Potential Reforms to the Residential Construction Defect Statutes

The legislative session is off and running in Olympia. The 2018 session is a short one but may prove to be eventful. Bills are under consideration in both the House and the Senate to amend the current construction defect statutes with regard to residential properties. Given the current housing crisis in Seattle, any reforms that reduce the risk to developers who build condominiums is potentially a good thing. Here are highlights from three bills that address residential construction defects and are currently under consideration by the Washington State legislature:

SB 6523 / HB 2475 – These bills, which mirrored each other at introduction, revise the current notice and opportunity to cure process in construction defect actions. Currently, before a homeowner can file a lawsuit against a construction professional based on construction defect claims, the homeowner must serve written notice of the claims on the construction professional. The construction professional has 21 days to respond to the notice. Currently, the construction professional has three available responses:

    1.       Propose an inspection of the residence subject to the claims and then, following the inspection:

          a.       offer to remedy the claimed defects,

          b.       compromise by payment, or

          c.       dispute the claim;

    2.       Offer to compromise and settle the claim by monetary payment without inspection; or

    3.       Dispute the claim.

Both bills propose adding a fourth response: the construction professional can offer to mediate the claim. The bills also include a framework for scheduling the mediation that allows an opportunity for the construction professional to inspect the residence and provides for the exchange of proposed repair plans and cost estimates. The bills also modify the applicable statutes of limitations and repose to provide additional time for the mediation process.

The Senate bill was introduced on January 22, 2018 and is currently before the Law and Justice committee. The House bill was introduced on January 10, 2018 and is currently before the Judiciary Committee, which held a public hearing on January 31, 2018.

HB 2831 –This bill revises the current process required for a Homeowner’s Association (“HOA”) to commence construction defect litigation against a construction professional. Under the new process, the HOA Board must give notice of potential defect claims to members of the HOA as well as any construction professionals against whom legal action is proposed. Following notice, the HOA Board must call a meeting of the HOA members to discuss the alleged defects and must provide the construction professionals an opportunity to respond to the alleged defects and concerns of the HOA members. Following the meeting, the HOA members must vote on whether to proceed with litigation. The Board can only proceed with litigation if more than 50% of eligible HOA members consent.

This bill was introduced on January 17, 2018 and is currently before the Judiciary Committee. A public hearing on the bill was held on January 31, 2018.

As always, the devil is in the details. H+G will be following the progress of these bills throughout the legislative session. If these bills are passed, we will provide a detailed analysis of the reforms and the potential impacts to homeowners and construct