BILL REQ. #:  H-2451.1 

READ FIRST TIME 03/02/09.   

     AN ACT Relating to improving residential real property construction by creating a home construction consumer education office, strengthening warranty protections applicable to residential real property construction, enhancing contractor registration requirements, and establishing worker certification standards; amending RCW 18.27.030; adding a new section to chapter 43.10 RCW; adding new sections to chapter 64.50 RCW; adding a new section to chapter 18.27 RCW; and creating a new section.

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

NEW SECTION.  Sec. 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 construction.
     (2) The office of consumer education for home construction shall:
     (a) Educate consumers about 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 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 brochure 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 in the area of residential 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;
     (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; and
     (i) Report to the legislature on an annual basis the total number of complaints, the nature of the complaints, the monetary value of the complaints, whether complaints 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.

NEW SECTION.  Sec. 2   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. The legislature does not intend to modify any other aspect of the common law implied warranty of habitability as developed through case law.
     (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.

NEW SECTION.  Sec. 3   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 any work to the foundation, framing, siding, roofing, windows, and doors, and any part thereof, will not impair the suitability of the property for the ordinary uses of real property of its type and that the work to these components of the property will be:
     (a) Free from defective materials;
     (b) Constructed in accordance with sound engineering and construction standards;
     (c) Constructed in a workmanlike manner; and
     (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 may bring a cause of action for damages against the construction professional. 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.
     (3) 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.
     (4) 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.
     (5)(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 (5)(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.
     (6) 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 section, the statute of limitations in this section and any applicable statute 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.
     (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. The warranties provided under this section may not be waived, disclaimed, modified, or limited.
     (8) This section does not apply to condominiums subject to chapter 64.34 RCW.
     (9) This section does not affect the application of the notice and opportunity to cure requirements and procedures imposed under RCW 64.50.010 through 64.50.050.
     (10) An action for breach of a warranty created under this section is subject to any requirements for mandatory arbitration imposed under chapter 7.06 RCW or state or local court rules.
     (11) 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.
     (12) For the purposes of this section:
     (a) "Construction professional" means a builder, builder-vendor, contractor, subcontractor, engineer, 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.
     (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.

Sec. 4   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.
     (c) Evidence of workers' compensation coverage for the applicant's employees working in Washington, as follows:
     (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. 5   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. 6   Part headings used in this act are not any part of the law.