5536-S.E AMS ESSE S3985.3

ESSB 5536 - S AMD 644

By Senator Esser

ADOPTED AS AMENDED 02/12/2004

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 64.34 RCW to read as follows:

(1) The legislature finds, declares, and determines that:

(a) Washington's cities and counties under the growth management act are required to encourage urban growth in urban growth areas at densities that accommodate twenty-year growth projections;

(b) One of the growth management act's planning goals is to encourage the availability of affordable housing for all residents of the state and promote a variety of housing types;

(c) Quality condominium construction needs to be encouraged to achieve growth management act mandated urban densities and ensure that residents of the state, particularly in urban growth areas, have a broad range of ownership choices.

(2) It is the intent of the legislature that this act implement changes in the condominium act that encourage insurance carriers to provide liability insurance for condominium builders by: Providing for arbitration of disputes; ensuring that material facts and claims are presented as fully as possible in arbitration proceedings; confining judicial review of arbitration decisions to the arbitration record, except in very limited circumstances; requiring mandatory arbitration of disputes involving construction defects; and eliminating litigation over minor or insignificant problems, while continuing to protect consumers' legitimate claims regarding condominium construction.

(3) It is the further intent of the legislature that these changes in the condominium act ensure that a broad range of affordable homeownership opportunities continue to be available to the residents of the state and also assist cities' and counties' efforts to achieve the density mandates of the growth management act.

Sec. 2. RCW 64.34.100 and 1989 c 43 s 1-113 are each amended to read as follows:

(1) The remedies provided by this chapter shall be liberally administered to the end that the aggrieved party is put in as good a position as if the other party had fully performed. However, consequential, special, or punitive damages may not be awarded except as specifically provided in this chapter or by other rule of law.

(2) Any right or obligation declared by this chapter is enforceable by arbitration or judicial proceeding. Arbitration may be provided for in the declaration or by agreement of the parties. However, all claims arising under or relating to RCW 64.34.443, 64.34.445, or 64.34.450 shall be subject to mandatory arbitration as set forth in this section. In any arbitration of claims arising under or relating to RCW 64.34.443, 64.34.445, or 64.34.450, the arbitrator may award reasonable attorneys' fees to the substantially prevailing party as set forth in this section.

(3) Mandatory arbitration for claims arising under or relating to RCW 64.34.443, 64.34.445, or 64.34.450 shall comply with the following minimum standards:

(a) All disputes shall be heard by one qualified arbitrator, unless the parties agree that three arbitrators shall be used. When three arbitrators are used, one shall be appointed by each of the disputing parties and the first two arbitrators shall appoint the third, who will chair the panel. The parties shall select the identity and number of the arbitrator(s) after service of the request, notice, or petition to arbitrate. If, within thirty days after service of the request, notice, or petition to arbitrate, the parties fail to agree on an arbitrator or the required number of arbitrators fail to be appointed, then an arbitrator shall be appointed under RCW 7.04.050 by the presiding judge of the superior court of the county in which the condominium is located;

(b) In any arbitration, at least one arbitrator must be a lawyer or retired judge. Any additional arbitrator must be either a lawyer or retired judge or a person who has experience with construction and engineering standards and practices, written construction warranties, or construction dispute resolution and a person shall not serve as an arbitrator in any arbitration in which that person has any financial or personal interest;

(c) The arbitration hearing must be conducted in a manner that permits full, fair, and expeditious presentation of the case by both parties. The arbitrator shall be bound by the law of Washington state. Parties may be, but are not required to be, represented by attorneys. The arbitrator may permit discovery to ensure a fair hearing but may limit the scope or manner of discovery for good cause to avoid excessive delay and costs to the parties. Unless the parties agree otherwise or the arbitrator grants an extension for good cause, the arbitration hearing shall be completed within six months of the service of the request, notice, or petition to arbitrate or, when applicable the service of the list of defects in accordance with RCW 64.50.030;

(d) Except as otherwise set forth in this section, arbitration shall be conducted under chapter 7.04 RCW, unless the parties elect to use the condominium or construction dispute resolution rules of the American arbitration association, which are permitted to the extent not inconsistent with this section. The expenses of witnesses including expert witnesses shall be paid by the party producing the witnesses. Each party shall pay its own reasonable attorneys' fees unless the parties agree otherwise or unless the arbitrator awards reasonable attorneys' fees or any part thereof to any specified party or parties. All other expenses of arbitration shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator awards such expenses or any part thereof to any specified party or parties; and

(e) Service of a request, notice, or petition to arbitrate commences an arbitration for purposes of RCW 64.34.452.

