1393-S2 AMH SPRI ADAM 034

2SHB 1393 - H AMD 290

By Representative Springer

WITHDRAWN 3/11/2009

Strike everything after the enacting clause and insert the following:

"PART I. OFFICE OF CONSUMER EDUCATION FOR HOME CONSTRUCTION

NEW SECTION. Sec. 1.1. A new section is added to chapter 43.10 RCW to read as follows:

(1) The office of consumer education for home construction is created in the office of the attorney general to be the primary point of contact for consumers in matters related to residential purchases and construction.

(2) The office of consumer education for home construction shall:

(a) Educate consumers about residential purchase and sale agreements and contracting for residential construction services, including the requirements of chapter 18.27 RCW and methods available to protect themselves against loss;

(b) Produce written and electronic consumer education materials about purchasing homes, contracting for residential construction services, and legal resources available to consumers;

(c) Create a pamphlet explaining a homeowner's legal rights and remedies and provide contractors and other construction professionals with a downloadable version of the pamphlet to attach to contracts for purchase and sale of new residential real property or the substantial remodel of existing residential real property. The office shall periodically update this pamphlet;

(d) Identify and work collaboratively with agencies and organizations who are already engaged in consumer education efforts regarding residential purchases and construction, such as the department of labor and industries, the department of licensing, local governments, the construction industry, financial institutions, and other interested organizations and individuals, to increase outreach to consumers;

(e) Share consumer education materials with and serve as a resource for agencies and organizations who are already engaged in consumer education;

(f) Develop a uniform manner of receiving, cataloging, analyzing, and responding to consumer complaints about residential construction, and develop a system of tracking resolutions of complaints and of claims received under section 8 of this act;

(g) Identify which agencies and organizations are already receiving complaints and coordinate with them to ensure that all agencies and organizations are requesting the same information from complaining consumers and that all consumers are referred to the office;

(h) Enter into data-sharing agreements with the department of labor and industries, local governments, and other agencies with enforcement duties in residential construction to increase assistance to consumers and enforcement of construction-related laws;

(i) Report to the legislature on an annual basis the total number of complaints about residential construction received and the total number of claims filed under section 8 of this act. For complaints, the office of consumer education for home construction shall summarize the nature of the complaints. For claims, the office of consumer education for home construction shall summarize the nature of the claims, the monetary value of the claims, whether claims have been resolved, and any other information that the office deems relevant. The first report is due on January 1, 2010, and subsequent reports are due on November 1st of each year thereafter; and

(j) Examine issues involved in establishing a recovery fund to provide compensation to residential real property homeowners through a claim filing process. The office of consumer education for home construction shall consult with appropriate agencies and representatives from organizations involved in the area of residential construction. The office of consumer education for home construction shall make recommendations to the legislature on the creation of a recovery fund by December 1, 2010.

Sec. 2.2. RCW 18.27.075 and 2001 c 159 s 14 are each amended to read as follows:

(1) The department shall charge a fee of one hundred dollars for issuing or renewing a certificate of registration during the 2001-2003 biennium. The department shall revise this amount at least once every two years for the purpose of recognizing economic changes as reflected by the fiscal growth factor under chapter 43.135 RCW.

(2) The department shall also charge a consumer education fee of one hundred dollars per year for issuing or renewing a certificate of registration. The department shall deposit the fee in the consumer education for home construction account created in section 3 of this act.

NEW SECTION. Sec. 3.3. A new section is added to chapter 43.10 RCW to read as follows:

The consumer education for home construction account is created in the custody of the state treasury for the purpose of funding the office of consumer education for home construction. All fees charged under subsection (2) of section 2 of this act and filing fees charged under section 8 of this act must be deposited into the account. Expenditures from the account may be used only to fund the office of consumer education for home construction. Only the home construction board created under section 6 of this act or the board's designee may authorize expenditure from the account. The account is subject to the allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

Sec. 4.4. RCW 43.79A.040 and 2008 c 208 s 9 are each amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.

(2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.

(b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the Washington international exchange scholarship endowment fund, the toll collection account, the developmental disabilities endowment trust fund, the energy account, the fair fund, the family leave insurance account, the food animal veterinarian conditional scholarship account, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the GET ready for math and science scholarship account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and fire fighters' plan 2 expense fund, the local tourism promotion account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, the Washington state heritage center account, the consumer education for home construction account, and the reading achievement account. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the city and county advance right-of-way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 5.5. A new section is added to chapter 43.10 RCW to read as follows:

For the purposes of sections 6 through 10 of this act, the following definitions apply:

(1) "Board" means the home construction board created in section 6 of this act.

