BILL REQ. #:  S-1078.1 

Read first time 01/23/2007.   Referred to Committee on Consumer Protection & Housing.

     AN ACT Relating to real property; amending RCW 4.16.310; 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) "Defect" means any violation or nonconformity with applicable building codes, regulations, or permits.
     (4) "Electrical systems" means all wiring, electrical boxes, switches, outlets, and connections to the public utility system.
     (5) "Heating, cooling, and ventilating systems" means all duct work, gas, steam, water and refrigerant lines, registers, convectors, solar panels, radiation elements, and dampers.
     (6) "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.
     (7)(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. Newly constructed private dwelling units include substantial remodels. "Substantial remodel" means a remodel of a residence, for which the total cost exceeds one-half of the assessed value of the improvements for property tax purposes at the time the contract for remodel was made; 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.
     (8) "New home warranty" means the warranty created in section 2 of this act.
     (9) "Owner" means the purchaser of a new home or any subsequent owner of a home to which the warranty created in section 2 of this act applies.
     (10) "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.
     (11)(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 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.
     (12) "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 that permit or, without repair, will lead to 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 knew or had reason to know existed but has not taken reasonable action to mitigate;
     (v) Normal wear and tear or expiration of normal useful life;
     (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 defects, including all incidental and consequential damages. The liability of a builder under the new home warranty shall be limited to the fair market value of the home. 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 six years have 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) The new home warranty created in this section may not be omitted, waived, or disclaimed in any way.
     (9) All new homes must include in the purchase and sale agreement between the builder and the buyer the following statement: "This home 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, or disclaimed in any way."

Sec. 3   RCW 4.16.310 and 2002 c 323 s 9 are each amended to read as follows:
     (1) All claims or causes of action as set forth in RCW 4.16.300 shall accrue, and the applicable statute of limitation shall begin to run only during the period within ((six)) ten years after substantial completion of construction, or during the period within ((six)) ten years after the termination of the services enumerated in RCW 4.16.300, whichever is later. The phrase "substantial completion of construction" shall mean the state of completion reached when an improvement upon real property may be used or occupied for its intended use. Any cause of action which has not accrued within ((six)) ten years after such substantial completion of construction, or within ((six)) ten years after such termination of services, whichever is later, shall be barred((: PROVIDED, That)). This limitation shall not be asserted as a defense by any owner, tenant, or other person in possession and control of the improvement at the time such cause of action accrues. The limitations prescribed in this section apply to all claims or causes of action as set forth in RCW 4.16.300 brought in the name or for the benefit of the state which are made or commenced after ((June 11, 1986)) the effective date of this section.
     (2) If a written notice is filed under RCW 64.50.020 within the time prescribed for the filing of an action under this chapter, the period of time during which the filing of an action is barred under RCW 64.50.020 plus sixty days shall not be a part of the period limited for the commencement of an action, nor for the application of this section.

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