BILL REQ. #:  S-4367.1 

READ FIRST TIME 02/01/10.   

     AN ACT Relating to real property warranties; and adding new sections to chapter 64.50 RCW.

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

NEW SECTION.  Sec. 1   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. 2   A new section is added to chapter 64.50 RCW to read as follows:
     (1) For the purposes of this section:
     (a) "Builder vendor" means a person, natural or otherwise, engaged in the business of erecting or constructing a new home or who purchases a new home for purposes of resale in the course of its business.
     (b) "Construction professional" means an architect, 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.
     (c) "Inspector" means a person licensed under chapter 18.280 RCW.
     (d) "Residential real property" means a single-family home, a duplex, a triplex, or a quadraplex and does not include a manufactured or mobile home as defined in RCW 65.20.020.
     (e) "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.
     (2) 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 will be:
     (a) Free from defective materials;
     (b) Constructed in accordance with sound engineering and construction standards;
     (c) Constructed in a work-like manner; and
     (d) Constructed in compliance with all laws then applicable to the improvements.
     (3) 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.
     (4) In a judicial 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, "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) A judicial proceeding for breach of a warranty arising under this section must be commenced within four years after the cause of action accrues. This period 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) Except as provided under (c) of this subsection, 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.
     (c)(i) A cause of action for breach of a warranty arising under this section that is based on a latent structural defect or a latent water penetration defect accrues when the claimant discovers or reasonably should have discovered the latent structural defect or latent water penetration defect.
     (ii) An action for breach of warranty under this subsection (6)(c) must be commenced, in the case of a newly constructed home, no later than ten years from the date the initial owner enters into possession of the property; or, in the case of a substantial remodel, no later than ten years from the date of substantial completion of construction or termination of the project, whichever is later.
     (iii) Chapter 4.16 RCW does not apply to a cause of action under this subsection (6)(c).
     (7) 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.
     (8) 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.
     (9) In a judicial proceeding under this section, the court may award reasonable attorneys' fees and costs to the prevailing party.
     (10) This section is not intended to create an independent right to maintain a class action against any construction professional.
     (11) This section does not apply to condominiums subject to chapter 64.34 RCW.
     (12) 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.
     (13) 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.