SENATE AMENDED
PRIOR PRINTER'S NOS. 1785, 2559, 3261, PRINTER'S NO. 3577
3558
No. 1467 Session of 2005
INTRODUCED BY T. STEVENSON, DALLY, ARGALL, BALDWIN, BARRAR,
BOYD, BUNT, CALTAGIRONE, CAPPELLI, CLYMER, CREIGHTON,
DENLINGER, FAIRCHILD, GERGELY, GILLESPIE, GINGRICH, GRELL,
HANNA, HERMAN, HUTCHINSON, KILLION, KOTIK, LaGROTTA, LEH,
LESCOVITZ, LEVDANSKY, MACKERETH, MANN, MICOZZIE, R. MILLER,
MUSTIO, NAILOR, PAYNE, PETRONE, PHILLIPS, REED, ROBERTS,
ROSS, RUBLEY, SAYLOR, SCHRODER, SEMMEL, B. SMITH, SOLOBAY,
SONNEY, R. STEVENSON, E. Z. TAYLOR, TIGUE, TRUE, TURZAI,
WALKO, WILT, GEIST, McGILL, FRANKEL, BUXTON, REICHLEY, PYLE
AND ALLEN, MAY 2, 2005
AS AMENDED ON THIRD CONSIDERATION, IN SENATE, FEBRUARY 14, 2006
AN ACT
1 Providing for dispute resolution procedures relating to
2 residential construction defects between contractors and
3 homeowners or members of associations.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Residential
8 Construction Dispute Resolution Act.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "Action." A civil lawsuit, judicial action or arbitration
1 proceeding asserting a claim, in whole or in part, for damages
2 or other relief in connection with a dwelling caused by a
3 construction defect.
4 "Association." An association as defined under 68 Pa.C.S. §§
5 3103 (relating to definitions), 4103 (relating to definitions)
6 and 5103 (relating to definitions).
7 "Claimant." Any person who asserts a claim concerning a
8 construction defect. The term includes an association.
9 "Construction defect." The term shall have the same meaning
10 assigned by a written express warranty either provided by the
11 contractor or required by applicable statutory law. If no
12 written express warranty or applicable statutory warranty
13 provides a definition, the term shall mean a matter concerning
14 the design or construction of a dwelling or addition to a
15 dwelling or an appurtenance to a dwelling on which a person has
16 a complaint against a contractor. The term may include any
17 physical damage to the dwelling or any appurtenance, or the real
18 property on which the dwelling or appurtenance is affixed,
19 proximately caused by a construction defect.
20 "Consultant." An engineer, architect, contractor, inspector
21 or other person purporting to have expertise relating to
22 residential construction or having that expertise as a result of
23 training or profession.
24 "Contractor." A person, firm, partnership, corporation,
25 association or other organization that is engaged in the
26 business of developing, constructing or selling newly
27 constructed dwellings or constructing additions or appurtenances
28 to an existing dwelling. The term includes an owner, officer,
29 director, shareholder, partner or employee of a contractor. For
30 purposes of this act, the term also includes an industrialized
20050H1467B3577 - 2 -
1 housing manufacturer. The term does not include a real estate
2 agent, broker or a contractor that installs a new device or
3 appurtenance which costs less than $2,000.
4 "Dwelling." A single-family house or duplex. The term
5 includes a multifamily unit STRUCTURE designed for residential <--
6 use in which title to each individual unit is transferred to the
7 owner. Under a condominium or cooperative system, the term
8 includes common areas and improvements that are owned or
9 maintained by an association or by members of an association.
10 The term also includes the systems, other components,
11 improvements, other structures and recreational facilities that
12 are appurtenant to the house, duplex or multifamily unit <--
13 STRUCTURE but not necessarily a part of the house, duplex or <--
14 multifamily unit STRUCTURE. For purposes of this act, the term <--
15 also includes industrialized housing.
