have been busy passing legislation to ward off construction-defect litigation. In April, Washington state enacted a law to guarantee the builder's right to receive notice of a construction defect and have an opportunity to make repairs before litigation can begin. Dubbed the "cure" bill, the new law requires a claimant to provide written notice to the builder 45 days before filing suit, giving the builder a 21-day window to indicate whether it will remedy the defect, compromise by payment, or dispute the claim.
"We hope this will stem the flow of insurance companies leaving the market in droves," says Jodi Slavik, general counsel of Washington's BIA.
Arizona passed its own law in May. The homeowner now must make his or her home available to the builder to see the defect within 10 days of alerting the builder to its presence.
California doubled its existing dispute-resolution window to 180 days and added the requirement that notice of a defect be given to not only the builder but the trades and architects involved as well. All parties must participate in settlement negotiations.
In Colorado, legislation intended to give builders an opportunity to correct defects hasn't done the trick, according to Rob Nanfelt, director of government affairs at the state's builders' association. He says the watered-down compromise bill hasn't stopped the exit of insurance carriers and that liability coverage can't be found at a reasonable price. His office is working on a stronger bill, based on Washington's law, to be introduced early in 2003.
For more on the national insurance problem, click here to go to Coverage Crisis.
Published in BIG BUILDER Magazine, September 2002