Washington joined other western states by enacting prelitigation statutes for construction defect claims in June, 2002. The act consists a new chapter in Title 64 of the Revised Washington Statues and amendments to various existing statutes (the "Act"). Section one of the Act contains the legislative intent:
Sec. 1. The legislature finds, declares, and determines that limited changes in the law are necessary and appropriate concerning actions claiming damages, indemnity, or contribution in connection with alleged construction defects. It is the of the legislature that this chapter apply to these types of civil actions while preserving adequate rights and remedies for property owners who bring and maintain such actions.
[1] Definitions
Section 2 of the Act contains definitions which apply to the Act.
Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(l) "Action" means any civil lawsuit or action in contract or tort for damages or indemnity brought against a construction professional to assert a claim, whether by complaint, counterclaim, or cross-claim, for damage to or the loss of use of real or personal property caused by a defect in the construction of a residence or in the substantial remodel of a residence. "Action" does not include any civil action in tort alleging personal injury or wrongful death to a person or persons resulting from a construction defect.
(2) "Association" means an association, master association, or subassociation as defined and provided for in RCW 64.34.020 (4), 64.34.276, 64.34.278, and 64.38.010 (1).
(3) "Claimant" means a homeowner or association who asserts a claim against a construction professional concerning a defect in the construction of a residence or in the substantial remodel of a residence.
(4) "Construction professional" means an architect, builder, builder vendor, contractor, subcontractor, engineer, or inspector, including, but not limited to, a dealer as defined in RCW 64.34.020 (12) and a declarant as defined in RCW 64.34.020(13), performing or furnishing the design, supervision, inspection, construction, or observation of the construction of any improvement to real property whether operating as a sole proprietor, partnership, corporation, or other business entity.
(5) "Homeowner" means: (a) Any person, company firm, partnership, corporation, or association who contracts with a construction professional for the construction, sale, or construction and sale of a residence; and (b) an "association" as defined in this section.
"Homeowner" includes, but is not limited to, a subsequent purchaser of a residence from any homeowner.
(6) "Residence" means a single-family house, duplex, triplex, quadraplex, or a unit in a multiunit residential structure in which title to each individual unit is transferred to the owner under a condominium or cooperative system, and should include common elements as defined in RCW 64.34.020(6) and common areas as defined in RCW 64.38.010(4).
(7) "Serve" or "service" means personal service or delivery by certified mail to the last known address of the addressee.
(8) "Substantial remodel" means a remodel of a residence, the total cost of which exceeds one-half of the assessed value of the residence for property tax purposes at the time the contract for the remodel work was made.
[2] Written Notice of Defects
Section 3(1) of the Act provides for written notice to the construction professional prior to the filing of a construction defect action.
Sec. 3. (1) In every construction defect action brought against a construction professional, the claimant shall, no later than forty-five days before filing an action, serve written notice of claim on the construction professional. The notice of claim shall state that the claimant asserts a construction defect claim against the construction professional and shall describe the claim in reasonable detail sufficient to determine the general nature of the defect.
[3] Construction Professional's Response
Section 3(2) of the Act mandates that the construction professional respond to the homeowner's notice.
(2) Within twenty-one days after service of the notice of claim, the construction professional shall serve a written response on the claimant by registered mail or personal service. The written response shall:
(a) Propose to inspect the residence that is the subject of the claim and to complete the inspection within a specified time frame. The proposal shall include the statement that the construction professional shall based on the inspection offer to remedy the defect, compromise by payment, or dispute the claim;
(b) Offer to compromise and settle the claim by monetary payment without inspection. A construction professional's offer under this subsection (2) (b) to compromise and settle a homeowner's claim may include, but is not limited to, an express offer to purchase the claimant's residence that is the subject of the claim, and to pay the claimant's reasonable relocation costs; or
(c) State that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.
Subsection (3)(a) sets forth the procedure If the construction professional disputes the claim or does respond to the notice.
