Bill Text: IA SF532 | 2019-2020 | 88th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: A bill for an act relating to notice and opportunity to repair construction defects in new construction, and including effective date and applicability provisions. (Formerly SSB 1146.) Effective 4-15-19.

Spectrum: Committee Bill

Status: (Passed) 2019-04-15 - Signed by Governor. S.J. 949. [SF532 Detail]

Download: Iowa-2019-SF532-Introduced.html
Senate File 532 - Introduced SENATE FILE 532 BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SSB 1146) A BILL FOR An Act relating to notice and opportunity to repair 1 construction defects in new construction, and including 2 effective date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1974SV (2) 88 asf/rn
S.F. 532 Section 1. NEW SECTION . 686.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Action” means any civil action or arbitration proceeding 4 for damages or indemnity asserting a claim for injury to 5 property, real or personal, or injury to person or wrongful 6 death arising out of the unsafe or defective condition of an 7 improvement to real property based on tort, breach of contract, 8 or express or implied warranty. 9 2. “Association” means an entity or homeowners association 10 created for the purposes of managing the operations of a 11 community as set forth in a declaration of covenants or 12 declaration of submission of property to horizontal property 13 regime filed of record in the county that the property is 14 located. 15 3. “Claimant” means a private owner, a subsequent private 16 owner, or an association, who asserts a claim in a class action 17 for damages against a general contractor or subcontractor 18 concerning a construction defect. “Claimant” shall not include 19 a public corporation as defined in section 573.1. 20 4. “Construction defect” means an alleged or actual unsafe 21 or defective condition of an improvement to real property. 22 5. “General contractor” means a person who does work or 23 furnishes materials by contract, express or implied, with an 24 owner. 25 6. “Owner” means the legal or equitable titleholder of 26 record to real property or the holder of a leasehold interest. 27 7. “Serve” , “served” , or “service” means delivery by 28 certified mail with a United States postal service record 29 of evidence of delivery or attempted delivery to the last 30 known address of the addressee, by hand delivery with written 31 evidence of delivery, or by delivery by any courier with 32 written evidence of delivery. 33 8. “Subcontractor” means a person furnishing material 34 or performing labor upon any building, erection, or other 35 -1- LSB 1974SV (2) 88 asf/rn 1/ 10
S.F. 532 improvement to land, except those having contracts directly 1 with the owner. 2 Sec. 2. NEW SECTION . 686.2 Action —— compliance. 3 1. A claimant shall not file an action without first 4 complying with the requirements of this chapter. If a claimant 5 files an action alleging a construction defect without first 6 complying with the requirements of this chapter, on timely 7 motion by a party to the action, the court shall stay the 8 action, without prejudice, and the action shall not proceed 9 until the claimant has complied with the requirements. 10 2. An action filed prior to the expiration of the 11 statute of limitations set forth in section 614.1, which is 12 stayed pursuant to this section and for which the statute of 13 limitations runs during the time the claimant is complying with 14 this statute, shall not be deemed barred by the applicable 15 statute of limitation for the pending action if the claimant 16 complies with the requirements of this chapter and the action 17 is otherwise allowed to proceed. 18 Sec. 3. NEW SECTION . 686.3 Notice and opportunity to 19 repair. 20 1. Prior to commencing an action alleging a construction 21 defect, the claimant shall, at least one hundred twenty days 22 before filing an action, serve written notice of claim on the 23 general contractor and subcontractor. The notice of claim 24 shall refer to this chapter and must describe the claim in 25 reasonable detail sufficient to determine the general nature of 26 each alleged construction defect, a description of the damage 27 or loss resulting from the defect, if known, and any work or 28 inspections completed to determine the cause of the damage 29 or loss or correct the construction defect. This subsection 30 does not preclude a claimant from filing an action sooner than 31 one hundred twenty days, after service of written notice as 32 expressly provided in subsection 6, 7, or 8. 33 2. a. Within sixty days after service of the notice 34 of claim, the person served with the notice of claim under 35 -2- LSB 1974SV (2) 88 asf/rn 2/ 10