(4) Within twenty days after the arbitration decision and award is served on the parties, any aggrieved party may file with the clerk of the superior court in which the condominium is located a written notice of appeal and request for a trial in the superior court. Such a trial shall thereupon be held and shall include a right to a jury, if demanded. Such a trial shall be commenced on an expedited schedule within ninety days of the filing of the notice of appeal.

(a) Judicial review of an arbitration decision and award shall be confined to the record created by the arbitrator, except that, upon order of the court, the record may be supplemented by additional evidence or claim only if the additional evidence or claim relates to:

(i) Claims for disqualification of an arbitrator, when such claims were unknown to the appealing party at the time of arbitration;

(ii) Claims regarding matters that were improperly excluded from the arbitration record after being offered by the appealing party;

(iii) Claims regarding matters that were outside the jurisdiction of the arbitrator; or

(iv) Material facts regarding claims that have been arbitrated and that: (A) Were unknown at the time of the arbitration hearing by the party proposing their introduction where such a lack of knowledge was not the result of the party's prior refusal or failure to exercise reasonable diligence in the investigation of its claims or defenses; and (B) could not have been reasonably discovered at the time of arbitration where the failure to discover was not intentional or due to inexcusable neglect.

(b) Except when the court has authorized the record to be supplemented under this subsection (4), the parties may not conduct pretrial discovery. When pretrial discovery is permitted, the court shall, in its order regarding supplementing the record, establish the scope, timing, and extent of permissible discovery and shall require the moving party to disclose before trial the specific additional evidence they intend to offer.

(c) Offers of compromise and the assessment of costs and reasonable attorneys' fees shall be governed by RCW 7.06.050 and 7.06.060.

(d) The arbitration decision shall be in writing and must set forth findings of fact and conclusions of law that support the decision.

(e) Unless the parties agree otherwise, a complete verbatim record of the arbitration hearing shall be maintained that includes all exhibits offered by the parties. Video recording of the arbitration hearing is permissible.

(f) Within forty-five days after entry of an order to submit the record, or within such other time as the court allows or as the parties agree, the arbitrator shall submit to the court a certified copy of the record for judicial review of the decision, except that the petitioner shall prepare at the petitioner's expense and submit the verbatim hearing record required under (e) of this subsection. If the parties agree, or upon order of the court, the record shall be shortened or summarized to avoid reproduction and transcription of portions of the record that are duplicative or not relevant to the issues to be reviewed by the court. The petitioner shall pay the arbitrator the cost of preparing the record before the arbitrator submits the record to the court. Failure by the petitioner to timely pay the arbitrator relieves the arbitrator of responsibility to submit the record and is grounds for dismissal of the petition. If the relief sought by the petitioner is granted in whole or in part, the court shall equitably assess the costs of preparing the record among the parties. In assessing costs, the court shall take into account the extent to which each party prevailed and the reasonableness of the parties' conduct in agreeing or not agreeing to shorten or summarize the record under this subsection (4)(f).

(g) Unless the parties agree otherwise, an appeal of an arbitrator's decision is an appeal of the full and complete decision.

Sec. 3. RCW 64.34.216 and 1992 c 220 s 7 are each amended to read as follows:

(1) The declaration for a condominium must contain:

(a) The name of the condominium, which must include the word "condominium" or be followed by the words "a condominium," and the name of the association;

(b) A legal description of the real property included in the condominium;

(c) A statement of the number of units which the declarant has created and, if the declarant has reserved the right to create additional units, the number of such additional units;

(d) The identifying number of each unit created by the declaration and a description of the boundaries of each unit if and to the extent they are different from the boundaries stated in RCW 64.34.204(1);

(e) With respect to each existing unit:

(i) The approximate square footage;

(ii) The number of bathrooms, whole or partial;

(iii) The number of rooms designated primarily as bedrooms;

(iv) The number of built-in fireplaces; and

(v) The level or levels on which each unit is located.

