BILL REQ. #:  H-1305.1 

Read first time 02/01/2007.   Referred to Committee on Judiciary.

     AN ACT Relating to real property; and adding a new chapter to Title 64 RCW.

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

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Appliances, fixtures, and items of equipment" means furnaces, boilers, oil tanks and fittings, air purifiers, air handling equipment, ventilating fans, ceiling fans, air conditioning equipment, water heaters, pumps, stoves, ranges, ovens, refrigerators, garbage disposals, compactors, dishwashers, automatic door openers, washers and dryers, bathtubs, sinks, toilets, faucets and fittings, lighting fixtures, lighting control and energy management systems, security systems, circuit breakers, and other similar items.
     (2) "Builder" means any person, corporation, general contractor, or other legal entity that:
     (a) Is engaged in the business of erecting or otherwise constructing a new home; or
     (b) Purchases a new home for resale in the course of its business.
     (3) "Electrical systems" means all wiring, electrical boxes, switches, outlets, connections to the public utility system, and other similar items.
     (4) "Heating, cooling, and ventilating systems" means all duct work, gas, steam, water and refrigerant lines, registers, convectors, solar panels, radiation elements, dampers, and other similar items.
     (5) "Load-bearing portions of the home" means the load-bearing portions of the foundation system and footings, beams, girders, lintels, columns, walls and partitions, floor systems, roof framing systems, and other items integral to the structural design.
     (6)(a) "New home" means:
     (i) Every newly constructed private dwelling unit in the state and the appliances, fixtures, and items of equipment and structure that are made a part of a newly constructed private dwelling unit at the time of construction; and
     (ii) A substantial remodel of a private dwelling unit. "Substantial remodel" means a private dwelling unit that has been remodeled to the extent that the total cost of the remodel exceeds one-half of the property tax assessed value of the home, excluding the assessed value of the land at the time the contract for remodel was made.
     (iii) A condominium, as defined in RCW 64.34.020, used for residential purposes, as defined in RCW 64.34.020.
     (b) "New home" does not include:
     (i) A residential timeshare as defined in RCW 64.36.010;
     (ii) A manufactured home or mobile home as defined in RCW 65.20.020;
     (iii) Outbuildings, including detached garages and carports, except outbuildings that contain plumbing, electrical, heating, cooling, or ventilation systems serving the new home, and then only to the extent that defects to the outbuildings could affect these systems;
     (iv) Driveways;
     (v) Walkways;
     (vi) Boundary walls;
     (vii) Retaining walls not necessary for the structural stability of the new home;
     (viii) Landscaping;
     (ix) Sprinkler or irrigation systems;
     (x) Fences;
     (xi) Off-site improvements;
     (xii) Appurtenant recreational facilities; and
     (xiii) Other similar items as determined by the director of the department of labor and industries by rule.
     (7) "New home warranty" means the warranty created in section 2 of this act.
     (8) "Owner" means the purchaser of a new home to the extent of the time limitations provided in section 2(4) of this act notwithstanding absence of privity of contract between the builder and owner.
     (9) "Plumbing systems" means:
     (a) Gas supply lines and fittings;
     (b) Water supply, waste, and vent pipes and their fittings;
     (c) Septic tanks and their drain fields;
     (d) Water, gas, and sewer service piping and their extensions to the tie-in of a public utility connection, or on-site wells and sewage disposal systems; and
     (e) Other similar items.
     (10)(a) "Structural defect" means any defect in the vertical or lateral (seismic and wind) load-bearing portions of a new home that adversely affects its load-bearing function to the extent that the home becomes or is in danger of becoming unsafe, unsanitary, or otherwise not reasonably safely inhabitable.
     (b) "Structural defect" also includes damage due to subsidence, expansion, or lateral movement of soil that has been disturbed or relocated by the builder.
     (c) "Structural defect" does not include damage caused by movement of the soil:
     (i) Resulting from a flood or earthquake; or
     (ii) For which compensation has been provided.
     (11) "Warranty date" means the first day on which the owner occupies the new home, closes on the new home, makes the final contract payment on the new home, or obtains an occupancy permit for the new home if the home is built on the owner's property, whichever is earliest.