(3) (a) If the construction professional disputes the claim or does not respond to the claimant's notice of claim within the time stated in subsection (2) of this section, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
[4] Claimant's Duties Upon Receipt of Construction Professional's Response
Upon receipt of the construction professional's response, subsection 3(b) of section 3 of the Act gives the claimant several alternatives
(3) (b) If the claimant rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (2) of this section, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the inspection proposal or settlement offer, then at anytime thereafter the construction professional may terminate the proposal or offer by serving written notice to the claimant, and the claimant may thereafter bring an action against the construction professional for the construction defect claim described in the notice of claim.
[5] Inspection Procedures
Subsection 4 of Section 3 of the Act sets forth procedures for inspection of the claimants' dwelling if the claimant elects to allow inspections.
(4) (a) If the claimant elects to allow the construction professional to inspect in accordance with the construction professional's proposal pursuant to subsection (2) (a) of this section, the claimant shall provide the construction professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect.
[6] Construction Professional's Alternatives Following Inspections
Subsection 4(b) of Section 3 of the Act gives the construction professional various options following the completion of inspections.
(4) (b) Within fourteen days following completion of the inspection, the construction professional shall serve on the claimant:
(i) A written offer to remedy the construction defect at no cost to the claimant including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction necessary to remedy the defect described in the claim, and a timetable for the completion of such construction;
(ii) A written offer to compromise and settle the claim by monetary payment pursuant to subsection (2) (b) of this section; or
(iii) A written statement that the construction professional will not proceed further to remedy the defect.
[7] Construction Professional's Failure to Comply with the Act
If the construction professional does not remedy the defects as agreed or fails to comply with the time line specified in the Act, subsection 4(c) of Section 3 permits the claimant to proceed with litigation.
(4) (c) If the construction professional does not proceed further to remedy the construction defect within the agreed timetable, or if the construction professional fails to comply with the provisions of (b) of this subsection, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
[8] Procedures If Claimant Rejects Construction Professional's Offer
Subsection 4(d) of Section 3 sets forth the steps to be taken next if the claimant rejects a construction professional's offer under the Act.
(4) (d) If the claimant rejects the offer made by the construction professional pursuant to (b) (i) or (ii) of this subsection to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection notice, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty days after the claimant's receipt of the construction professionals response, either an acceptance or rejection of the offer made pursuant to (b) (i) or (ii) of this subsection, then at anytime thereafter the construction professional may terminate the offer by serving written notice to the claimant.
[9] Steps Upon Acceptance of Construction Professional's Offer
Subsection 5 of Section 3 of the Act sets forth the steps following a claimant's acceptance of an offer by the construction professional.
(5) (a) Any claimant accepting the offer of a construction professional to remedy the construction defect pursuant to subsection (4) (b) (i) of this section shall do so by serving the construction professional with a written notice of acceptance within a reasonable time period after receipt of the offer, and no later than thirty days after receipt of the offer. The claimant shall provide the construction professional and its contractors or other agent reasonable access to the claimant's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.
(b) The claimant and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer, including, but not limited to, repair of additional defects.
[10] Impact of Claimant's Failure to Comply with the Act
Subsection 6 of Section 3 of the Act provides for dismissal of actions commenced prior to compliance with the Act.
(6) Any action commenced by a claimant prior to compliance with the requirements of this section shall be subject to dismissal without prejudice, and may not be recommenced until the claimant has complied with the requirements of the Act.
However, subsection 7 of Section 3 permits an action to proceed if the construction professional fails to perform as agreed upon acceptance of the offer to repair.
(7) Nothing in this section may be construed to prevent a claimant from commencing an action on the construction defect claim described in the notice of claim if the construction professional fails to perform the construction agreed upon, fails to remedy the defect, or fails to perform by the timetable agreed upon pursuant to subsection (2) (a) or (5) of this section.
[11] Procedure For Amending Claimant's Notice of Claim
Subsection 8 of Section 3 of the Act provides a mechanism for amending notices of claims during the prelitigation process.
(8) Prior to commencing any action alleging a construction defect, or after the dismissal of any action without prejudice pursuant to subsection (6) of this section, the claimant may amend the notice of claim to include construction defects discovered after the service of claim, and must otherwise comply with the requirements of this section for the additional claims. The service of an amended notice of claim shall relate back to the original notice of claim for purposes of tolling statutes of limitations and repose. Claims for defects discovered after the commencement or recommencement of an action may be added to such action only after providing notice to the construction professional of the defect and allowing for response under subsection (2) of this section.