The data described in (ii), (iii), and (iv) of this subsection (1)(e) may be omitted with respect to units restricted to nonresidential use;

(f) The number of parking spaces and whether covered, uncovered, or enclosed;

(g) The number of moorage slips, if any;

(h) A description of any limited common elements, other than those specified in RCW 64.34.204 (2) and (4), as provided in RCW 64.34.232(2)(j);

(i) A description of any real property which may be allocated subsequently by the declarant as limited common elements, other than limited common elements specified in RCW 64.34.204 (2) and (4), together with a statement that they may be so allocated;

(j) A description of any development rights and other special declarant rights under RCW 64.34.020(29) reserved by the declarant, together with a description of the real property to which the development rights apply, and a time limit within which each of those rights must be exercised;

(k) If any development right may be exercised with respect to different parcels of real property at different times, a statement to that effect together with: (i) Either a statement fixing the boundaries of those portions and regulating the order in which those portions may be subjected to the exercise of each development right, or a statement that no assurances are made in those regards; and (ii) a statement as to whether, if any development right is exercised in any portion of the real property subject to that development right, that development right must be exercised in all or in any other portion of the remainder of that real property;

(l) Any other conditions or limitations under which the rights described in (j) of this subsection may be exercised or will lapse;

(m) An allocation to each unit of the allocated interests in the manner described in RCW 64.34.224;

(n) Any restrictions in the declaration on use, occupancy, or alienation of the units;

(o) A cross-reference by recording number to the survey map and plans for the units created by the declaration; and

(p) All matters required or permitted by RCW 64.34.220 through 64.34.232, 64.34.256, 64.34.260, 64.34.276, ((and)) 64.34.308(4), and 64.34.450.

(2) All amendments to the declaration shall contain a cross-reference by recording number to the declaration and to any prior amendments thereto. All amendments to the declaration adding units shall contain a cross-reference by recording number to the survey map and plans relating to the added units and set forth all information required by RCW 64.34.216(1) with respect to the added units.

(3) The declaration may contain any other matters the declarant deems appropriate.

Sec. 4. RCW 64.34.324 and 1992 c 220 s 16 are each amended to read as follows:

(1) Unless provided for in the declaration, the bylaws of the association shall provide for:

(a) The number, qualifications, powers and duties, terms of office, and manner of electing and removing the board of directors and officers and filling vacancies;

(b) Election by the board of directors of such officers of the association as the bylaws specify;

(c) Which, if any, of its powers the board of directors or officers may delegate to other persons or to a managing agent;

(d) Which of its officers may prepare, execute, certify, and record amendments to the declaration on behalf of the association; ((and))

(e) The method of amending the bylaws; and

(f) A statement regarding the decision-making standards to which the board of directors or officers will be held.

(2) Subject to the provisions of the declaration, the bylaws may provide for any other matters the association deems necessary and appropriate.

(3) In determining the qualifications of any officer or director of the association, notwithstanding the provision of RCW 64.34.020(32) the term "unit owner" in such context shall, unless the declaration or bylaws otherwise provide, be deemed to include any director, officer, partner in, or trustee of any person, who is, either alone or in conjunction with another person or persons, a unit owner. Any officer or director of the association who would not be eligible to serve as such if he or she were not a director, officer, partner in, or trustee of such a person shall be disqualified from continuing in office if he or she ceases to have any such affiliation with that person, or if that person would have been disqualified from continuing in such office as a natural person.