(2) "Claim" means a claim filed with the board against a construction professional under section 8 of this act and does not mean a complaint as that term is used in section 1 of this act.

(3) "Construction professional" has the same meaning as in section 14 of this act.

(4) "Contractor" means a contractor, as defined in RCW 18.27.010, that is registered with the department of labor and industries under chapter 18.27 RCW.

(5) "Defect" means a deficiency, an inadequacy or an insufficiency arising out of or relating to the construction, alteration, or repair of residential real property. "Defect" also includes a deficiency, an inadequacy or an insufficiency in a system, component, or material incorporated into residential real property.

(6) "Damages" means the cost of repairs, or if the cost of repairs is clearly disproportionate to the loss in market value, damages is the loss in market value.

(7) "Homeowner" means a person or persons owning residential real property. "Homeowner" does not include government agencies, political subdivisions, financial institutions, and any other entity that purchases, guarantees, or insures a loan secured by real property. "Homeowner" also does not include the spouse, domestic partner, or personal representative of the contractor named in the claim filed under section 8 of this act.

(8) "Residential real property" has the same meaning as in section 14 of this act.

NEW SECTION. Sec. 6.6. A new section is added to chapter 43.10 RCW to read as follows:

(1) The home construction board is established within the office of consumer education for home construction to administer a residential real property homeowner and construction professional early resolution mediation program.

(2) The purpose of the board is to provide homeowners and construction professionals with a cost-effective and time-efficient process to resolve disputes arising from alleged construction.

(3) The board consists of the following seven members:

(a) Three members possessing a minimum of ten years of experience in the construction of residences and directly, or as employees or officers of a firm, registered under chapter 18.27 RCW;

(b) One member possessing a minimum of ten years of experience in the remodeling of residences and directly, or as employees or officers of a firm, registered under chapter 18.27 RCW;

(d) One building inspector employed by a city or county; and

(e) One member of the general public.

(3) Members of the board shall be appointed by the governor with consent of the Senate. The governor shall appoint initial members of the board to staggered terms of from two to four years. Thereafter, all members shall be appointed to full four-year terms. Members of the board hold office until their successors are appointed. A vacancy shall be filled by appointment by the governor for the unexpired portion of the term in which the vacancy occurs.

(4) The board shall select from its members a chair person, vice chair person, and any other officer the board determines is necessary to perform its duties.

(5) The board shall meet a minimum of four times per year to carry out its functions.

(6) The board may adopt rules to implement the board's duties.

NEW SECTION. Sec. 7.7. A new section is added to chapter 43.10 RCW to read as follows:

(1) The board shall investigate and mediate claims filed by a homeowner against a construction professional for alleged construction defects to residential real property.

(2) The board may use the services of neutral third party experts to assist the board in investigating, assessing, and mediating claims. The board may rely on the national building standards and other recognized standards or codes that the board finds appropriate.

NEW SECTION. Sec. 8.8. A new section is added to chapter 43.10 RCW to read as follows:

(1) A homeowner of residential real property alleging that a construction professional has performed defective work must, prior to commencing an action against the construction professional, file a claim against the construction professional with the board.

(2) The claim shall be in the form required by the board, and shall include, at a minimum:

(a) The name and mailing address of the homeowner or the homeowner’s legal representative, if any;

(b) The address and location of the residential real property;

(c) The names and addresses of the construction professionals, to the extent known to the homeowner, who performed the work;

(d) Whether the work performed involved construction of new residential real property or a substantial remodel of residential real property and the date that the homeowner took possession of the new residential real property or, for a substantial remodel, the date the work was substantially completed or the project was terminated;

(e) A description of the defective work performed and the actual or estimated costs of repair;

(f) Any report, estimates, and other documents evidencing the defect and the costs of repair;

(g) Whether there is a written contract between the construction professional and the homeowner and whether the contract contains warranties related to the work performed or the materials used.

(3) The board may not process a claim against a construction professional unless the claim is filed with the board within the applicable statute of limitations.

