S-3996

AN ACT Relating to construction defect claims asserting property loss and damage; amending RCW 64.34.452; adding a new section to chapter 4.16 RCW; and adding a new chapter to Title 64 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds, declares, and determines that limited changes in the law are necessary and appropriate concerning actions claiming damages, indemnity, or contribution in connection with alleged construction defects resulting in property loss or damage. It is the intent of the legislature that this chapter apply to these types of civil actions while preserving adequate rights and remedies for property owners who bring and maintain such actions.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Action" means any civil action in contract or tort for damages or indemnity brought against a construction professional to assert a claim, whether by complaint, counterclaim, or cross-claim, for damage or the loss of use of real or personal property caused by a defect in the construction or remodel of more than half of a residence. "Action" does not include any civil action in tort alleging physical injury or wrongful death to a person or persons resulting from a construction defect.

(2) "Association" means an association, master association, or subassociation as defined and provided for in RCW 64.34.020(4), 64.34.276, 64.34.278, and 64.38.010(1).

(3) "Claimant" means a homeowner, association, or a construction professional who asserts a claim against a construction professional concerning a defect in the construction or remodel of more than half of a residence.

(4) "Construction professional" means an architect, builder, builder vendor, contractor, engineer, or inspector, including, but not limited to, a dealer as defined in RCW 64.34.020(12) and a declarant as defined in RCW 64.34.020(13), performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property, whether operating as a sole proprietor, partnership, corporation, or other business entity.

(5) "Homeowner" means any person, company, firm, partnership, corporation, or association who contracts with a construction professional for the construction, sale, or construction and sale of a residence. "Homeowner" includes, but is not limited to, a subsequent purchaser of a residence from any homeowner.

(6) "Residence" means a single-family house, duplex, triplex, quadraplex, or a unit in a multiunit residential structure in which title to each individual unit is transferred to the owner under a condominium or cooperative system, and shall include common elements as defined in RCW 64.34.020(6) and common areas as defined in RCW 64.38.010(4).

NEW SECTION. Sec. 3. (1) In every construction defect action brought against a construction professional, the claimant shall, no later than forty-five days before filing an action, serve written notice on the construction professional, by registered mail or personal service. The notice of claim shall state that the claimant asserts a construction defect claim against the construction professional and shall describe the claim in reasonable detail.

(2) Within twenty-one days after service of the notice of claim, the construction professional shall serve a written response on the claimant by registered mail or personal service. The written response shall:

(a) Propose to inspect the residence that is the subject of the claim within a specified time frame. The proposal shall include the statement that the construction professional shall, based on the inspection, offer to remedy the defect, compromise by payment, or dispute the claim;

(b) Offer to compromise and settle the claim by monetary payment without inspection. An offer made under this subsection (2)(b) to compromise and settle a homeowner's claim includes, but is not limited to, an express offer to purchase the claimant's residence that is the subject of the claim, and to pay the claimant's reasonable relocation costs; or

(c) State that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.

(3)(a) If the construction professional disputes the claim or does not respond to the claimant's notice of claim, the claimant may, in accordance with this chapter, bring an action against the construction professional for the claim described in the notice of claim.

(b) If the claimant rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (2) of this section, the claimant shall serve written notice of the claimant's rejection on the construction professional by registered mail or personal service. After service of the rejection, the claimant may, in accordance with this chapter, bring an action against the construction professional for the construction defect claim described in the notice of claim.

(4)(a) If the claimant elects to consider the inspection proposal of the construction professional made pursuant to subsection (2)(a) of this section, the claimant shall provide the construction professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect so that the construction professional may verify the claim.

(b) Within fourteen days following the inspection, the construction professional shall serve on the claimant, by registered mail or personal service:

(i) A written offer to remedy the construction defect at no cost to the claimant, including a description of the additional construction that the construction professional has determined from the inspection will be necessary to remedy the defect, and a timetable for the completion of such construction;

(ii) A written offer to compromise and settle the claim by monetary payment pursuant to subsection (2)(b) of this section; or

(iii) A written statement that the construction professional will not proceed further to remedy the defect.

(c) If the construction professional does not proceed further to remedy the construction defect, or if the construction professional fails to comply with the provisions of (b) of this subsection, the claimant may bring an action against the construction professional for the claim described in the notice of claim.

(d) If the claimant rejects the offer made by the construction professional pursuant to (b)(i) or (ii) of this subsection to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant's rejection on the construction professional by registered mail or personal service. After service of the rejection notice, the claimant may, in accordance with this chapter, bring an action against the construction professional for the construction defect claim described in the notice of claim.

(5)(a) Any claimant accepting the offer of a construction professional to remedy the construction defect pursuant to subsection (4)(b)(i) of this section shall do so by serving the construction professional with a written notice of acceptance, by personal service or registered mail, within a reasonable time period after receipt of the offer. The claimant shall promptly provide the construction professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.

(b) The claimant and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer.