[12] List of Known Defects
Once an action is filed following the completion of prelitigation requirements under the Act, section 4 specifies the procedures for filing lists of known defects.
Sec. 4. (1) In every action brought against a construction professional, the claimant, including a construction professional asserting a claim against another construction professional, shall file with the court and serve on the defendant a list of known construction defects in accordance with this section.
(2) The list of known construction defects shall contain a description of the construction that the claimant alleges to be defective. The list of known construction defects shall be filed with the court and served on the defendant within thirty days after the commencement of the action or within such longer period as the court in its discretion may allow.
(3) The list of known construction defects may be amended by the claimant to identify additional construction defects as they become known to the claimant.
(4) The list of known construction defects must specify, to the extent known to the claimant, the construction professional responsible for each alleged defect identified by the claimant.
(5) If a subcontractor or supplier is added as a party to an action under this section, the party making the claim against such subcontractor or supplier shall serve on the subcontractor or supplier the list of construction defects in accordance with this section within thirty days after service of the complaint against the subcontractor or supplier or within such period as the court in its discretion may allow.
[13] Steps by Boards of Directors Required Before Filing Defect Actions
Section 5 of the Act mandates certain additional steps by boards of directors prior to commencing defect actions involving two or more residences in a common interest development.
Sec. 5. (1) (a) In the event the board of directors, pursuant to RCW 64.34.304 (1) (d) or 64.38.020 (4), institutes an action asserting defects in the construction of two or more residences, common elements, or common areas, this section shall apply.
For purposes of this section, "action" has the same meaning as set forth in section 2 of this act.
(b) The board of directors shall substantially comply with the provisions of this section.
(2) (a) Prior to the service of the summons and complaint on any defendant with respect to an action governed by this section, the board of directors shall mail or deliver written notice of the commencement or anticipated commencement of such action to each homeowner at the last known address described in the association's records.
(b) The notice required by (a) of this subsection shall state a general description of the following:
(i) The nature of the action and the relief sought; and
(ii) The expenses and fees that the board of directors anticipates will be incurred in prosecuting the action.
(3) Nothing in this section may be construed to:
(a) Require the disclosure in the notice or the disclosure to a unit owner of attorney-client communications or other privileged communications;
(b) Permit the notice to serve as a basis for any person to assert the waiver of any applicable privilege or right of confidentiality resulting from, or to claim immunity in connection with the disclosure of information in the notice; or
(c) Limit or impair the authority of the board of directors to contract for legal services, or limit or impair the ability to enforce such a contract for legal services.
[14] Disclosure Requirements in Contracts of Sale
Section 6 of the Act also provides for certain disclosures by construction professionals in contracts of sale.
Sec. 6. (1) The construction professional shall provide notice to each homeowner upon entering into a contract for sale, construction, or substantial remodel of a residence, of the construction professional's right to offer to cure construction defects before a homeowner may commence litigation against the construction professional. Such notice shall be conspicuous and may be included as part of the underlying contract signed by the homeowner. In the sale of a condominium unit, the requirement for delivery of such notice shall be deemed satisfied if contained in a public offering statement delivered in accordance with chapter 64.34 RCW.
(2) The notice required by this subsection shall be in substantially the following form:
CHAPTER 64.-RCW (sections 1 through 7 of this act) CONTAINS IMPORTANT REQUIREMENTS YOU MUCH FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE SELLER OR BUILDER OF YOUR HOME. FORTHY-FIVE DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE SELLER OR BUILDER A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR SELLER OR BUILDER THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE BUILDER OR SELLER. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT.
Under section 6(3), the Act shall not preclude or bar any action if notice is not given to the homeowner as required by section 6.
[15] Impact of Act on Legal Relationships Between Homeowners and Construction Professionals
Section 7 of the Act preserves common law and other statutory relationships between homeowners and construction professionals.
Sec. 7. Nothing in this chapter shall be construed to hinder or otherwise affect the employment, agency, or contractual relationship between and among homeowners and construction professionals during the process of construction or remodeling and does not preclude the termination of those relationships as allowed under current law. Nothing in this chapter shall negate or otherwise restrict a construction professional's right to access or inspection provided by law, covenant, easement, or contract.