(4) When a claim is filed with the board within the applicable statute of limitations, the filing of the claim tolls any applicable statute of limitations and any applicable statute of repose for construction-related claims for the period of time until fifteen days after the board provides written notice of completion of mediation.

(5) Any action commenced in court by a homeowner prior to compliance with the requirements of this section shall be subject to dismissal without prejudice, and may not be recommenced until the homeowner has complied with the requirements of this section.

(6) The board by rule may impose a processing fee for claims filed under this section not to exceed one hundred dollars. The fee shall be deposited into the consumer education for home construction account created under section 3 of this act.

NEW SECTION. Sec. 9.9. A new section is added to chapter 43.10 RCW to read as follows:

(1) Upon receipt of a claim, the board shall give written notice to the construction professional against whom the claim is made. The notice of the claim shall describe the claim in reasonable detail sufficient to determine the nature of the defect.

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

(a) Propose to inspect the residence that is the subject of the claim and to complete the inspection 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. A construction professional's offer under this subsection (2)(b) to compromise and settle a homeowner's claim may include, but is not limited to, an express offer to purchase the homeowner's residence that is the subject of the claim, and to pay the homeowner's reasonable relocation costs; or

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

(3)(a) If the construction professional disputes the claim or does not respond to the notice of claim within the time stated in subsection (2) of this section, the board shall commence an investigation and mediation of the claim.

(b) If the homeowner rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (2) of this section, the homeowner shall serve written notice of the rejection on the construction professional and the board. After service of the rejection, the board shall commence an investigation and mediation of the claim.

(c) If the construction professional has not received from the homeowner, within thirty days after the homeowner's receipt of the construction professional's response, either an acceptance or rejection of the inspection proposal or settlement offer, then at anytime thereafter the construction professional may terminate the proposal or offer by serving written notice to the homeowner, and the board shall commence an investigation and mediation of the claim.

(4)(a) If the homeowner elects to allow the construction professional to inspect in accordance with the construction professional's proposal pursuant to this section, the homeowner shall provide the construction professional and its contractors or other agents reasonable access to the homeowner's residence during normal working hours to inspect the premises and the claimed defect.

(b) Within fourteen days following completion of the inspection, the construction professional shall serve on the homeowner:

(i) A written offer to remedy the defect at no cost to the homeowner, including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction 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 defect within the agreed timetable, or if the construction professional fails to comply with the provisions of (b) of this subsection, the homeowner shall provide written notification to the board. The board shall commence an investigation and mediation of the claim.

(d) If the homeowner rejects the offer made by the construction professional pursuant to (b)(i) or (ii) of this subsection (4) to either remedy the defect or to compromise and settle the claim by monetary payment, the homeowner shall serve written notice of the rejection on the construction professional and the board. After service of the rejection notice, the board shall commence an investigation and mediation of the claim.

(e) If the construction professional has not received from the homeowner, within thirty days after the homeowner's receipt of the construction professional's response, either an acceptance or rejection of the offer made pursuant to (b)(i) or (ii) of this subsection (4), then at anytime thereafter the construction professional may terminate the offer by serving written notice to the homeowner.

(5)(a) Any homeowner accepting the offer of a construction professional to remedy the defect pursuant to subsection (4)(b)(i) of this section shall do so by serving the construction professional with a written notice of acceptance within a reasonable time period after receipt of the offer, and no later than thirty days after receipt of the offer. The homeowner shall also send a copy of the written notice of acceptance to the board. The homeowner shall provide the construction professional and its contractors or other agents reasonable access to the homeowner's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.

(b) The homeowner and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer, including, but not limited to, repair of additional defects.

(6) Compliance with this section satisfies the requirements of RCW 64.50.020.

NEW SECTION. Sec. ~~10.~~10. A new section is added to chapter 43.10 RCW to read as follows:

(1) If, after compliance with the procedures established in section 9 of this act, a resolution has not been reached between the homeowner and construction professional, the board shall investigate the claim.

(2) The board may use the services of neutral third party experts to conduct on-site investigations, make recommendations to the board, and assist the board in investigating and mediating claims.

(3) After the investigation is complete, the board shall provide the parties with notification of the findings of the investigation. If the parties do not provide the board with written notification within 14 days after receipt of the findings that the parties have resolved the claim, the board shall mediate the claim.

(4) The mediation shall be conducted by a panel of three members of the board in accordance with rules adopted by the board.