Sec. 5. RCW 64.34.410 and 2002 c 323 s 10 are each amended to read as follows:

(1) A public offering statement shall contain the following information:

(a) The name and address of the condominium;

(b) The name and address of the declarant;

(c) The name and address of the management company, if any;

(d) The relationship of the management company to the declarant, if any;

(e) A list of up to the five most recent condominium projects completed by the declarant or an affiliate of the declarant within the past five years, including the names of the condominiums, their addresses, and the number of existing units in each. For the purpose of this section, a condominium is "completed" when any one unit therein has been rented or sold;

(f) The nature of the interest being offered for sale;

(g) A brief description of the permitted uses and use restrictions pertaining to the units and the common elements;

(h) A brief description of the restrictions, if any, on the renting or leasing of units by the declarant or other unit owners, together with the rights, if any, of the declarant to rent or lease at least a majority of units;

(i) The number of existing units in the condominium and the maximum number of units that may be added to the condominium;

(j) A list of the principal common amenities in the condominium which materially affect the value of the condominium and those that will or may be added to the condominium;

(k) A list of the limited common elements assigned to the units being offered for sale;

(l) The identification of any real property not in the condominium, the owner of which has access to any of the common elements, and a description of the terms of such access;

(m) The identification of any real property not in the condominium to which unit owners have access and a description of the terms of such access;

(n) The status of construction of the units and common elements, including estimated dates of completion if not completed;

(o) The estimated current common expense liability for the units being offered;

(p) An estimate of any payment with respect to the common expense liability for the units being offered which will be due at closing;

(q) The estimated current amount and purpose of any fees not included in the common expenses and charged by the declarant or the association for the use of any of the common elements;

(r) Any assessments which have been agreed to or are known to the declarant and which, if not paid, may constitute a lien against any units or common elements in favor of any governmental agency;

(s) The identification of any parts of the condominium, other than the units, which any individual owner will have the responsibility for maintaining;

(t) If the condominium involves a conversion condominium, the information required by RCW 64.34.415;

(u) Whether timesharing is restricted or prohibited, and if restricted, a general description of such restrictions;

(v) A list of all development rights reserved to the declarant and all special declarant rights reserved to the declarant, together with the dates such rights must terminate, and a copy of or reference by recording number to any recorded transfer of a special declarant right;

(w) A description of any material differences in terms of furnishings, fixtures, finishes, and equipment between any model unit available to the purchaser at the time the agreement for sale is executed and the unit being offered;

(x) Any liens on real property to be conveyed to the association required to be disclosed pursuant to RCW 64.34.435(2)(b);

(y) A list of any physical hazards known to the declarant which particularly affect the condominium or the immediate vicinity in which the condominium is located and which are not readily ascertainable by the purchaser;

(z) A brief description of any construction warranties to be provided to the purchaser and a brief statement as to whether any express written warranty replaces or other document excludes or modifies the implied warranties of quality provided in RCW 64.34.445;

(aa) Any building code violation citations received by the declarant in connection with the condominium which have not been corrected;

(bb) A statement of any unsatisfied judgments or pending suits against the association, a statement of the status of any pending suits material to the condominium of which the declarant has actual knowledge, and a statement of any litigation brought by an owners' association, unit owner, or governmental entity in which the declarant or any affiliate of the declarant has been a defendant, arising out of the construction, sale, or administration of any condominium within the previous five years, together with the results thereof, if known;

(cc) Any rights of first refusal to lease or purchase any unit or any of the common elements;

(dd) The extent to which the insurance provided by the association covers furnishings, fixtures, and equipment located in the unit;

(ee) A notice which describes a purchaser's right to cancel the purchase agreement or extend the closing under RCW 64.34.420, including applicable time frames and procedures;

(ff) Any reports or statements required by RCW 64.34.415 or 64.34.440(6)(a). RCW 64.34.415 shall apply to the public offering statement of a condominium in connection with which a final certificate of occupancy was issued more than sixty calendar months prior to the preparation of the public offering statement whether or not the condominium is a conversion condominium as defined in RCW 64.34.020(10);

(gg) A list of the documents which the prospective purchaser is entitled to receive from the declarant before the rescission period commences;

(hh) A notice which states: A purchaser may not rely on any representation or express warranty unless it is contained in the public offering statement or made in writing signed by the declarant or by any person identified in the public offering statement as the declarant's agent;

(ii) A notice which states: This public offering statement is only a summary of some of the significant aspects of purchasing a unit in this condominium and the condominium documents are complex, contain other important information, and create binding legal obligations. You should consider seeking the assistance of legal counsel;

(jj) Any other information and cross-references which the declarant believes will be helpful in describing the condominium to the recipients of the public offering statement, all of which may be included or not included at the option of the declarant;

(kk) A notice that addresses compliance or noncompliance with the housing for older persons act of 1995, P.L. 104-76, as enacted on December 28, 1995; and

(ll) A notice that is substantially in the form required by RCW 64.50.050.

