BILL REQ. #:  S-0181.1 

Read first time 01/09/2007.   Referred to Committee on Consumer Protection & Housing.

     AN ACT Relating to new home warranties; amending RCW 4.16.300; 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 completed new home for resale in the course of its business.
     (3) "Electrical systems" means all wiring, electrical boxes, switches, outlets, and connections to the public utility system.
     (4) "Heating, cooling, and ventilating systems" means all duct work, gas, steam, water and refrigerant lines, registers, convectors, solar panels, radiation elements, and dampers.
     (5) "Load-bearing portions of the home" means the load-bearing portions of the:
     (a) Foundation system and footings;
     (b) Beams;
     (c) Girders;
     (d) Lintels;
     (e) Columns;
     (f) Walls and partitions;
     (g) Floor systems; and
     (h) Roof framing systems.
     (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 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.
     (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; and
     (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.
     (10)(a) "Structural defect" means any defect in the load-bearing portions of a new home that adversely affects its load-bearing function to the extent that the home becomes or is in serious 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 earlier.

NEW SECTION.  Sec. 2   (1)(a) Except as excluded under (b) of this subsection, every contract for the construction or sale of a new home includes, as a matter of law, a warranty from the residential builder that shall warrant at a minimum that:
     (i) For two years, beginning on the warranty date, the new home is free from any defects in materials and workmanship;
     (ii) For three years, beginning on the warranty date, the new home is free from any defects in the electrical, plumbing, 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, the new home is free from any defects resulting from water penetration; and
     (iv) For ten years, beginning on the warranty date, the new home is 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 or damage to personal property;
     (iii) Any defect in materials supplied or work performed by anyone other than the builder or the builder's employees, agents, or subcontractors;
     (iv) Any damage that the owner has not taken timely action to minimize;
     (v) Normal wear and tear or normal deterioration;
     (vi) Insect damage, except where the builder has failed to use proper materials or construction methods designed to prevent 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 or made worse by negligence, improper maintenance, or improper operations by anyone other than the builder or its employees, agents, or subcontractors;
     (ix) Any damage to the extent it is caused or made worse 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.
     (2) The warranty created by this section runs from the builder to the owner. This warranty entitles the owner to recover from the builder all costs associated with repairing the defect, together with the cost of repair of damage proximately caused by the defect, including the cost of repairing driveways, sidewalks, lawns, landscaping, or similar associated facilities and fixtures necessarily damaged as a result of the required repairs. The liability of a builder under the new home warranty shall be limited to the purchase price of the home in the first good faith sale or the fair market value of the home on its completion date if there is no good faith sale. Absence of privity of contract between the owner and the builder is not a defense to the enforcement of this warranty.
     (3) If the defect is the result of work performed by a subcontractor, the builder has a right of contribution from that subcontractor for amounts paid to the owner as a result of the new home warranty.
     (4) No action to enforce the new home warranty created by this section may be commenced after four years has passed from the time the defect is discovered, or, with reasonable diligence, should have been discovered. 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 and subsection (5) of this section. Tolling continues until the builder completes the repair to the owner's satisfaction, or the builder gives the owner written notice that the builder refuses to make the repair or has completed as much of the repair as the builder intends to complete.
     (5) Except as provided in subsection (4) of this section, no action to enforce the new home warranty created by this section may be filed later than the time periods described in subsection (1)(a) of this section.
     (6) 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.
     (7) 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 until the warranties provided in subsection (1)(a) of this section expire.
     (8) A general disclaimer of the new home warranty is not effective except that a purchaser of real property consisting of, or improved by, more than four dwelling units may make a written disclaimer of the new home warranty. A builder and any owner or any successor in title to the owner may disclaim liability in a written instrument signed by the purchaser for a specified defect, if the defect entered into and became a part of the basis of the bargain.

Sec. 3   RCW 4.16.300 and 2004 c 257 s 1 are each amended to read as follows:
     RCW 4.16.300 through 4.16.320 shall apply to all claims or causes of action of any kind against any person, arising from such person having constructed, altered or repaired any improvement upon real property, or having performed or furnished any design, planning, surveying, architectural or construction or engineering services, or supervision or observation of construction, or administration of construction contracts for any construction, alteration or repair of any improvement upon real property. This section is specifically intended to benefit persons having performed work for which the persons must be registered or licensed under RCW 18.08.310, 18.27.020, 18.43.040, 18.96.020, or 19.28.041, and shall not apply to claims or causes of action against persons not required to be so registered or licensed. This section does not apply to a new home warranty under chapter 64.-- RCW (sections 1 and 2 of this act).

NEW SECTION.  Sec. 4   Sections 1 and 2 of this act constitute a new chapter in Title 64 RCW.