[16] Tolling of Statutes of Limitations
Section 8 of the Act addresses the tolling of statutes of limitations during the prelitigation steps.
Sec. 8. A new section is added to chapter 4 RCW to read as follows:
If a written notice of claim is served under section 3 of this act within the time prescribed for the filing of an action under this chapter, the statues of limitations for construction - related claims are tolled until sixty days after the period of time during which the filing of an action is barred under section 3 of this act.
[17] New Disclosure Requirements in Public Offering Statements
Section 9 of the Act also provides for additional disclosures in public offering statements for sales of dwellings in common interest developments.
Sec. 9. RCW 64.34.410 and 1997 chapter 400, section 1 are each amended to read as follows:
(1) A public offering statement shall contain the following information:
(a) The name and address of the condominium;
(b) The name and address of the declarant;
(c) The name and address of the management company, if any;
(d) The relationship of the management company to the declarant, if any;
(e) A list of up to the five most recent condominium projects completed by the declarant or an affiliate of the declarant within the past five years, including the names of the condominiums, their addresses, and the number of existing units in each. For the purpose of this section, a condominium is "completed" when any one unit therein has been rented or sold;
(f) The nature of the interest being offered for sale;
(g) A brief description of the permitted uses and use restrictions pertaining to the units and the common elements;
(h) A brief description of the restrictions, if any, on the renting or leasing of units by the declarant or other unit owners, together with the rights, if any, of the declarant to rent or lease at least a majority of units;
(i) The number of existing units in the condominium and the maximum number of units that may be added to the condominium;
(j) A list of the limited common elements assigned to the units being offered for sale;
(l) The identification of any real property not in the condominium to which unit owners have access and a description of the terms of such access;
(n) The status of construction of the units and common elements, including estimated dates of completion if not completed;
(o) The estimated current common expense liability for the units being offered;
(p) An estimate of any payment with respect to the common expense liability for the units being offered which will be due at closing;
(q) The estimated current amount and purpose of any fees not included in the common expenses and charged by the declarant or the association for the use of any of the common elements;
(r) Any assessments which have been agreed to or are known to the declarant and which, if not paid, may constitute a lien against any units or common elements in favor of any governmental agency;
(s) The identification of any parts of the condominium, other than the units, which any individual owner will have the responsibility for maintaining;
(t) If the condominium involves a conversion condominium, the information required by RCW 64.34.415;
(u) Whether timesharing is restricted or prohibited, and if restricted, a general description of such restrictions;
(v) A list of all development rights reserved to the declarant and all special declarant rights reserved to the declarant, together with recording number to any recorded transfer of a special declarant right;
(w) A description of any material differences in terms of furnishings, fixtures, finishes, and equipment between any model unit available to the purchaser at the time the agreement for sale is executed and the unit being offered;
(x) Any liens on real property to be conveyed to the association required to be disclosed pursuant to RCW 64.45.435 (2) (b);
(y) A list of any physical hazards known to the declarant which particularly affect the condominium or the immediate vicinity in which the condominium is located and which are not readily ascertainable by the purchaser;
(z) A brief description of any construction warranties to be provided to the purchaser;
(aa) Any building code violation citations received by the declarant in connection with the condominium which have not been corrected;
(bb) A statement of any unsatisfied judgments or pending suits against the association, a statement of the status of any pending suits material to the condominium of which the declarant has actual knowledge, and a statement of any litigation brought by an owners' association, unit owner, or governmental entity in which the declarant or any affiliate of the declarant has been a defendant, arising out of the construction, sale, or administration of any condominium within the previous five years, together with the results thereof, if known;
(cc) Any rights of first refusal to lease or purchase any unit or any of the common elements;
(dd) The extent to which the insurance provided by the association covers furnishings, fixtures, and equipment located in the unit;
(ee) A notice which describes a purchaser's right to cancel the purchase agreement or extend the closing under RCW 64.34.420, including applicable time frames and procedures;
(ff) Any reports or statements reqired by RCW 64.34.415 or 64.34.440(6)(a). RCW 64.34.415 shall apply to the public offering statement of a condominium in connection with which a final certificate of occupancy was issued more than sixty calendar months prior to the preparation of the public offering statement whether or not the condominium is a conversion condominium as defined in RCW 64.34.020(10);
(gg) A list of the documents which the prospective purchaser is entitled to receive from the declarant before the rescission period commences;
(hh) A notice which states: A purchaser may not rely on an representation or express warranty unless it is contained in the public offering statement or made in writing signed by the declarant or by any person identified in the public offering statement as the declarant's agent;
(ii) A notice which states: This public offering statement is only a summary of some of the significant aspects of purchasing a unit in this condominium and the condominium documents are complex, contain other important information, and create binding legal obligations. You should consider seeking the assistance of legal counsel;
(jj) Any other information and cross-references which the declarant believes will be helpful in describing the condominium to the recipients of the public offering statement, all of which may be included or not included at the option of the declarant;
(kk) A notice that addresses compliance or noncompliance with the housing for older persons act of 1995, P.L. 104-76, as enacted on December 28, 1995;
(ll) A notice that is substantially in the form required by section 6 of this act.