16 "Industrialized housing." A structure designed primarily for
17 residential occupancy, and which is wholly or in substantial
18 part made, constructed, fabricated, formed or assembled in
19 manufacturing facilities for installation or assembly and
20 installation on the building site so that concealed parts or
21 processes of manufacture cannot be inspected at the site without
22 disassembly, damage or destruction. The term does not include a
23 structure or building classified as an institutional building or
24 manufactured home, as defined by the National Manufactured
25 Housing Construction and Safety Standards Act of 1974 (42 U.S.C.
26 §§ 5401-5426).
27 "Industrialized housing manufacturer." A person, firm,
28 partnership, corporation, association or other organization
29 involved in the process of making, constructing, fabricating,
30 forming or assembling, in a manufacturing facility, for
20050H1467B3577 - 3 -
1 installation or assembly and installation on the building site,
2 industrialized housing from raw, unfinished or semifinished
3 materials.
4 "Serve" or "service." For an individual, delivery by
5 certified mail, return receipt requested, to the last known
6 address of an addressee. For a corporation, limited partnership,
7 limited liability company or other registered business <--
8 organization, the term shall mean delivery to the registered
9 agent or other agent for service of process authorized by the
10 laws of this Commonwealth.
11 Section 3. Notice and opportunity to repair.
12 (a) Notice.--In every action subject to this act, the
13 claimant shall, no later than 75 days before initiating an
14 action against a contractor, provide service of written notice
15 of claim on the contractor. The notice of claim shall state that
16 the claimant asserts a construction defect claim or claims and
17 is providing notice of the claim or claims pursuant to the
18 requirements of this act. The notice of claim shall describe the
19 claim or claims sufficiently to explain the nature of the
20 alleged construction defects and IF KNOWN the results of the <--
21 defects.
22 (b) Service.--Service of the notice of the claim shall be
23 the equivalent of service of a lawsuit or demand for arbitration
24 with respect to imposing on the contractor a legal obligation to
25 pay as damages the cost of any repairs and/or monetary payment
26 made to settle the claim.
27 (c) Evidence.--In addition, the claimant shall provide to
28 the contractor any evidence known to the claimant or in the
29 claimant's possession that depicts the nature and cause of the
30 construction defect, including expert reports, photographs and
20050H1467B3577 - 4 -
1 videotapes, if the evidence would be discoverable under the <--
2 State's evidentiary rules. If, after proper request, the
3 claimant fails to provide such evidence, the claimant shall not
4 be permitted to introduce any evidence not produced as evidence
5 in any action. VIDEOTAPES. IF EVIDENCE OF THE CLAIMANT IS <--
6 DISCOVERED, DISCLOSED OR PRODUCED AFTER A CONTRACTOR'S OFFER,
7 THE CONTRACTOR MAY MAKE A NEW OFFER UNDER SECTION 5 WHICH SHALL
8 BE THE BASIS OF THE DETERMINATION OF ITS REASONABLENESS UNDER
9 SECTION 5(H) AND (I).
10 Section 4. Personal injury or death claims.
11 This act shall not apply to any claim for personal injury or
12 death.
13 Section 5. Procedure.
14 (a) Contents of notice.--
15 (1) In an action under this act, the claimant shall, at
16 least 75 days before initiating the action against a
17 contractor, provide service of written notice of claim on the
18 contractor. The notice of claim shall:
19 (i) State that the claimant asserts a construction
20 defect claim and is providing notice of the claim
21 pursuant to the requirements of this act.
22 (ii) Describe the claim sufficiently to explain the
23 nature of the construction defect and the result of the
24 defect.
25 (iii) Include any evidence that describes the
26 construction defect that the claimant possesses.
27 (2) Service under this subsection shall toll all
28 applicable statutes of limitation until 75 days after receipt
29 of notice of the claim.
30 (b) Response.--Except as otherwise provided for under
20050H1467B3577 - 5 -
1 subsection (g), within 15 days after service of the notice of
2 claim, the contractor that has received the notice of claim
3 shall serve on the claimant and on any other contractor that has <--
4 received the notice of claim a written response to the claim
5 which:
6 (1) offers to settle the claim by monetary payment, the
7 making of repairs or a combination of both, without
8 inspection, including a timetable for the making of the
9 payment or repairs;
10 (2) proposes to inspect at the contractor's expense the
11 dwelling that is the subject of the claim within 15 days; or
12 (3) rejects the claim.
