PRINTER'S NO. 1785
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 AND McGILL, MAY 2, 2005
REFERRED TO COMMITTEE ON URBAN AFFAIRS, MAY 2, 2005
AN ACT
1 Providing for dispute resolution procedures relating to
2 residential construction defects between contractors and
3 homeowners or members of associations; and prescribing
4 penalties.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the Residential
9 Construction Dispute Resolution Act.
10 Section 2. Definitions.
11 The following words and phrases when used in this act shall
12 have the meanings given to them in this section unless the
13 context clearly indicates otherwise:
14 "Action." A civil lawsuit, judicial action or arbitration
15 proceeding asserting a claim, in whole or in part, for damages
1 or other relief in connection with a dwelling caused by a
2 construction defect.
3 "Association." An association as defined under 68 Pa.C.S. §§
4 3103 (relating to definitions), 4103 (relating to definitions)
5 and 5103 (relating to definitions).
6 "Claimant." Any person who asserts a claim concerning a
7 construction defect.
8 "Construction defect." The term shall have the same meaning
9 assigned by a written express warranty either provided by the
10 contractor or required by applicable statutory law. If no
11 written express warranty or applicable statutory warranty
12 provides a definition, the term shall mean a matter concerning
13 the design or construction of a dwelling or an alteration of or
14 addition to a dwelling or an appurtenance to a dwelling on which
15 a person has a complaint against a contractor. The term may
16 include any physical damage to the dwelling or any appurtenance,
17 or the real property on which the dwelling or appurtenance is
18 affixed, proximately caused by a construction defect.
19 "Consultant." An engineer, architect, contractor, inspector
20 or other person purporting to have expertise relating to
21 residential construction.
22 "Contractor." A person, firm, partnership, corporation,
23 association or other organization that is engaged in the
24 business of developing, constructing or selling newly
25 constructed dwellings or constructing additions or appurtenances
26 to an existing dwelling. The term includes an owner, officer,
27 director, shareholder, partner or employee of a contractor. For
28 purposes of this act, the term also includes an industrialized
29 housing manufacturer. The term does not include a real estate
30 agent or broker.
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1 "Dwelling." A single-family house or duplex. The term
2 includes a multifamily unit designed for residential use in
3 which title to each individual unit is transferred to the owner.
4 Under a condominium or cooperative system, the term includes
5 common areas and improvements that are owned or maintained by an
6 association or by members of an association. The term also
7 includes the systems, other components, improvements, other
8 structures and recreational facilities that are appurtenant to
9 the house, duplex or multifamily unit but not necessarily a part
10 of the house, duplex or multifamily unit. For purposes of this
11 act, the term also includes industrialized housing.
12 "Industrialized housing." A structure designed primarily for
13 residential occupancy, and which is wholly or in substantial
14 part made, constructed, fabricated, formed or assembled in
15 manufacturing facilities for installation or assembly and
16 installation on the building site so that concealed parts or
17 processes of manufacture cannot be inspected at the site without
18 disassembly, damage or destruction. The term does not include a
19 structure or building classified as an institutional building or
20 manufactured home, as defined by the National Manufactured
21 Housing Construction and Safety Standards Act of 1974 (42 U.S.C.
22 §§ 5401-5426).
23 "Industrialized housing manufacturer." A person, firm,
24 partnership, corporation, association or other organization
25 involved in the process of making, constructing, fabricating,
26 forming or assembling, in a manufacturing facility, for
27 installation or assembly and installation on the building site,
28 industrialized housing from raw, unfinished or semifinished
29 materials.
30 "Serve" or "service." For an individual, delivery by
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1 certified mail, return receipt requested, to the last known
2 address of an addressee. For a corporation, limited partnership,
3 limited liability company or other registered business
4 organization, the term shall mean delivery to the registered
5 agent or other agent for service of process authorized by the
6 laws of this Commonwealth.