S.F. 532 subsection 1 is entitled to perform a reasonable inspection 1 of the property or of each unit subject to the claim to 2 assess each alleged construction defect. The claimant shall 3 provide the person served with notice under subsection 1 and 4 the person’s general contractors, subcontractors, or agents 5 reasonable access to the property during normal working hours 6 to inspect the property to determine the nature and cause of 7 each alleged construction defect and the nature and extent 8 of any repairs or replacements necessary to remedy each 9 construction defect. The person served with notice under 10 subsection 1 shall reasonably coordinate the timing and manner 11 of any and all inspections with the claimant to minimize the 12 number of inspections. The inspection may include reasonable 13 destructive testing by mutual agreement under the following 14 terms and conditions: 15 (1) If the person served with notice under subsection 1 16 determines that destructive testing is necessary to determine 17 the nature and cause of the alleged construction defects, the 18 person shall notify the claimant in writing. 19 (2) The notice shall describe the destructive testing 20 to be performed, the person selected to do the testing, the 21 estimated anticipated damage and repairs to or restoration of 22 the property resulting from the testing, the estimated amount 23 of time necessary for the testing and to complete the repairs 24 or restoration, and the financial responsibility offered for 25 covering the costs of repairs or restoration. 26 (3) The testing shall be done at a mutually agreeable time. 27 (4) The claimant or a representative of the claimant may be 28 present to observe the destructive testing. 29 b. If the claimant refuses to agree and permit reasonable 30 destructive testing, the claimant shall have no claim for 31 damages which could have been avoided or mitigated had 32 destructive testing been allowed when requested and had a 33 feasible remedy been promptly implemented. 34 3. The general contractor or subcontractor may serve a 35 -3- LSB 1974SV (2) 88 asf/rn 3/ 10
S.F. 532 copy of the notice of claim to each subcontractor or general 1 contractor whom the general contractor or subcontractor 2 reasonably believes is responsible for a construction defect 3 specified in the notice of claim and shall note the specific 4 construction defect for which the subcontractor or general 5 contractor is alleged to be responsible. The notice described 6 in this subsection shall not be construed as an admission of 7 any kind. A general contractor or subcontractor may inspect 8 the property in the manner described in subsection 2. 9 4. Within thirty days after service of the notice of 10 claim pursuant to subsection 3, the general contractor or 11 subcontractor must serve a written response to the general 12 contractor or subcontractor who served the notice of claim. 13 The written response shall include a report, if any, of 14 the scope of any inspection of the property, the findings 15 and results of the inspection, a statement of whether the 16 subcontractor or general contractor is willing to make repairs 17 to the property or whether the claim is disputed, a description 18 of any repairs the subcontractor or general contractor is 19 willing to make to remedy the alleged construction defect, and 20 a timetable for the completion of the repairs. This response 21 may also be served on the initial claimant by the general 22 contractor or subcontractor. 23 5. Within seventy-five days after service of the notice of 24 claim, the person who was served the notice under subsection 1 25 shall serve a written response to the claimant. The response 26 shall be served to the attention of the person who signed the 27 notice of claim, unless otherwise designated in the notice 28 of claim. The written response must provide for one of the 29 following: 30 a. A written offer to remedy the alleged construction defect 31 at no cost to the claimant, a description of the proposed 32 repairs necessary to remedy the construction defect, and a 33 timetable for the completion of such repairs. 34 b. A written offer to compromise and settle the claim by 35 -4- LSB 1974SV (2) 88 asf/rn 4/ 10
S.F. 532 monetary payment, that will not obligate the person’s insurer, 1 and a timetable for making payment. 2 c. A written offer to compromise and settle the claim by 3 a combination of repairs and monetary payment that will not 4 obligate the person’s insurer, and which includes a detailed 5 description of the proposed repairs and a timetable for the 6 completion of such repairs and making payment. 7 d. A written statement that the person disputes the claim 8 and will not remedy the construction defect or compromise and 9 settle the claim. 10 e. A written offer of a monetary payment, including 11 insurance proceeds, to be determined by the person and the 12 person’s insurer, which the claimant may accept or reject. 13 6. If the person served with a notice of claim pursuant 14 to subsection 1 disputes the claim and will neither remedy 15 the construction defect nor compromise and settle the claim, 16 or does not respond to the claimant’s notice of claim within 17 the time provided in subsection 5, the claimant may, without 18 further notice, proceed with an action against that person for 19 the claim described in the notice of claim. Nothing in this 20 chapter shall be construed to preclude a partial settlement or 21 compromise of the claim as agreed to by the parties and, in 22 that event, the claimant may, without further notice, proceed 23 with an action on the unresolved portions of the claim. 24 7. A claimant who receives a timely settlement offer shall 25 accept or reject the offer by serving written notice of such 26 acceptance or rejection on the person making the offer within 27 forty-five days after receiving the settlement offer. If 28 a claimant initiates an action without first accepting or 29 rejecting the offer, the court shall stay the action upon 30 timely motion until the claimant complies with this subsection. 31 8. If the claimant timely and properly accepts the offer 32 to repair an alleged construction defect, the claimant shall 33 provide the offeror and the offeror’s agents reasonable access 34 to the claimant’s property during normal working hours to 35 -5- LSB 1974SV (2) 88 asf/rn 5/ 10
