Introduced by Representatives Howrigan of Fairfield, Atkins of Winooski and Valliere of Barre City
Subject: Commerce; residential construction; court procedures; alternative resolution
Statement of purpose: This bill proposes to provide a process for resolution of residential construction disputes prior to filing an action in court.
AN ACT RELATING TO ALTERNATIVE RESOLUTION OF RESIDENTIAL CONSTRUCTION DISPUTES
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 12 V.S.A. chapter 191A is added to read:
CHAPTER 191A. RESIDENTIAL CONSTRUCTION DISPUTE RESOLUTION
§ 5621. DEFINITIONS
As used in this chapter:
(1) “Action” means any civil lawsuit or action in contract or tort for damage or indemnity brought against a construction professional to assert a claim, whether by complaint, counterclaim, or cross-claim, for damage or the loss of use of real or personal property caused by a defect in the construction or remodeling of a residence, but does not include a civil action in tort alleging personal injury or wrongful death resulting from a construction defect.
(2) “Association” means a unit owners’ organization or a nonprofit corporation created to own and operate portions of a planned community that has the power to require unit owners to pay the costs and expenses incurred in the performance of the association’s obligations.
(3) “Claimant” means a homeowner or association that asserts a claim against a construction professional concerning a defect in the construction or remodeling of a residence.
(4) “Construction defect” means a deficiency in or arising out of the supervision, construction, or remodeling of a residence that results from any of the following:
(A) Defective materials, products, or components used in the construction or remodeling of a residence.
(B) Violation of the applicable building, plumbing, or electrical codes in effect at the time of construction or remodeling of a residence.
(C) Failure to construct or remodel a residence in accordance with contract specifications or accepted trade standards.
(5) “Construction professional” means any person that is a builder, builder vendor, contractor, or subcontractor performing or furnishing the supervision of the construction or remodeling of any improvement to real property.
(6) “Homeowner” means any person that contracts with a construction professional for the remodeling, construction, or construction and sale of a residence, and includes subsequent purchasers.
(7) “Residence” means a single family house or a unit in a multi‑unit residential structure in which title to each individual unit is transferred to the owner under a condominium or cooperative system.
§ 5622. RESIDENT CONSTRUCTION DISPUTES; NOTICE AND
OPPORTUNITY TO REPAIR; STATUTE OF LIMITATIONS;
(a) Prior to commencing an action against a construction professional for a construction defect, a claimant shall serve on the construction professional written notice of claim that shall assert the construction defect with reasonable detail description sufficient to determine the nature of the defect. If service of this notice is within the statute of limitations for commencing an action in contract, the statute shall be tolled.
(b) The construction professional shall serve a written response on the claimant within 21 days of receipt of the notice of claim. The response shall include one of the following:
(1) A proposal to inspect the residence that is the subject of the claim within a specified time frame not to exceed 21 days, and an offer to remedy the defect, based on the inspection; to compromise by payment; or to dispute the claim.
(2) An offer to compromise and settle the claim by monetary payment without inspection.
(3) A dispute of the claim and clarification that the construction professional will neither remedy the defect nor compromise and settle the claim.
(c) If the construction professional disputes the claim or fails to respond to the claimant’s notice of claim within 21 days, the claimant may without further notice bring an action against the construction professional for the claim described in the notice of claim;
(d) If the claimant rejects the inspection proposal or the settlement offer made by the construction professional, the claimant shall serve written notice of that rejection on the construction professional, after which the claimant may bring an action against the construction professional for the defect claim described in the notice of claim.
(e) If the construction professional has received neither an acceptance nor a rejection of the inspection proposal or settlement offer within 30 days after the claimant’s receipt of the construction professional’s response, the construction professional may terminate or withdraw the offer by serving notice on the claimant. The claimant may, after service, bring an action against the construction professional for the construction defect claim described in the notice of claim.
(f) If the claimant elects to allow the construction company to inspect in accordance with the construction professional’s proposal pursuant to subdivision (b)(1) of this section:
(1) The claimant shall provide reasonable access to the residence, as agreed by the parties, to inspect the premises and the claimed defect.
(2) The construction professional shall serve on the claimant within 14 days following completion of the inspection a written notice indicating one of the following:
(A) An offer to remedy the construction defect at no cost to the claimant, including a report of the scope of the inspection, the findings, a description of the additional construction necessary to remedy the defect, and a timetable for completion.
(B) An offer to compromise and settle the claim by monetary payment pursuant to subdivision (b)(2) of this section.
(C) An offer to remedy the claim through a combination of repair and monetary payment.
(D) A statement of the reasons why the construction professional will not proceed further to remedy the alleged defect.
(g) If the construction professional fails to proceed further to remedy the alleged construction defect within the agreed time frame or if the construction professional fails to serve a written notice as required under subdivision (f)(2) of this section, the claimant may without further notice bring an action against the construction professional for the claim described in the notice of claim;
(h) Within 30 days after receipt of the construction professional’s offer pursuant to subdivision (f)(2)(A) or (B) of this section the claimant shall accept or reject the offer by serving written notice on the construction professional. If the claimant fails to respond within 30 days, the construction professional may withdraw or terminate the offer by serving written notice on the claimant.
(i) Construction defects subsequently discovered shall be considered separate and distinct defects and handled separately under this section.
(j) This section shall not be construed to prevent:
(1) The parties from entering into agreements to change the extent of construction, the timetable for completion, or including additional repairs.
(2) A claimant from commencing an action under this section if the construction professional fails to perform the construction agreed upon, fails to remedy the defect, or fails to perform within the time frame agreed upon.
§ 5623. DAMAGES
(a) In an action filed subject to this chapter, the claimant may recover only the following damages proximately caused by a construction defect:
(1) The reasonable cost of repairs necessary to cure any construction defect, including any reasonable and necessary engineering or consulting fees required to evaluate or cure the defect.
(2) The reasonably necessary expenses of temporary housing or other accommodation necessary during the repair period.
(3) The reduction in market value, if any, to the extent the reduction is due to a construction defect.
(4) Reasonable costs and attorney fees.
(b) This chapter shall not be construed to supersede contractual alternative dispute resolution provisions contained in a contract between a claimant and a construction professional.
The Vermont General Assembly
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