7 Section 3. Notice and opportunity to repair.
8 (a) Notice.--In every action subject to this act, the
9 claimant shall, no later than 60 days before initiating an
10 action against a contractor, provide service of written notice
11 of claim on the contractor. The notice of claim shall state that
12 the claimant asserts a construction defect claim or claims and
13 is providing notice of the claim or claims pursuant to the
14 requirements of this act. The notice of claim shall describe the
15 claim or claims in detail sufficient to explain the nature of
16 the alleged construction defects and the results of the defects.
17 (b) Service.--Service of the notice of the claim shall be
18 the equivalent of service of a lawsuit or demand for arbitration
19 with respect to imposing on the contractor a legal obligation to
20 pay as damages the cost of any repairs and/or monetary payment
21 made to settle the claim.
22 (c) Evidence.--In addition, the claimant shall provide to
23 the contractor any evidence that depicts the nature and cause of
24 the construction defect, including expert reports, photographs
25 and videotapes, if the evidence would be discoverable under the
26 State's evidentiary rules. If, after proper request, the
27 claimant fails to provide such evidence, the claimant shall not
28 be permitted to introduce any evidence not produced as evidence
29 in any action.
30 Section 4. Personal injury or death claims.
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1 This act shall not apply to any claim for personal injury or
2 death.
3 Section 5. Procedure.
4 (a) Contents of notice.--
5 (1) In an action under this act, the claimant must, at
6 least 60 days before initiating the action against a
7 contractor, provide service of written notice of claim on the
8 contractor. The notice of claim shall:
9 (i) State that the claimant asserts a construction
10 defect claim and is providing notice of the claim
11 pursuant to the requirements of this act.
12 (ii) Describe the claim in detail sufficient to
13 explain the nature of the construction defect and the
14 result of the defect.
15 (iii) Include any reports by consultants that
16 describe the construction defect that the claimant
17 possesses.
18 (2) Service under this subsection shall toll all
19 applicable statutes of limitation until 60 days after receipt
20 of notice of the claim.
21 (b) Response.--Except as otherwise provided for under
22 subsection (g), within 15 days after service of the notice of
23 claim, the contractor that has received the notice of claim may
24 serve on the claimant and on any other contractor that has
25 received the notice of claim a written response to the claim
26 which:
27 (1) offers to settle the claim by monetary payment, the
28 making of repairs or a combination of both, without
29 inspection, including a timetable for the making of the
30 payment or repairs;
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1 (2) proposes to inspect the dwelling that is the subject
2 of the claim within 15 days; or
3 (3) rejects the claim.
4 (c) Inspection of dwelling.--
5 (1) If the contractor requests the opportunity to
6 inspect the dwelling under subsection (b)(2), the claimant
7 shall provide the contractor and its consultants complete
8 access to inspect the dwelling in order to document the
9 defect and perform any destructive or nondestructive tests
10 necessary to evaluate the claim. If testing is performed, the
11 contractor shall return the dwelling to its pretesting
12 condition.
13 (2) If an inspection reveals a condition that requires
14 additional testing, the contractor shall provide notice to
15 the claimant of the need for the additional testing, and the
16 claimant shall provide access to the dwelling.
17 (3) If a claim is asserted on behalf of owners of
18 multiple dwellings or multiple owners of units within a
19 multifamily complex, the contractor shall be entitled to
20 inspect each of the dwellings or units.
21 (d) Process following inspection.--Within 15 days following
22 completion of an inspection or testing under subsection (c), the
23 contractor may serve a written response on the claimant which:
24 (1) offers to settle the claim by monetary payment, the
25 making of repairs or a combination of both, including a
26 timetable for making the payment and/or repairs; or
27 (2) rejects the claim.
28 (e) Notice of claimant's response.--
29 (1) The claimant shall accept or reject an offer by a
30 contractor under subsection (b)(1) or (2) and (d)(1) within
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1 15 days of receipt of the offer.