S.F. 532 perform the repair by the agreed-upon timetable as stated 1 in the offer. If the offeror does not make the payment or 2 repair the construction defect within the agreed time and in 3 the agreed manner, except for reasonable delays beyond the 4 control of the offeror, including but not limited to weather 5 conditions, delivery of materials, claimant’s actions, or 6 issuance of any required permits, the claimant may, without 7 further notice, proceed with an action against the offeror 8 based upon the claim in the notice of claim. If the offeror 9 makes payment or repairs to the defect within the agreed 10 time and in the agreed manner, the claimant is barred from 11 proceeding with an action for the claim described in the notice 12 of claim or as otherwise provided in the accepted settlement 13 offer. 14 9. This section does not prohibit or limit a claimant from 15 making any necessary emergency repairs to the property as are 16 required to protect the health, safety, and welfare of any 17 person. 18 10. Any offer or failure to offer, pursuant to subsection 5, 19 to remedy a construction defect or to compromise and settle the 20 claim by monetary payment does not constitute an admission of 21 liability with respect to the defect and is not admissible in 22 an action that is subject to this chapter. 23 11. This section does not relieve the person who is served 24 a notice of claim under subsection 1 from complying with all 25 contractual provisions of any liability insurance policy as 26 a condition precedent to coverage for any claim under this 27 section. 28 Sec. 4. NEW SECTION . 686.4 Multiple construction defects. 29 The procedures in this chapter apply to each construction 30 defect. However, a claimant may include multiple defects in 31 one notice of claim. A claimant may amend the initial list of 32 construction defects to identify additional or new construction 33 defects as the defects become known to the claimant. The court 34 shall allow the action to proceed to trial only as to alleged 35 -6- LSB 1974SV (2) 88 asf/rn 6/ 10
S.F. 532 construction defects that were noticed and for which the 1 claimant has complied with this chapter and as to construction 2 defects reasonably related to, or caused by, the construction 3 defects previously noticed. Nothing in this section shall 4 preclude subsequent or further actions. 5 Sec. 5. NEW SECTION . 686.5 Limitations of chapter. 6 This chapter does not do any of the following: 7 1. Bar or limit any rights, including the right of specific 8 performance to the extent such right would be available in the 9 absence of this chapter, any causes of action, or any theories 10 on which liability may be based, except as specifically 11 provided in this chapter. 12 2. Bar or limit any defense, or create any new defense, 13 except as specifically provided in this chapter. 14 3. Create any new rights, causes of action, or theories on 15 which liability may be based. 16 Sec. 6. NEW SECTION . 686.6 Effect of arbitration clauses. 17 To the extent that an arbitration clause in a contract for 18 the sale, design, or construction of real property conflicts 19 with this chapter, this chapter shall control. 20 Sec. 7. NEW SECTION . 686.7 Application. 21 1. This chapter applies to construction defects in new 22 construction. This chapter does not apply to construction 23 defects in renovations or remodels. 24 2. This chapter only applies to actions brought pursuant to 25 a class action. 26 Sec. 8. EFFECTIVE DATE. This Act, being deemed of immediate 27 importance, takes effect upon enactment. 28 Sec. 9. APPLICABILITY. This Act applies to actions for 29 which litigation has not commenced prior to the effective date 30 of this Act. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to notice and opportunity to repair 35 -7- LSB 1974SV (2) 88 asf/rn 7/ 10