(5) All proceedings of the mediation conference, including any statement made by any party, attorney or other participant, shall be privileged and not reported, recorded, placed in evidence, used for impeachment, made known to a court or jury, or construed for any purpose as an admission. No party shall be bound by anything done or said at the mediation conference unless a settlement is reached, in which event the agreement upon a settlement shall be reduced to writing and shall be binding upon all parties to that agreement.

(6) At the conclusion of the mediation the board shall provide a written notice of the completion of mediation to the parties. The notice shall include a statement of the results of the mediation and a copy of any written settlement agreement between the parties. If the parties did not reach an agreement, the notice shall include a statement that the parties may pursue any other right or remedy provided by statutory or common law.

NEW SECTION. Sec. 11. A new section is added to chapter 43.10 RCW to read as follows:

(1) The board shall maintain and make available to the office of consumer education for home construction a record of all claims filed with the board against construction professionals under this chapter and the outcomes of those claims.

(2) The office of consumer education for home construction shall compile a summary of the claims into a report for the legislature as required under section 1 of this act.

NEW SECTION. Sec. 12. A new section is added to chapter 64.50 RCW to read as follows:

The provisions of RCW 64.50.020 do not apply to a claim filed with the home construction board under sections 8 through 10 of this act.

PART II. RESIDENTIAL REAL PROPERTY WARRANTIES

NEW SECTION. Sec. ~~13.~~13. A new section is added to chapter 64.50 RCW to read as follows:

(1) The legislature intends by this section to modify the common law implied warranty of habitability to provide that this warranty may not be contractually disclaimed, waived, modified, or limited.

(2) The common law implied warranty of habitability may not be disclaimed, waived, modified, or limited by contractual agreement. A provision of any contract for the purchase or sale of newly constructed residential property that purports to disclaim, waive, modify, or limit the implied warranty of habitability is void and unenforceable.

(3) Damages awarded for a breach of the implied warranty of habitability are the cost of repairs. However, if it is established that the cost of repairs is clearly disproportionate to the loss in market value caused by the breach, damages are limited to the loss in market value.

NEW SECTION. Sec. ~~14.~~14. A new section is added to chapter 64.50 RCW to read as follows:

(1) A construction professional involved in the construction of new residential real property, or the substantial remodel of existing residential real property, warrants that the work, and any part thereof, will be suitable for the ordinary uses of real property of its type and that the work, and any part therof, will be:

(a) Free from defective materials;

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

(d) Constructed in compliance with all laws then applicable to the work.

(2) If a construction professional breaches a warranty arising under this section and the breach results in damage to any portion of the residential real property, the current owner of the residential real property must file a claim with the home construction board against the construction professional prior to commencing an action for breach of a warranty.

(3) Absence of privity of contract between the owner and the construction professional is not a defense to the enforcement of a warranty arising under this section.

(4) In a proceeding for breach of a warranty arising under this section, the plaintiff must show that the alleged breach has adversely affected or will adversely affect the performance of that portion of the property alleged to be in breach. To establish an adverse effect, the person alleging the breach is not required to prove that the breach renders the property unfit for occupancy. As used in this subsection, an "adverse effect" must be more than technical and must be significant to a reasonable person.

(5) Proof of breach of a warranty arising under this section is not proof of damages. Damages awarded for a breach of a warranty arising under this section are the cost of repairs. However, if it is established that the cost of repairs is clearly disproportionate to the loss in market value caused by the breach, damages are limited to the loss in market value.

(6)(a)(i) Except as provided in (a)(ii) of this subsection, a proceeding for breach of a warranty arising under this section must be commenced within three years after the cause of action accrues.

(ii) A cause of action for breach of a warranty arising under this section that is based on a latent structural defect to the foundation component of the residential real property must be commenced within four years after the cause of action accrues.

(iii) The periods provided in this subsection (6)(a) 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.

(b) A cause of action for breach of a warranty arising under this section accrues, regardless of the owner's lack of knowledge of the breach:

(i) In the case of the purchase of newly constructed residential real property, on the date the initial owner enters into possession of the property; or

(ii) In the case of the substantial remodel of existing residential real property, on the date of substantial completion of construction or termination of the construction project, whichever is later.

(7) The warranties provided under this section are in addition to any other rights or remedies available under statutory law or common law or provided for under contract.