2 (2) If the claimant rejects the settlement offer made by
3 the contractor under subsection (b) or (d), the claimant
4 shall provide written notice of the claimant's rejection to
5 the contractor and include the specific reasons for the
6 claimant's rejection.
7 (3) If the claimant fails to respond as required under
8 paragraph (1), the contractor's offer of monetary payment or
9 offer to repair shall be deemed to be accepted.
10 (f) Claimant's ability to bring an action.--If the
11 contractor:
12 (1) rejects the claim;
13 (2) does not respond to a notice of claim made under
14 subsection (a); or
15 (3) does not make monetary payment or repair within the
16 proposed timetable, the claimant may bring an action against
17 the contractor for the defect described in the notice of
18 claim without further notice, notwithstanding the 60-day time
19 period set forth under subsection (a).
20 (g) Construction defects involving physical safety of
21 occupants.--
22 (1) If a construction defect poses an imminent threat to
23 the physical safety of the occupants of the dwelling, the
24 notice shall so advise the contractor, and the deadline for
25 the contractor's initial response under subsection (b) shall
26 be seven days after receipt of the notice.
27 (2) If the contractor's response under subsection (b)
28 contains a request to inspect the dwelling, the contractor
29 shall arrange for the inspection within five days.
30 (3) If the contractor determines there is an imminent
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1 threat to physical safety, the contractor shall provide the
2 claimant with a proposal for a monetary offer or offer to
3 repair within three days of the determination. If the
4 contractor determines there is no imminent threat to public
5 safety, the contractor shall respond as provided in
6 subsection (d).
7 (4) During the course of any notice of an inspection by
8 the contractor, the claimant or contractor may take interim
9 repair steps to maintain the structural integrity of the
10 dwelling without prejudicing the claimant's or contractor's
11 claims or defenses.
12 (h) Right of action.--
13 (1) If a claimant rejects a reasonable monetary offer or
14 reasonable supplemental monetary offer or does not permit the
15 contractor to repair the defect pursuant to an accepted offer
16 to repair under subsection (e), the claimant may not recover
17 an amount in excess of:
18 (i) the fair market value of the offer to repair the
19 construction defect or the actual cost of the repairs,
20 whichever is less; or
21 (ii) the amount of the monetary offer of settlement.
22 (2) For purposes of this subsection, the trier of fact
23 shall determine the reasonableness of a monetary offer or
24 offer to repair made under subsection (b). If the claimant
25 has rejected a reasonable monetary offer or offer to repair,
26 the claimant may not recover costs or attorney fees incurred
27 after the date of rejection.
28 (i) Timely access for repairs.--If a claimant accepts a
29 contractor's offer to repair a construction defect, the claimant
30 shall provide the contractor and its subcontractors, agents,
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1 experts and consultants access to the dwelling to complete the
2 repairs within the timetable set forth under this section.
3 (j) Agreement between claimant and contractor.--Following
4 service under subsection (a), a claimant and a contractor may
5 alter the procedures under this act by mutual written agreement.
6 (k) Limitation of liability.--In an action involving a
7 construction defect, a contractor shall not be liable for
8 damages caused by:
9 (1) Normal shrinkage due to drying or settlement of
10 construction components with the tolerance of building
11 standards.
12 (2) The contractor's reasonable reliance on written
13 information relating to the dwelling that was obtained from
14 official government records or provided by a government
15 entity.
16 (3) Refusal of the claimant to allow the contractor or
17 the contractor's agents to perform their warranty service
18 work.
19 Section 6. Additional construction defects.
20 A construction defect that is discovered after a claimant has
21 served notice under section 3(a) (relating to notice and
22 opportunity to repair) may not be alleged in an action until the
23 claimant has complied with the requirements of section 5
24 (relating to procedure) with respect to the defect.
25 Section 7. Actions of homeowner associations.
26 (a) General prohibition.--No person may provide or offer to
27 provide anything of value, directly or indirectly, to a property
28 manager of an association or to a member or officer of an
29 association to induce the manager, member or officer to
30 encourage or discourage the association to file a claim for
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1 damages arising from a construction defect.