S.F. 532 construction defects. The bill proposes a new Code chapter 1 which provides a mandatory dispute resolution process for 2 construction defects to new property, which are originally 3 brought as class actions. The bill is effective upon enactment 4 and applies to actions for which litigation has not commenced 5 prior to the effective date of the bill. The bill provides 6 that a claimant must comply with the requirements set forth in 7 the bill before filing an action. The bill provides that if a 8 claimant files an action alleging a construction defect without 9 first complying with the requirements of the bill, the court 10 shall stay the action without prejudice until the requirements 11 have been met. The bill sets forth specific time frames for 12 each part of the dispute resolution. 13 The bill provides that the claimant shall serve written 14 notice of a construction defect claim on the general contractor 15 and subcontractor. In the notice, the claimant shall refer 16 to the new Code chapter and describe the claim in reasonable 17 detail sufficient to determine the general nature of each 18 alleged construction defect, provide a description of the 19 damage or loss resulting from the defect, if known, and 20 describe any work or inspections completed to determine the 21 cause of the damage or loss or correct the construction defect. 22 The bill provides that after being served with the notice 23 of claim, the person is entitled to perform a reasonable 24 inspection of the property or of each unit subject to the 25 claim to assess each alleged construction defect. The bill 26 provides that the claimant shall provide the person served with 27 notice reasonable access to the property during normal working 28 hours to inspect the property to determine the nature and 29 cause of each alleged construction defect and the nature and 30 extent of any repairs or replacements necessary to remedy each 31 construction defect. The bill provides additional details, 32 including providing for destructive testing. 33 The bill provides that the general contractor or 34 subcontractor may serve a copy of the notice of claim to 35 -8- LSB 1974SV (2) 88 asf/rn 8/ 10
S.F. 532 each subcontractor or general subcontractor whom the general 1 contractor or subcontractor reasonably believes is responsible 2 for each construction defect specified in the notice of claim. 3 The bill provides that subcontractors shall be entitled to 4 inspect in the same manner as general contractors. The general 5 contractor or subcontractor must then serve a written response, 6 which shall include a report, if any, of the scope of any 7 inspection of the property, the findings and results of the 8 inspection, a statement of whether the general contractor or 9 subcontractor is willing to make repairs to the property or 10 whether such claim is disputed, a description of any repairs 11 they are willing to make, and a timetable for the completion of 12 the repairs. This response may also be served on the initial 13 claimant by the general contractor. 14 The bill provides that the person who was served the notice 15 must serve a written response to the claimant. The bill 16 provides that the written response must fall into one of five 17 categories, which are laid forth in the bill. 18 If the person served with a notice of claim disputes the 19 claim and will neither remedy the construction defect nor 20 compromise and settle the claim, or does not respond to the 21 claimant’s notice of claim within the time provided in the 22 bill, the claimant may, without further notice, proceed with 23 an action against that person for the claim described in the 24 notice of claim. 25 A claimant who receives a timely settlement offer must 26 accept or reject the offer by serving written notice of such 27 acceptance or rejection on the person or company making the 28 offer within the time period set forth in the bill after 29 receiving the settlement offer. The bill specifies that if 30 a claimant initiates an action without first accepting or 31 rejecting the offer, the court shall stay the action upon 32 timely motion until the claimant complies with the requirement. 33 The bill provides that if the claimant timely and properly 34 accepts the offer to repair an alleged construction defect, 35 -9- LSB 1974SV (2) 88 asf/rn 9/ 10
S.F. 532 the claimant shall provide the offeror and the offeror’s 1 agents reasonable access to the claimant’s property during 2 normal working hours to perform the repair by the agreed-upon 3 timetable as stated in the offer. If the offeror does not make 4 the payment or repair the construction defect within the agreed 5 time and in the agreed manner, except for reasonable delays 6 beyond the control of the offeror, the claimant may, without 7 further notice, proceed with an action against the offeror 8 based upon the claim in the notice of claim. If the offeror 9 makes payment or repairs the defect within the agreed time and 10 in the agreed manner, the claimant is barred from proceeding 11 with an action for the claim described in the notice of claim 12 or as otherwise provided in the accepted settlement offer. 13 The bill does not bar or limit any rights, including the 14 right of specific performance to the extent such right would be 15 available in the absence of the new Code chapter, any causes of 16 action, or any theories on which liability may be based, except 17 as specifically provided in the bill. Additionally, the bill 18 does not bar or limit any defense, or create any new defense, 19 except as specifically provided in the new Code chapter. 20 Finally, the bill does not create any new rights, causes of 21 actions, or theories on which liability may be based. 22 The bill provides that to the extent that an arbitration 23 clause in a contract for the sale, design, or construction of 24 real property conflicts with the bill, the bill shall control. 25 -10- LSB 1974SV (2) 88 asf/rn 10/ 10
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