BAM NEWS
Defense: A BAM Legislative Session Overview
For the Builders Association of Minnesota (BAM) this year’s session was spent defending a host of warranty bills introduced against the industry. This session marked the eighth year these bills have been introduced at the Capitol, and with an increased democrat majority in both the house and the senate the odds were against us. Debates saw consumer protection emerge as the predominant concern over the battle-bruised residential construction industry. The good news is the governor vetoed five out of the six warranty bills that would have adversely affected the industry.
The following is a recap of the bills introduced against the industry and their outcome.
Attorneys Fees –This bill as introduced would have required (must) the courts to assign costs, disbursement and attorney’s fees to a homeowner who prevailed in a case against a builder. The bill as passed through the legislature allowed (may) a court to decide whether or not to apply costs, disbursements and attorney’s fees in favor of a homeowner in a cause of action against a builder. BAM argued the court already has this ability, and changing the tone of the current law would unfairly tip the scales of due process in favor of the homeowner allowing for unequal treatment of decisions on the builder. Governor Pawlenty vetoed this bill May 21st.
Property Damages Uncapped - Current law within the warranty statute allows a homeowner to receive "the amount necessary to remedy the breach" or "the difference between the value of the dwelling without the defect” for an alleged defect. The original bill uncapped these damages and could have required a builder to pay anything from housing costs to food costs and possibly emotional damages. The underlying assumption by the authors and homeowners is that a builder’s commercial general liability policy covers statutory warranty obligations. This is simply not the case. Governor Pawlenty vetoed this bill on May 19th citing the litany of bills introduced against an industry that must recover to get Minnesota’s economy back in line.
Statute of Repose Extension - Another bill introduced against the industry was an extension of the statute of repose from 10 years to 12 years. Under current law, the statute of repose allows a homeowner to file a cause of action after the 10th year but no later than the end of the 12th year if the alleged damage was discovered in the 9th or 10th year from the warranty date. This bill extends the 10-year warranty to 12 years if a homeowner discovers a breach in the warranty statutes after the 10th year. In cases where the breach is discovered after the 10th year, the action must be brought within one year of discovery of the (alleged) breach.
This bill was being proposed because many believed clarification was necessary. The story is that a few years ago the legislature “intended” to make the warranty statutes a straight 12-year statute of repose. Testimony provided this year says many plaintiffs were not able to file a cause of action because they filed with the courts after the 10-year timeline had run out. The question BAM asked over and over is when does the warranty end. Governor Pawlenty vetoed the bill on May 19th.
Discovery Date Extended - Current law says a homeowner has six months to notify a builder of the discovery of a breach in the warranty statute. This bill extends the time to notify from six months to one year. BAM opposed this bill for two reasons. The first is we don’t want to encourage homeowners to wait another six months for a problem to exacerbate itself. The second is somewhere along the line homeowners need to take responsibility for their homes. Governor Pawlenty vetoed this bill on May 20th.
Written Notice - Statutory warranty law currently requires a homeowner to put any warranty claims in writing. If they do not put their concerns in writing, the claim may be and have been denied in court, even though a builder may have gone out to try and remedy the issue. This bill would have altered the required written notice provision to also include "actual notice” leading to ambiguity in how notice was given. Did the builder receive the message left on the answering machine? Did the builder try more than once to remedy damages but the homeowner was unhappy with the remedy? The Governor vetoed this bill May 21st.
Express Warranties – This bill requires a builder to give a copy of the warranty statute to homeowners as a part of their contract. Many attorneys are already doing so. This bill was signed into law by the Governor May 16th.
Stay tuned: a more detailed recap of the 2009 legislative session will be sent to all members.