13 (c) Inspection of dwelling.--
14 (1) If the contractor requests the opportunity to
15 inspect the dwelling under subsection (b)(2), the claimant
16 shall provide the contractor and its consultants reasonable
17 and timely access to inspect the dwelling in order to
18 document the defect and perform any destructive or
19 nondestructive tests necessary to evaluate the claim. If
20 testing is performed, the CLAIMANT SHALL BE NOTIFIED OF <--
21 TESTING AND SHALL BE PROVIDED THE OPPORTUNITY TO BE PRESENT
22 DURING TESTING. THE contractor shall return the dwelling to
23 its pretesting condition.
24 (2) If an inspection reveals a condition that requires
25 additional testing, the contractor shall provide prompt
26 notice to the claimant of the need for the additional
27 testing, and the claimant shall provide reasonable and timely
28 access to the dwelling. Additional testing, if necessary,
29 shall be completed within 15 days of the notice.
30 (3) If a claim is asserted on behalf of owners of
20050H1467B3577 - 6 -
1 multiple dwellings or multiple owners of units within a
2 multifamily complex, the contractor shall be entitled to
3 inspect each of the dwellings or units for which a defect has
4 been claimed.
5 (d) Process following inspection.--Within 15 days following
6 completion of an inspection or testing under subsection (c), the
7 contractor shall serve a written response INCLUDING COPIES OF <--
8 ALL TEST REPORTS, EXPERT REPORTS, PHOTOGRAPHS AND VIDEO TAPES on
9 the claimant which:
10 (1) offers to settle the claim by monetary payment, the
11 making of repairs or a combination of both, including a
12 timetable for making the payment and/or repairs; or
13 (2) rejects the claim.
14 (e) Notice of claimant's response.--
15 (1) The claimant shall accept or reject an offer by a
16 contractor under subsection (b)(1) or (d)(1) within 30 days
17 of receipt of the offer.
18 (2) If the claimant rejects the settlement offer made by
19 the contractor under subsection (b) or (d), the claimant
20 shall provide written notice of the claimant's rejection to
21 the contractor and include the specific reasons for the <--
22 claimant's rejection.
23 (3) If the claimant fails to respond as required under
24 paragraph (1), the contractor's offer of monetary payment or
25 offer to repair shall be deemed to be rejected.
26 (4) After submitting notice under section 3, a claimant
27 may not initiate an action without conducting an in-person
28 meeting with the contractor in a good faith attempt to
29 resolve the dispute. In the case of an association claimant,
30 a majority of the association's board of directors shall
20050H1467B3577 - 7 -
1 attend the meeting. A meeting is not required if the
2 contractor has failed to timely respond to a claimant's
3 notice or refused or ignored a request for a meeting.
4 (f) Claimant's ability to bring an action.--If the
5 contractor:
6 (1) rejects the claim;
7 (2) does not respond to a notice of claim within the
8 time frames under this section; or
9 (3) does not make monetary payment or repair within the
10 proposed timetable of an accepted offer, the claimant may
11 bring an action against the contractor for the defect
12 described in the notice of claim without further notice,
13 notwithstanding the 75-day time period set forth under
14 subsection (a).
15 (g) Construction defects involving physical safety of
16 occupants.--
17 (1) If a construction defect poses an imminent threat to
18 the physical safety of the occupants of the dwelling, the
19 notice shall so advise the contractor, and the deadline for
20 the contractor's initial response under subsection (b) shall
21 be seven days after receipt of the notice.
22 (2) If the contractor's response under subsection (b)
23 contains a request to inspect the dwelling, the contractor
24 shall arrange for the inspection within five days.
25 (3) If the contractor determines there is an imminent
26 threat to physical safety, the contractor shall provide the
27 claimant with a proposal for a monetary offer or offer to
28 repair within three days of the determination.