(6) No action may be commenced until after the claimant has complied with the requirements of this section.

(7) Nothing in this section may be construed to prevent a claimant from commencing an action on the construction defect claim described in the notice of claim if:

(a) The construction professional fails to perform the construction agreed upon, fails to remedy the defect as defined by the terms of the agreement under subsection (5) of this section, or fails to perform by the timetable agreed upon pursuant to subsection (2)(a) or (5) of this section; or

(b) Notwithstanding the completion of the construction agreed upon, the claimant later discovers latent construction defects that the claimant attributes to the construction professional, but that were not discoverable by a reasonable person at the time of such completion. Any claimant who intends to bring an action for such latent construction defects may do so only after complying with the requirements of this section.

NEW SECTION. Sec. 4. (1) In every action brought against a construction professional, the claimant shall file with the court and serve on the defendant a list of construction defects in accordance with this section.

(2) The list of construction defects shall contain a description of the construction that the claimant alleges to be defective. The list of construction defects shall be filed with the court and served on the defendant within thirty days after the commencement of the action or within such longer period as the court in its discretion may allow.

(3) The list of construction defects may be amended by the claimant to identify additional construction defects as they become known to the claimant.

(4) The list of defects must specify, to the extent known to the claimant, the construction professional responsible for each alleged defect identified by the claimant.

(5) If a subcontractor or supplier is added as a party to an action under this section, the claimant making the claim against such subcontractor or supplier shall file with the court and serve on the defendant the list of construction defects in accordance with this section within thirty days after service of the complaint against the subcontractor or supplier or within such period as the court in its discretion may allow.

NEW SECTION. Sec. 5. (1)(a) In the event the board of directors, pursuant to RCW 64.34.304(1)(d) or 64.38.020(4), institutes an action asserting defects in the construction of two or more residences, common elements, or common areas, this section shall apply. For purposes of this section, "action" has the same meaning as set forth in section 2 of this act.

(b) The board of directors shall substantially comply with the provisions of this section.

(2)(a) Prior to the service of the summons and complaint on any defendant with respect to an action governed by this section, the board of directors shall mail or deliver written notice of the commencement or anticipated commencement of such action to each homeowner at the last known address described in the association's records.

(b) The notice required by (a) of this subsection shall state a general description of the following:

(i) The nature of the action and the relief sought; and

(ii) The expenses and fees that the board of directors anticipates will be incurred in prosecuting the action.

(3) Nothing in this section may be construed to:

(a) Require the disclosure in the notice or the disclosure to a unit owner of attorney-client communications or other privileged communications;

(b) Permit the notice to serve as a basis for any person to assert the waiver of any applicable privilege or right of confidentiality resulting from, or to claim immunity in connection with, the disclosure of information in the notice; or

(c) Limit or impair the authority of the board of directors to contract for legal services, or limit or impair the ability to enforce such a contract for legal services.

NEW SECTION. Sec. 6. Nothing in this chapter shall be construed to hinder or otherwise affect the employment relationship between and among homeowners and construction professionals during the process of construction or remodeling and does not preclude the termination of those relationships as allowed under current law.

NEW SECTION. Sec. 7. A new section is added to chapter 4.16 RCW to read as follows:

If a written notice is filed under section 3 of this act within the time prescribed for the filing of an action under this chapter, the period of time during which the filing of an action is barred under section 3 of this act shall not be a part of the period limited for the commencement of an action.

Sec. 8. RCW 64.34.452 and 1990 c 166 s 14 are each amended to read as follows:

(1) A judicial proceeding for breach of any obligations arising under RCW 64.34.443 and 64.34.445 must be commenced within four years after the cause of action accrues: PROVIDED, That the period for commencing an action for a breach accruing pursuant to subsection (2)(b) of this section shall not expire prior to one year after termination of the period of declarant control, if any, under RCW 64.34.308(4). Such period may not be reduced by either oral or written agreement.

(2) Subject to subsection (3) of this section, a cause of action or breach of warranty of quality, regardless of the purchaser's lack of knowledge of the breach, accrues:

(a) As to a unit, the date the purchaser to whom the warranty is first made enters into possession if a possessory interest was conveyed or the date of acceptance of the instrument of conveyance if a nonpossessory interest was conveyed; and

(b) As to each common element, at the latest of (i) the date the first unit in the condominium was conveyed to a bona fide purchaser, (ii) the date the common element was completed, or (iii) the date the common element was added to the condominium.

(3) If a warranty of quality explicitly extends to future performance or duration of any improvement or component of the condominium, the cause of action accrues at the time the breach is discovered or at the end of the period for which the warranty explicitly extends, whichever is earlier.

(4) If a written notice is filed under section 3 of this act within the time prescribed for the filing of an action under this chapter, the period of time during which the filing of an action is barred under section 3 of this act shall not be a part of the period limited for the commencement of an action.

NEW SECTION. Sec. 9. Sections 1 through 6 of this act constitute a new chapter in Title 64 RCW.