Home builders and contractors in Arizona are girding themselves for an imminent ruling by the state's Supreme Court that will determine whether a measure, Proposition 201, which requires builders to provide 10-year warranties on the homes they build, can be put before voters in November.

Last week, Judge Sam Myers rejected attempts by the state's home builders associations to keep this measure off the ballot in November. The measure was financed by the Sheet Metal Workers International Association and endorsed by the local chapter of the AFL-CIO. Dana Kennedy, a spokesperson for that organization, tells BUILDER that the metal workers group raised more than 200,000 signatures to get this measure before voters.

"This was one of the more popular ballot measures on the street," Kennedy insists. When asked why a union representing sheet metal workers is promoting what amounts to a homeowners' rights bill, she explains that "our workers live in these homes, too, and we support any measure that helps workers in general." (The union has been attempting to organize workers at Chas Roberts, the market's largest HVAC contractor, for several years.)

The home builders groups tried to block this measure on the grounds that the initiative's wording was legally flawed. For example, the builders argued that the initiative failed to give would-be petition signers "fair notice" because changes to existing laws were not placed in capital letters. The builders also said the measure should be kept off the ballot because it doesn't mention that a change in the law would impact both commercial and residential construction. The Supreme Court will rule on Myers' rejection of the builders' language arguments and needs to make its decision by August 28, which is the last day the Board of Elections will remove a measure from the ballot.

"The initiative would be a bonanza for trial lawyers," asserts Connie Wilhelm, executive director for the Phoenix-based HBA of Central Arizona, which has taken a lead role in opposing the initiative. In an interview with BUILDER today, Wilhelm said the measure would eliminate the ability of owners and builders to meditate or arbitrate defect issues without resorting to legal action. "It also takes away the rights of a homebuilder or a seller to recover damages if a lawsuit is found to be frivolous."

Wilhelm says that extending the warranty period by two years, which local news reports have focused on, is actually the least contentious component of the proposition. For example, the bill would allow buyers the right to cancel contracts up to 100 days after they've been signed. "That's automatically going to postpone construction." The bill shortens the time that builders can resolve complaints after a person moves into a house to 60 days from 90. It would also require builders to provide home buyers with the names of three contractors to fix any defects, "which means we won't be able to go in and fix the problems ourselves." Wilhelm implies that the initiative's language is vague as to which contractors could be included on such a list. "We might need to build into the cost of the house the fact that we’d have to use different subs to fix any problems."

She says that while the HBAs in the state are "guardedly optimistic" about Proposition 201 getting bumped off the ballot by the Supreme Court, they are also in the process of preparing a multimedia campaign against its passage in November that she says would be designed to "educate" the consumer about the bill's flaws.

Even though the Supreme Court is only ruling on the legality of Prop 201's language, another recent decision sheds some light on the court's attitude about defect resolution. Last week, the court overruled a trial judge and the Arizona Court of Appeals, and unanimously agreed that an association representing condo owners could sue a contractor over alleged construction defects, even though the home buyers had contracts exclusively with the developer that had hired the contractor to convert a commercial building to residences.

Learn more about markets featured in this article: Phoenix, AZ.