29 (4) Prior to the submission of an offer by the
30 contractor under this subsection, either the claimant or
20050H1467B3577 - 8 -
1 contractor may take interim repair steps to maintain the
2 structural integrity of the dwelling without prejudicing the
3 claimant's or contractor's claims or defenses. A CLAIMANT <--
4 MAY, WITHOUT GIVING NOTICE TO THE CONTRACTOR, EMPLOY A
5 CONTRACTOR AND SUCH OTHER PERSONS AS ARE NECESSARY TO MAKE
6 SUCH IMMEDIATE REPAIRS TO A DWELLING AS ARE REQUIRED TO
7 PROTECT THE HEALTH, SAFETY AND WELFARE OF THE OCCUPANTS.
8 (h) Right of action.--If a claimant rejects a reasonable
9 monetary offer or reasonable supplemental monetary offer or does <--
10 not permit the contractor to repair the defect pursuant to an
11 accepted offer to repair under subsection (e), the claimant may
12 not recover an amount in excess of:
13 (1) the fair market value of the offer to repair the
14 construction defect or the actual cost of the repairs,
15 whichever is less; or
16 (2) the amount of the monetary offer of settlement.
17 (i) Reasonableness of monetary offer or offer to repair.--
18 (1) For purposes of this section, the trier of fact
19 shall determine the reasonableness of a monetary offer or <--
20 offer to repair. AN OFFER. If the claimant has rejected a <--
21 reasonable monetary offer or offer to repair, OFFER, the <--
22 claimant may not recover costs or attorney fees incurred
23 after the date of rejection.
24 (2) If the contractor, through no fault of the claimant,
25 fails to make a reasonable offer, this act shall not limit
26 the remedies available to a claimant.
27 (j) Timely access for repairs.--If a claimant accepts a
28 contractor's offer to repair a construction defect, the claimant
29 shall provide the contractor and its subcontractors, agents,
30 experts and consultants reasonable and timely access to the
20050H1467B3577 - 9 -
1 dwelling to complete the repairs within the timetable set forth
2 under this section THE CONTRACTOR'S OFFER. <--
3 (k) Agreement between claimant and contractor.--Following
4 service under subsection (a), a claimant and a contractor may
5 alter the procedures under this act, including the tolling of
6 the statute of limitations, by mutual written agreement.
7 (l) Limitation of liability.--In an action involving a
8 construction defect, a contractor shall not be liable for
9 damages caused by:
10 (1) Normal shrinkage due to drying or settlement of
11 construction components with the tolerance of building
12 standards.
13 (2) The contractor's reasonable reliance on written
14 information relating to the dwelling that was obtained from
15 official government records or provided by a government
16 entity.
17 (3) Refusal of the claimant to REASONABLY allow the <--
18 contractor or the contractor's agents to perform their
19 warranty service work.
20 Section 6. Additional construction defects.
21 A construction defect that is discovered after a claimant has
22 served notice under section 3(a) (relating to notice and
23 opportunity to repair) may be alleged in an action provided the
24 claimant complies with the requirements of section 5 (relating
25 to procedure) with respect to the defect.
26 Section 7. Destructive test.
27 No claimant may employ a person to perform destructive tests
28 to determine any damage or injury to a dwelling caused by a
29 construction defect unless reasonable prior notice and
30 opportunity to observe the tests are given to the contractor
20050H1467B3577 - 10 -
1 against whom an action may be brought as a result of the test.
2 Section 8. Contractor employed by claimant. <--
3 A claimant may, without giving notice to the contractor,
4 employ a contractor and such other persons as are necessary to
5 make such immediate repairs to a dwelling as are required to
6 protect the health, safety and welfare of the occupants.
7 Section 9 8. Construction. <--
8 Nothing in this act shall be construed as establishing a
9 cause of action on behalf of any claimant or contractor.