(8) This section does not apply to condominiums subject to chapter 64.34 RCW.

(9) An action for breach of a warranty under this section that is brought after compliance with sections 8 through 10 of this act is subject to any requirements for mandatory arbitration imposed under chapter 7.06 RCW or state or local court rules.

(10) This section applies to new residential real property construction and substantial remodels of residential real property that are commenced on or after January 1, 2010.

(11) For the purposes of this section:

(a) "Construction professional" means a builder, builder-vendor, contractor, subcontractor, or inspector, performing or furnishing the design, supervision, inspection, construction, or observation of the construction, of any improvement to residential real property, whether operating as a sole proprietor, partnership, corporation, or other business entity. "Construction professional" does not include a supplier of materials who has otherwise had no involvement in performing or furnishing the design, supervision, inspection, construction, or observation of the construction, of any improvement to residential real property. “Construction professional” does not include an inspector who is an agent or employee of a local government and acting in his or her official capacity as an inspector.

(b) "Residential real property" means a single-family home, a duplex, a triplex, or a quadraplex.

(c) "Substantial completion of construction" means the state of completion reached when an improvement upon real property may be used or occupied for its intended use.

PART III. CONTRACTOR REGISTRATION AND WORKER CERTIFICATION

NEW SECTION. Sec. ~~15.~~15. (1) The legislature finds that there is inadequate protection for consumers in the area of residential construction. The legislature further finds that a significant amount of the problems in the construction of new residential real property, or the substantial remodel of existing residential real property, pertain to water intrusion and unstable foundations and develop from poor installation of roofing, siding, framing, foundations, doors, and windows. The legislature recognizes that it is important to assure consumers that those doing construction work are properly trained. The legislature, therefore, intends to establish a worker certification requirement for those doing construction work in the areas of roofing, siding, framing, foundations, doors, and windows.

(2) The department of labor and industries shall contract for consultant services to develop recommendations to the legislature on the education, experience, and examination requirements of the program to certify workers engaged in the installation of roofing, siding, framing, foundations, doors, and windows. In developing the recommendations, the consultant and the department shall closely involve and consult with stakeholders. The recommendations must be submitted to the legislature by November 1, 2009.

(3) This section expires December 31, 2009.

Sec. ~~16.~~16. RCW 18.27.030 and 2008 c 120 s 1 are each amended to read as follows:

(1) An applicant for registration as a contractor shall submit an application under oath upon a form to be prescribed by the director and which shall include the following information pertaining to the applicant:

(a) Employer social security number.

(b) Unified business identifier number.

(i) The applicant's industrial insurance account number issued by the department;

(ii) The applicant's self-insurer number issued by the department; or

(iii) For applicants domiciled in a state or province of Canada subject to an agreement entered into under RCW 51.12.120(7), as permitted by the agreement, filing a certificate of coverage issued by the agency that administers the workers' compensation law in the applicant's state or province of domicile certifying that the applicant has secured the payment of compensation under the other state's or province's workers' compensation law.

(d) Employment security department number.

(e) Unified business identifier (UBI) account number may be substituted for the information required by (c) and (d) of this subsection if the applicant will not employ employees in Washington.

(f) Type of contracting activity, whether a general or a specialty contractor and if the latter, the type of specialty.

(g) Type of work performed, whether residential, commercial, or both.
(h) The name ((~~and~~)), address, social security number, date of birth, and driver's license number of each partner if the applicant is a firm or partnership, or the name ((~~and~~)), address, social security number, date of birth, and driver's license number of the owner if the applicant is an individual proprietorship, or the name ((~~and~~)), address, social security number, date of birth, and driver's license number of the corporate officers and statutory agent, if any, if the applicant is a corporation, or the name ((~~and~~)), address, social security number, date of birth, and driver's license number of all members of other business entities. The information contained in such application is a matter of public record and open to public inspection.

    (i) The registration numbers and unified business identifier account numbers of previously or currently registered businesses involving the same owner, principal, or officer as the applicant.
    (j) Disclosure of any bankruptcy proceedings filed by or against the applicant.
    (k) Information about any construction licenses, certifications, or registrations that have been issued to the applicant by other states. The applicant shall also provide details about any denials, suspensions, revocations, or any enforcement actions related to construction against the applicant by other states.

