A way to resolve builder-owner defect disputes

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http://www.charlotte.com/mld/observer/living/home/3521291.htm

Sat, Jun. 22, 2002

NATION'S HOUSING

A way to resolve builder-owner defect disputes

KENNETH HARNEY

WASHINGTON - When you find construction defects in your new home, is it

preferable to (a) sue the builder immediately, or ( get the defects

corrected with no litigation expense under a binding, statutory set of

deadlines that allow you to sue if you're not satisfied?

Sounds like a no-brainer.

The National Association of Home Builders hopes it is. It is about to begin

a nationwide push to make the latter approach the law of the land, state by

state. The 205,000-member trade group is holding out a new plan adopted by

the legislature of Washington state as a model for cool-headed resolution of

construction-defects disputes between home buyers and their builders.

The Washington law, which took effect June 13, essentially requires a " cure "

or buffer period for defect repairs or a financial settlement before buyers

can file suit against builders. The statute drew unusual bipartisan support

in the legislature and passed both houses unanimously.

If adopted nationwide, it would create a formal process within which home

builders and their customers could handle controversies without duking it

out in court.

The process would work like this: Say you buy a new home and begin to

discover problems. The concrete pad in the garage has cracks, the siding is

slightly buckled on one wall, nails are popping here and there, and you find

an infestation of what appears to be mold.

Another example: Say you've just bought a unit in a large luxury condominium

project that has recently sold out. The condominium board compiles a list of

perceived construction problems and is approached by a law firm that offers

to sue the builder on a contingency fee basis.

Under Washington state's new dispute-resolution model, neither you

individually, nor a condo association board of directors, could go to court

immediately. Instead, there would be a mandatory 45-day clock, within which

period you have to serve written notice to the builder of your intent to

file suit.

Once the building firm received the notice, it would have 21 days to inspect

the defects, offer to fix the problems promptly or pay you monetary damages

to settle your claim.

Alternatively, it could dispute your claim. If the builder chose to dispute,

you would then be free to file suit immediately. The suit would have to list

each of the construction defects prompting the original complaint;

additional defects could be added to the lawsuit later, provided the builder

is given notice and 21 days to respond.

If the builder elects to inspect your property, there would be a 14-day

deadline following the inspection to offer to remedy the defects at no cost

to you, or to end the dispute with a cash settlement. If you found the offer

for repairs unacceptable, you'd then be free to go to court.

Tom McCabe, executive vice president of the Building Industry Association of

Washington, said the dispute-resolution model was prompted by a rash of

costly suits filed in his state and in California.

The risk of huge awards against builders -- especially condominium

developers -- prompted insurance companies to refuse to provide liability

coverage to builders or to raise premiums dramatically.

In many cases, said McCabe, the suits were filed by trial attorneys working

on contingency fee arrangements without prior notice to builders and without

offering them the opportunity to inspect or repair the problems. In some

condominium projects, he said, the individual unit owners weren't even

polled or contacted before the suits were filed.

" All we're asking is: Give us a chance to fix it before you go to court, "

said McCabe. " Tell us what's wrong. Let us take a look and see if we can

resolve your complaint. If we can't work things out, then go ahead and sue. "

Garczynski, president of the National Association of Home Builders,

says some type of time buffers -- or " cure periods " -- are needed throughout

the country to prevent needless litigation expenses between builders and

customers. That is why the board of directors of the national association

recently voted to recommend that " alternative dispute resolution " techniques

such as Washington's be adopted by other state legislatures.

" Our (Washington state) legislature is fairly liberal politically and is

known as very pro-consumer, " said McCabe. " So the fact that this

(dispute-resolution model) was passed without a single vote against it tells

you it makes sense for everybody. "

After all, why go to court to get stuff fixed two years later if you can get

it fixed now under a legally mandated time schedule -- at no cost -- and

involving no lawyers? And if you're not happy, you can still sue.

Sounds like the state of Washington is on to something.

Harney

Ken Harney: kenharney@...