10 Section 10 9. Notice required at time of contracting. <--
11 (a) Form of notice.--Upon entering into a contract to
12 construct a dwelling, the contractor shall give the owner or
13 buyer a written notice worded substantially as follows: BUYER, <--
14 AS THE CASE MAY BE, NOTICE OF THE CONTRACTOR'S RIGHTS TO OFFER
15 TO CURE CONSTRUCTION DEFECTS OR PAY TO SETTLE A CLAIM AGAINST
16 THE CONTRACTOR FOR CONSTRUCTION DEFECTS UNDER THIS ACT BEFORE A
17 CLAIMANT MAY COMMENCE AN ACTION FOR THE CONSTRUCTION DEFECTS.
18 THE NOTICE SHALL BE IN 10-POINT BOLD TYPE OR GREATER, SHALL BE
19 INCLUDED AS PART OF THE CONTRACT AND SHALL BE IN SUBSTANTIALLY
20 THE FOLLOWING FORM:
21 NOTICE CONCERNING CONSTRUCTION DEFECTS
22 Pennsylvania law contains important requirements you must
23 follow before you may file any A LEGAL action for <--
24 defective construction against the contractor who
25 constructed your dwelling OR CONSTRUCTED YOUR ADDITION OR <--
26 APPURTENANCE. Pennsylvania law requires you to deliver to <--
27 the contractor a THAT YOU PROVIDE THE CONTRACTOR WITH <--
28 written notice by certified mail of any construction
29 conditions that you believe are defective, with an <--
30 opportunity to repair, before you file any action, and
20050H1467B3577 - 11 -
1 you must provide your contractor:
2 (1) The opportunity to make an offer to repair or
3 pay for the alleged defects.
4 (2) With any evidence in your possession that
5 described DESCRIBES the defect. If you do not disclose <--
6 such evidence AFTER PROPER REQUEST, you will not be <--
7 allowed to use the evidence in any action. YOU ALLEGE ARE <--
8 DEFECTIVE, WITH ANY EVIDENCE IN YOUR POSSESSION THAT
9 DESCRIBED THE ALLEGED DEFECT SO THAT THE CONTRACTOR HAS
10 THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE
11 ALLEGED CONSTRUCTION DEFECTS.
12 You are not obligated to accept any offer made by the
13 contractor, but failure to accept a reasonable offer, as
14 determined by a court or other trier of fact, may limit
15 your recoverable damages. There are strict deadlines and
16 procedures under State PENNSYLVANIA law, and failure to <--
17 follow them may affect or impair your ability to file an <--
18 action or to seek recovery for any A LEGAL ACTION TO SEEK <--
19 RECOVERY FOR THE defects. There may also be requirements
20 which must be followed in a written warranty. It is
21 recommended that you consult with an attorney of your
22 choosing before entering into any agreement. IF YOU HAVE <--
23 ANY QUESTIONS ABOUT YOUR RIGHTS AND OBLIGATIONS UNDER THE
24 LAW.
25 (b) Additional requirements.--The notice required under <--
26 subsection (a) shall be in 10-point bold type or greater and
27 shall be included within the contract between the contractor and
28 potential claimant.
29 (c) (B) Failure to include notice.--Failure to include the <--
30 notice IN CONTRACTS ENTERED INTO AFTER THE EFFECTIVE DATE OF <--
20050H1467B3577 - 12 -
1 THIS ACT shall deprive the contractor of the benefits of this
2 act.
3 Section 11 10. Applicability. <--
4 This act shall apply as follows:
5 (1) This act shall not affect a contractor's right to
6 seek contribution, indemnity or recovery against a
7 subcontractor, supplier or design professional for any claim
8 made against the contractor by a claimant.
9 (2) This act shall apply regardless of the date of sale <--
10 or substantial completion of a dwelling, consistent with 42
11 Pa.C.S. § 5536 (relating to construction projects).
12 (3) (2) This act shall not restrict, modify or alter or <--
13 otherwise interfere with the obligations, terms or conditions
14 of an insurance policy.
15 (4) (3) This act shall not apply to an insurer asserting <--
16 a claim against a contractor for payments made by the insurer
17 pursuant to an insurance policy covering the dwelling. A
18 claim under this paragraph shall not be prejudiced, reduced
19 or otherwise modified because of the failure of the claimant
20 to comply with this act.
21 Section 12 20. Effective date. <--
22 This act shall take effect in 60 days.
C30L48MRD/20050H1467B3577 - 13 -