(2) The department may verify the workers' compensation coverage information provided by the applicant under subsection (1)(c) of this section, including but not limited to information regarding the coverage of an individual employee of the applicant. If coverage is provided under the laws of another state, the department may notify the other state that the applicant is employing employees in Washington.

(3)(a) The department shall deny an application for registration if: (i) The applicant has been previously performing work subject to this chapter as a sole proprietor, partnership, corporation, or other entity and the department has notice that the applicant has an unsatisfied final judgment against him or her in an action based on work performed subject to this chapter or the applicant owes the department money for penalties assessed or fees due under this chapter as a result of a final judgment; (ii) the applicant was an owner, principal, or officer of a partnership, corporation, or other entity that either has an unsatisfied final judgment against it in an action that was incurred for work performed subject to this chapter or owes the department money for penalties assessed or fees due under this chapter as a result of a final judgment; (iii) the applicant does not have a valid unified business identifier number; (iv) the department determines that the applicant has falsified information on the application, unless the error was inadvertent; ((or)) (v) the applicant does not have an active and valid certificate of registration with the department of revenue; or (vi) the department has determined that a different state has taken enforcement action against the applicant for activities that would be a violation of this chapter if they had occurred in Washington state.

(b) The department shall suspend an active registration if: (i) The department has determined that the registrant has an unsatisfied final judgment against it for work within the scope of this chapter; (ii) the department has determined that the registrant is a sole proprietor or an owner, principal, or officer of a registered contractor that has an unsatisfied final judgment against it for work within the scope of this chapter; (iii) the registrant does not maintain a valid unified business identifier number; (iv) the department has determined that the registrant falsified information on the application, unless the error was inadvertent; ((or)) (v) the registrant does not have an active and valid certificate of registration with the department of revenue; or (vi) the department has determined that a different state has taken enforcement action against the registrant for activities that would be a violation of this chapter if they had occurred in Washington state.

(c) The department may suspend an active registration if the department has determined that an owner, principal, partner, or officer of the registrant was an owner, principal, or officer of a previous partnership, corporation, or other entity that has an unsatisfied final judgment against it.

(4) The department shall not deny an application or suspend a registration because of an unsatisfied final judgment if the applicant's or registrant's unsatisfied final judgment was determined by the director to be the result of the fraud or negligence of another party.

NEW SECTION. Sec. ~~17.~~17. A new section is added to chapter 18.27 RCW to read as follows:

A registered contractor, by or against whom a petition in bankruptcy has been filed, shall notify the department of the proceedings in bankruptcy, including the identity and location of the court in which the proceedings are pending, within ten days of the filing.

NEW SECTION. Sec. ~~18.~~18. Sections 5 through 12 of this act take effect January 1, 2010.

NEW SECTION. Sec. ~~19.~~19. Part headings used in this act are not any part of the law."

Correct the title.

EFFECT: The striking amendment makes the following changes:

A. Creates a seven-member Home Construction Board (Board) within the Office of Consumer Education for Home Construction (OCEHC) to investigate and mediate construction defect claims. Allows the Board to use the services of neutral third parties to investigate, assess, and mediate claims.

Creates notice and opportunity to cure procedures when a homeowner files a claim with the Board.

Requires the board to investigate and mediate a claim that has not been settled by the parties.

Allows the Board to impose a fee of up to $100 for claims filed with the Board.

Requires a homeowner to file a claim with the Board prior to commencing a lawsuit alleging a construction defect.

B. Creates an account to fund the Office of Consumer Education for Home Construction (Office) and requires the Department of Labor and Industries to charge contractors a $100 fee to be deposited in the account. Requires the Office to examine issues involved in establishing a recovery fund to provide compensation to residential real property homeowners through a claim filing process.

C. Limits damages recoverable under the common law implied warranty of habitability to the cost of repairs, or if those are clearly disproportionate to the loss in market value, limits damages to the loss in market value.

D. Provides that the statutory warranties created by the bill apply to work on all aspects of the residential real property and are not limited to the foundation, framing, siding, roofing, windows and doors.

E. Removes engineers from the definition of "construction professional" and exempts inspectors who are agents or employees of local government acting in their official capacity as inspectors.

F. Requires the Department of Labor and Industries to contract for consultant services to develop recommendations to the Legislature on certification requirements for workers who install roofing, siding, framing, foundations, doors, and windows.

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