[18] New Documents To Be Included With Public Offering Statements
Subsection (2) of Section 9 of the Act also requires additional documents to be included with public offering statements.
(2) The public offering statement shall include copies of each of the following documents: The declaration, the survey map and plans, the articles of incorporation of the association, bylaws of the association, rules and regulations, if any, current or proposed budget for the association, and the balance sheet of the association current within ninety days if assessments have been collected for ninety days or more.
If any of the foregoing documents listed in this subsection are not available because they have not been executed, adopted, or recorded, drafts of such documents shall be provided with the public offering statement, and, before closing the sale of a unit, the purchaser shall be given copies of any material changes between the draft of the proposed documents and the final documents.
[19] Additional New Requirements in Public Offering Statements
Under subsections(3) and (4) of Section 9 of the Act, there are additional new requirements relating to public offering statements.
(3) The disclosures required by subsection (1) (g), (k), (s), (u), (v), and (cc) of this section shall also contain a reference to specific sections in the condominium documents which further explain the information disclosed.
(4) The disclosures required by subsection (1) (ee), (hh), (ii) (ll) of this section shall be located at the top of the first page of the public offering statement and be typed or printed in ten-point bold face type size.
[20] Requirements For Amending Public Offering Statements
Under subsection (5) of Section 9 of the Act, declarants are required to amend public offering statements under certain new circumstances.
(5) A declarant shall promptly amend the public offering statement to reflect any material change in the information required by this section.
[21] New Statutes of Limitation
Section 1 of the Act establishes new statutes of limitation for actions relating to construction defects.
Sec. 10. RCW 64.34.452 and 1990 chapter 166 section 14 are each amended to read as follows:
(1) A judicial proceeding for breach of any obligations arising under RCW 64.34.443 and 64.34.445 must be commenced within four years after the cause of action accrues: PROVIDED, That the period for commencing an action for a breach accruing pursuant to subsection (2) (b) of this section shall not expire prior to one year after termination of the period of declarant control, if any, under RCW 64.34.308(4). Such period may not be reduced by either oral or written agreement.
(2) Subject to subsection (3) of this section, a cause of action for breach of warranty of quality, regardless of the purchaser's lack of knowledge of the breach, accrues:
(a) As to a unit, the date the purchaser to whom the warranty is first made enters into possession if a possessory interest was conveyed or the date of acceptance of the instrument of conveyance if a nonpossessory interest was conveyed; and
(b) As to each common element, at the latest of (i) the date the first unit in the condominium was conveyed to a bona fide purchaser, (ii) the date the common element was completed, or (iii) the date the common element was added to the condominium.
(3) If a warranty of quality explicitly extends to future performance or duration of any improvement or component of the condominium, the cause of action accrues at the time the breach is discovered or at the end of the period for which the warranty explicitly extends, whichever is earlier.
(4) If a written notice of claim is served under section 3 of this act within the time prescribed for the filing of an action under this chapter, the statues of limitation in this chapter and any applicable statues of repose for construction - related claims are tolled until sixty days after the period of time during which the filing of an action is barred under section 3 of this act.
For more legislation information, see the California Legislation Web Site at http://www.leginfo.ca.gov.
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