NEW SECTION.  Sec. 2   (1)(a) Except as excluded under (b) of this subsection, all builders of new homes warrant, at a minimum, that the new home, or improvements made as part of a substantial remodel, are:
     (i) For two years, beginning on the warranty date, free from any patent defects in materials and workmanship not otherwise governed by the remaining warranties in this section;
     (ii) For three years, beginning on the warranty date, free from any defects in the electrical systems, plumbing systems, heating, cooling, and ventilating systems, except that in the case of appliances, fixtures, and items of equipment, the warranty need not exceed the length and scope of the warranty offered by the manufacturer, and the warranty of merchantability, fitness, and all other implied warranties with respect to appliances, fixtures, and items of equipment shall be governed by the Washington uniform commercial code;
     (iii) For five years, beginning on the warranty date, free from defective materials, constructed in accordance with sound engineering and construction standards, constructed in a workmanlike manner, constructed in compliance with all laws applicable to the new home or improvements including building codes and regulations, and in conformance with the plans as permitted by the local governmental jurisdiction, or free from any defects that permit or, without repair, will lead to water penetration; and
     (iv) For ten years, beginning on the warranty date, free from any structural defects.
     (b) The new home warranty excludes the following:
     (i) Damage to real property that is not part of the home covered by the warranty or that is not included in the purchase price of the home;
     (ii) Bodily injury;
     (iii) Any defect in materials supplied or work performed by anyone other than the builder or the builder's employees, agents, subcontractors, or others acting under the direction of the builder;
     (iv) Any damage caused by the owner or prior owner's failure to take reasonable action to mitigate when that owner knew or had reason to know the defect existed;
     (v) Normal wear and tear or expiration of normal useful life;
     (vi) Insect damage, except where any defect covered by the new home warranty permitted or was a proximate cause of the insect infestation;
     (vii) Any loss or damage that arises while the home is being used primarily for nonresidential purposes;
     (viii) Any damage to the extent it is caused by negligence, improper maintenance, or improper operations by anyone other than the builder or its employees, agents, subcontractors, or others acting under the direction of the builder;
     (ix) Any damage to the extent it is caused by changes of the grading of the ground by anyone other than the builder, its employees, agents, or subcontractors; and
     (x) Any loss or damage caused by acts of God unless the damage is attributable at least in part to breach of the warranties in subsection (1)(a) of this section.
     (2) The new home warranty created by this section runs from the builder to the owner and to subsequent owners to the extent of limitations provided under subsection (4) of this section. The new home warranty does not expire on the subsequent sale of a new home by the owner to a subsequent purchaser, but continues to protect later purchasers to the extent of the limitations in subsection (4) of this section. An absence of privity of contract between the owner and the builder is not a defense to the enforcement of this warranty. This new home warranty entitles the owner to recover from the builder all costs associated with repairing the defects and damage caused by the defects, including all incidental and consequential damages. The liability of a builder under this chapter, exclusive of attorneys' fees, is limited to the fair market value of the home without the defects.
     (3) If the breach of the new home warranty is the result of work performed by contractors or subcontractors on behalf of the builder, the builder may immediately assert claims against the contractor or subcontractor for that portion of the owner's damages that the builder attributes to the contractor or subcontractor.
     (4) No action for a breach of the new home warranty created by this section may be commenced after six years have passed from the time the defect is discovered or, with reasonable diligence, should have been discovered. No action for a breach of the new home warranty may be commenced more than eleven years from the warranty date. Providing written notice and a reasonable description of a defect to the builder has the effect of tolling the limitation periods established by this subsection. Tolling continues until the builder completes the repair to the owner's satisfaction, or the owner receives written notice from the builder that the builder refuses to make the repair or has completed as much of the repair as the builder intends to complete.
     (5) The new home warranty is a cumulative remedy, and shall not have the effect of diminishing or replacing any other remedy or warranty created by law or equity or agreement between the parties. The new home warranty is in addition to the warranties created under chapter 64.34 RCW.
     (6) The new home warranty created under this chapter may not be omitted, waived, modified, or disclaimed in any way.
     (7) All builders of new homes shall include in the purchase and sale agreement or other contract between the builder and the buyer the following statement: "This home (or improvements made thereto if a substantial remodel) was built in compliance with all applicable building codes and is governed by a statutory warranty set forth in chapter 64.-- RCW (sections 1 and 2 of this act), which representation and warranty may not be omitted, waived, modified, or disclaimed in any way."

NEW SECTION.  Sec. 3   Sections 1 and 2 of this act constitute a new chapter in Title 64 RCW.