2 (b) Property managers.--No property manager of an
3 association or member or officer of an association may accept
4 anything of value, directly or indirectly, in exchange for
5 encouraging or discouraging the association to file a claim for
6 damages arising from a construction defect.
7 (c) Penalty.--A person who knowingly violates subsection (a)
8 or (b) commits a misdemeanor of the third degree.
9 Section 8. Right of action for association.
10 (a) General rule.--An association may bring an action
11 against a contractor to recover damages resulting from
12 construction defects in any of the common elements or limited
13 common elements of a common interest community.
14 (b) Restrictions.--The action may be maintained only after:
15 (1) A majority of the board of directors of the
16 association and the contractor have met in person and
17 conferred in a good faith attempt to resolve the
18 association's claim, or the contractor has definitively
19 declined or ignored the requests to meet with the board of
20 directors of the association. Notice of a meeting under this
21 paragraph shall be provided to all board members and to the
22 contractor.
23 (2) The association has complied with section 5
24 (relating to procedure).
25 Section 9. Destructive tests.
26 No association may employ a person to perform destructive
27 tests to determine any damage or injury to a unit, common
28 element or limited common element caused by a construction
29 defect unless:
30 (1) The person performing the test has provided a
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1 written schedule for repairs.
2 (2) The person performing the test is required to repair
3 all damage resulting from the tests in accordance with State
4 laws and local ordinances relating thereto.
5 (3) The association or the person so employed obtains
6 all permits required to conduct the tests and to repair any
7 damage resulting from the tests.
8 (4) Reasonable prior notice and opportunity to observe
9 the tests is given to the contractor against whom an action
10 may be brought as a result of the tests.
11 Section 10. Contractor employed by association.
12 The board of directors of an association may, without giving
13 notice to the unit owners, employ a contractor and such other
14 persons as are necessary to make such immediate repairs to a
15 unit or common element within the association as are required to
16 protect the health, safety and welfare of the units' owners.
17 Section 11. Construction.
18 Nothing in this act shall be construed as establishing a
19 cause of action on behalf of any claimant or contractor.
20 Section 12. Notice required at time of contracting.
21 (a) Form of notice.--Upon entering into a contract to
22 construct a dwelling or to complete a remodeling project on a
23 dwelling, the contractor shall give the potential claimant a
24 written notice worded substantially as follows:
25 NOTICE CONCERNING CONSTRUCTION DEFECTS
26 Pennsylvania law contains important requirements you must
27 follow before you may file a lawsuit for defective
28 construction against the contractor who constructed your
29 dwelling or completed your remodeling project.
30 Pennsylvania law requires you to deliver to the
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1 contractor a written notice by certified mail of any
2 construction conditions that you believe are defective
3 before you file your lawsuit, and you must provide your
4 contractor the opportunity to make an offer to repair or
5 pay for the alleged defects. You are not obligated to
6 accept any offer made by the contractor, but failure to
7 accept a reasonable offer can limit your recoverable
8 damages. There are strict deadlines and procedures under
9 State law, and failure to follow them may affect your
10 ability to file a lawsuit.
11 (b) Additional requirements.--The notice required under
12 subsection (a) shall be in 10-point type or greater and shall be
13 included within the contract between the contractor and
14 potential claimant.
15 Section 13. Applicability.
16 This act shall apply as follows:
17 (1) This act shall not apply to a contractor's right to
18 seek contribution, indemnity or recovery against a
19 subcontractor, supplier or design professional for any claim
20 made against the contractor by a claimant.
21 (2) This act shall apply regardless of the date of sale
22 or substantial completion of a dwelling, consistent with 42
23 Pa.C.S. § 5536 (relating to construction projects).
24 Section 14. Effective date.
25 This act shall take effect in 60 days.
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