(2) The public offering statement shall include copies of each of the following documents: The declaration, the survey map and plans, the articles of incorporation of the association, bylaws of the association, rules and regulations, if any, current or proposed budget for the association, and the balance sheet of the association current within ninety days if assessments have been collected for ninety days or more.

If any of the foregoing documents listed in this subsection are not available because they have not been executed, adopted, or recorded, drafts of such documents shall be provided with the public offering statement, and, before closing the sale of a unit, the purchaser shall be given copies of any material changes between the draft of the proposed documents and the final documents.

(3) The disclosures required by subsection (1)(g), (k), (s), (u), (v), (z), and (cc) of this section shall also contain a reference to specific sections in the condominium documents which further explain the information disclosed.

(4) The disclosures required by subsection (1)(z), (ee), (hh), (ii), and (ll) of this section shall be located at the top of the first page of the public offering statement and be typed or printed in ten-point bold face type size.

(5) A declarant shall promptly amend the public offering statement to reflect any material change in the information required by this section.

Sec. 6. RCW 64.34.425 and 1992 c 220 s 23 are each amended to read as follows:

(1) Except in the case of a sale where delivery of a public offering statement is required, or unless exempt under RCW 64.34.400(2), a unit owner shall furnish to a purchaser before execution of any contract for sale of a unit, or otherwise before conveyance, a resale certificate, signed by an officer or authorized agent of the association and based on the books and records of the association and the actual knowledge of the person signing the certificate, containing:

(a) A statement disclosing any right of first refusal or other restraint on the free alienability of the unit contained in the declaration;

(b) A statement setting forth the amount of the monthly common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner and a statement of any special assessments that have been levied against the unit which have not been paid even though not yet due;

(c) A statement, which shall be current to within forty-five days, of any common expenses or special assessments against any unit in the condominium that are past due over thirty days;

(d) A statement, which shall be current to within forty-five days, of any obligation of the association which is past due over thirty days;

(e) A statement of any other fees payable by unit owners;

(f) A statement of any anticipated repair or replacement cost in excess of five percent of the annual budget of the association that has been approved by the board of directors;

(g) A statement of the amount of any reserves for repair or replacement and of any portions of those reserves currently designated by the association for any specified projects;

(h) The annual financial statement of the association, including the audit report if it has been prepared, for the year immediately preceding the current year.

(i) A balance sheet and a revenue and expense statement of the association prepared on an accrual basis, which shall be current to within one hundred twenty days;

(j) The current operating budget of the association;

(k) A statement of any unsatisfied judgments against the association and the status of any pending suits or legal proceedings in which the association is a plaintiff or defendant;

(l) A statement describing any insurance coverage provided for the benefit of unit owners;

(m) A statement as to whether there are any alterations or improvements to the unit or to the limited common elements assigned thereto that violate any provision of the declaration;

(n) A statement of the number of units, if any, still owned by the declarant, whether the declarant has transferred control of the association to the unit owners, and the date of such transfer;

(o) A statement as to whether there are any violations of the health or building codes with respect to the unit, the limited common elements assigned thereto, or any other portion of the condominium;

(p) A statement of the remaining term of any leasehold estate affecting the condominium and the provisions governing any extension or renewal thereof; and

(q) A copy of the declaration, the bylaws, the rules or regulations of the association, and any other information reasonably requested by mortgagees of prospective purchasers of units. Information requested generally by the federal national mortgage association, the federal home loan bank board, the government national mortgage association, the veterans administration and the department of housing and urban development shall be deemed reasonable, provided such information is reasonably available to the association.

(2) The association, within ten days after a request by a unit owner, and subject to payment of any fee imposed pursuant to RCW 64.34.304(1)(l), shall furnish a resale certificate signed by an officer or authorized agent of the association and containing the information necessary to enable the unit owner to comply with this section. For the purposes of this chapter, a reasonable charge for the preparation of a resale certificate may not exceed one hundred fifty dollars. The association may charge a unit owner a nominal fee for updating a resale certificate within six months of the unit owner's request. The unit owner shall also sign the certificate but the unit owner is not liable to the purchaser for any erroneous information provided by the association and included in the certificate unless and to the extent the unit owner had actual knowledge thereof.

(3) A purchaser is not liable for any unpaid assessment or fee against the unit as of the date of the certificate greater than the amount set forth in the certificate prepared by the association unless and to the extent such purchaser had actual knowledge thereof. A unit owner is not liable to a purchaser for the failure or delay of the association to provide the certificate in a timely manner, but the purchaser's contract is voidable by the purchaser until the certificate has been provided and for five days thereafter or until conveyance, whichever occurs first.

Sec. 7. RCW 64.34.445 and 1992 c 220 s 26 are each amended to read as follows:

(1) A declarant and any dealer warrants that a unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting, reasonable wear and tear and damage by casualty or condemnation excepted.

(2)(a) A declarant and any dealer impliedly warrants that a unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by such declarant or dealer will be:

(((a))) (i) Free from defective materials; ((and

(b))) (ii) Constructed in accordance with sound engineering and construction standards((, and));

(iii) Constructed in a workmanlike manner; and

(iv) Constructed in compliance with all laws then applicable to such improvements.

(b) The implied warranty is applicable only to the extent that a failure under (a) of this subsection: (i) Has had or will have a materially adverse effect on the structural integrity of a unit or common element; (ii) has resulted or will result in a unit or common element being unsafe in any material respect when used for its intended purpose; (iii) would have substantially reduced the fair market value of the unit on the date of initial conveyance by the declarant or dealer had the defect been disclosed at the date of initial conveyance; or (iv) materially impairs or will impair the use of a unit or common element for its intended purpose.

(3) A declarant and any dealer warrants to a purchaser of a unit that may be used for residential use that an existing use, continuation of which is contemplated by the parties, does not violate applicable law at the earlier of the time of conveyance or delivery of possession.

(4) Warranties imposed by this section may be replaced, excluded, or modified as specified in RCW 64.34.450.

(5) For purposes of this section, improvements made or contracted for by an affiliate of a declarant, as defined in RCW 64.34.020(1), are made or contracted for by the declarant.

(6) Any conveyance of a unit transfers to the purchaser all of the declarant's implied warranties of quality, as they may be replaced, excluded, or modified by an express written warranty as specified in RCW 64.34.450.

Sec. 8. RCW 64.34.450 and 1989 c 43 s 4-113 are each amended to read as follows:

(1) ((Except as limited by subsection (2) of this section)) For units intended for nonresidential use, implied warranties of quality:

(a) May be excluded or modified by written agreement of the parties; and

(b) Are excluded by written expression of disclaimer, such as "as is," "with all faults," or other language which in common understanding calls the buyer's attention to the exclusion of warranties.

(2) ((With respect to a purchaser of a unit that may be occupied)) For units intended for residential use, no ((general)) disclaimer of implied warranties of quality is effective, ((but a)) except that:

(a) A declarant ((and any)) or dealer may disclaim liability in ((an)) a separate recorded instrument signed by the purchaser for a specified defect or specified failure to comply with applicable law, if: (i) The specific defect or failure ((entered into and became)) is known to exist at the time of disclosure; (ii) the disclaimer specifically describes the defect or failure; (iii) the disclaimer includes a statement as to the effect of the defect or failure; and (iv) the disclaimer is clearly a part of the basis of the bargain; and/or

(b) A declarant or dealer may replace or modify the implied warranties of quality provided under RCW 64.34.445 with an express written warranty of quality only if each of the following conditions are met:

(i) The express written warranty does not reduce protections provided to the purchaser by the implied warranty set forth in RCW 64.34.445;

(ii) The disclosure required by RCW 64.34.410(1)(z) is contained in a public offering statement as provided by RCW 64.34.410(3) and such disclosure is set forth in twelve-point bold face type in the declaration or amendment thereto;

(iii) The express written warranty is set forth in full in the declaration, an amendment to the declaration, or another recorded document; and

(iv) The unit purchaser who initially acquires the unit from the declarant expressly acknowledges in a recorded written conveyance or another recorded written instrument that the implied warranties of quality have been replaced or modified by the express written warranty.

Sec. 9. RCW 64.34.452 and 2002 c 323 s 11 are each amended to read as follows:

(1) A judicial proceeding or arbitration for breach of any obligations arising under or relating to RCW 64.34.443 ((and)), 64.34.445, and 64.34.450 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 periods may not be reduced by either oral or written agreement, or through the use of contractual claims or notice procedures that require the filing or service of any claim or notice prior to the expiration of the period specified in this section. Arbitration under this chapter shall be deemed commenced when a request, notice, or petition is served on a party that is necessary to the resolution of the claim.

(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 of claim is served under RCW 64.50.020 within the time prescribed for the filing of an action under this chapter, the statutes of limitation in this chapter and any applicable statutes of repose for construction-related claims are tolled until sixty days after the period of time during which the filing of an action is barred under RCW 64.50.020.

NEW SECTION. Sec. 10. A new section is added to chapter 64.34 RCW to read as follows:

(1) Effective January 1, 2006, all condominiums shall be inspected by a qualified third party independent inspector during the course of construction. Condominiums inspected that are granted a certification of inspection shall be presumed to be constructed in accordance with sound engineering and construction standards; constructed in a workmanlike manner; and constructed in compliance with all laws then applicable to improvements.

(2)(a) The inspections shall be performed by qualified inspectors. To be qualified, the person performing the inspection shall have at least five years of verifiable experience in construction; have certification as a building inspector, combination inspector or combination dwelling inspector from the international code council; and have successfully passed the technical written examination promulgated by the international code council for those certification categories.

(b) Nothing in this section, as it relates to qualified inspectors, shall be construed to alter the requirements for licensure, or the jurisdiction, authority, or scope of practice of architects, professional engineers, or general contractors.

(c) A qualified inspector shall be free from any interference or influence relating to the inspections under this chapter. An inspector shall not engage in any design or construction activities relating to the condominium for which the inspector is engaged to inspect. Nor may a qualified inspector be engaged by the declarant or agents of the declarant in any other activity except qualified inspections.

(3)(a) Any inspection during the course of construction of a condominium shall include at a minimum the following:

(i) An independent review of all plans and specifications for the condominium to determine compliance with all laws then applicable to improvements and to ensure that the plans and specifications are in accordance with sound engineering and construction standards.

(ii) An independent periodic review of all construction activities during the course of construction to ensure that the condominium has been constructed in a workmanlike manner.

(b) A qualified inspector shall prepare a certificate certifying that the condominium has been inspected during the course of construction in compliance with this chapter. The certificate of inspection shall be provided to each purchaser at or prior to closing of the sale of a unit.

(4)(a) A qualified inspector shall have no monetary liability and no cause of action for damages shall arise against a qualified inspector for the inspections required by this chapter.

(b) The immunity provided under this section does not inure to the benefit of the qualified inspector for damages caused to the declarant solely by the negligence or willful misconduct of the qualified inspector resulting from the provision of services under the contract with the declarant.

(c) Except for qualified inspectors, this section shall not relieve from, excuse, or lessen in any manner, the responsibility or liability of any person, company, contractor, builder, developer, architect, engineer, designer, or other individual or entity who develops, improves, owns, operates, or manages any condominium for any damages to persons or property caused by construction or design defects. The fact that an inspection by a qualified inspector has taken place may be introduced as evidence in a construction defect action, including any reports or other items generated by the qualified inspector.

NEW SECTION. Sec. 11. Sections 3, 5, and 8 of this act apply only to condominiums created by declarations recorded on or after July 1, 2004.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 13. This act takes effect July 1, 2004."

ESSB 5536 - S AMD 644

By Senator Esser

ADOPTED AS AMENDED 02/12/2004

On page 1, line 1 of the title, after "condominiums;" strike the remainder of the title and insert "amending RCW 64.34.100, 64.34.216, 64.34.324, 64.34.410, 64.34.425, 64.34.445, 64.34.450, and 64.34.452; adding new sections to chapter 64.34 RCW; creating a new section; and providing an effective date."

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