Construction-defect claims and related lawsuits have made liability insurance for builders and subcontractors skyrocket in the last few years. These laws force the homeowner to officially notify the contractor of defects in the workmanship; and then allow the contractor so many days to cure alleged defects prior to filing a lawsuit or arbitration claim.
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This is also a story about an atrocious roof installed by Eagle Construction. Did the Better Business Bureau, Better Contractor's Bureau, NARI - National Association of the Remodeling Industry, GAF Materials Corporation, or the D&C newspaper do anything to help the consumer? Amy wants to share what she has learned to help other consumers not make the same mistakes she made.
Just like the illustration above, my roof is destroying my home from the inside-out. Leaks are coming into my attic and down my outside walls, growing mold and mildew; and promoting wood rot in my house's framework.
Construction-defect claims and related lawsuits have made liability insurance rates for builders and contractors skyrocket in the last few years. Builders have acted swiftly in response to the increased premiums by trying to stamp out new lawsuits, and have successfully lobbied thirty-one states to pass "Opportunity to Repair" or "Right to Cure" laws. They claim this is an important first step to potentially reduce general liability insurance rates. They claim that these laws will benefit consumers, and to "help good builders establish a process for resolving defects that is up-front and effective for consumers."
UNBELIEVABLY, 60% of our states have given-in, and enacted these
construction-defect statutes. Note that New York has not succumbed, yet!
Statistics say "No." Staff Writer for In Business Las Vegas, Jennifer Shubinski, examined Nevada's 3-year-old Right-to-Repair law, and confirmed that the law fails to trim the number of lawsuits. Lawmakers, nationwide, have been victims of a disinformation campaign; and have been fooled by the building industry. The nationwide promotion by the National Association of Builders (NAHB) has successfully painted a deceptive picture of runaway lawsuit abuse. NAHB convinced lawmakers to pass laws that, in theory, would give builders more opportunity to repair homes; and that the number of lawsuits would decline. "It's a clever scheme that aggressively tilts the playing field in favor of builders and contractors, and is devastating to families and the American Dream."
The theory has also been invalidated in Texas where the bill was touted as the first Tort Reform law in the country. The problem is that the law successfully limits builders' liability for their mistakes. Time has proven that the law actually gives a disincentive for builders to construct a house properly from the beginning; and in reality, encourages the industry to build them as fast as possible, and worry about defects later.
Most Texan builders see it as an opportunity for extra time and a possibility to avoid responsibility. The results are predictable - major or even simple warranty issues become costly legal disputes for homebuyers who are forced into Mandatory Binding Arbitration. These lengthy legal disputes are just what homeowners cannot afford at this very vulnerable time. The associated legal expenses drain homebuyers financially, causing most families to give up.
These laws don't provide any consumer protection. In fact, they negate consumer protection! "Builder sponsored legislation will enable bad builders to continue to build substandard homes and breach the warranty without fear of consequences."
Generally, these laws require strict compliance by homeowners (who may or may not have the law's usually complex requirements disclosed to them) to officially notify the contractor and other allegedly responsible parties (like sub-contractors) via certified mail of defects in the workmanship; and then allow contracting parties so many days to cure the alleged defects prior to filing a lawsuit or arbitration claim.
There are a few inherent problems with this government involvement:
Builders are strategically circumventing new lawsuits by getting the governments statutes to protect them. This is an abuse of the system. I think it would be better if the builders would preclude the need for lawsuits by building properly. What a novel idea?
In New York, about 30 members of Builder Partners, a coalition of contractors, realtors, and business owners, were in Albany, NY lobbying for worker compensation reform and affordable liability insurance. It's fine for these people to try to improve their industry. I just wonder, are they lobbying for some type of Right-to-Cure law or a Binding-Mandatory-Arbitration law that would take away even more of our consumer rights? Is New York State next on the HIT LIST?
Make no mistake - presently in New York, we are not required to allow contractors any additional attempts to effect repairs if the contractor failed to perform substantially in accordance with the terms of the contract. Currently in New York, there are "Laws That Protect You" regarding contracts.
Unfortunately, even New Yorkers may need to be prepared to prove performance was not substantial. This is because, even in the states without these laws on the books (New York also), it is generally accepted that the contractor should be allowed back to fix or repair defects in their workmanship. The intent is to reduce the number of lawsuits that are filed by compelling the owner to give the contractor the chance to remedy the problem, before the lawyers get involved. There is no "Right to Cure" or "Opportunity to Repair" law in New York State. I hate to think how hard it will be for a homeowner to get the job done right the first time, if a law like that is ever passed in NY.
Moreover, with contractors pressing for these laws, how long New Yorkers will have this protection against abusers of this generally accepted policy is a very good question. I know that if NY adopts a Right-to-Cure law, it will obliterate some rights that everyone in the state will continue to possess; that is everyone except construction consumers. The one law that I refer to, specifically, is the law regarding "contract termination." As NYS Contract Law affirms, if one party defaults in the performance of a contract, the other party may treat the contract as terminated; and may then sue for damages.
This would no longer be true with Right-to-Cure laws in place. The consumer would now be forced to notify the contractor of defects; and then be obligated to continue with the contract by allowing the contractor to effect repairs. This would be the consumer's only option, whether or not the contractor had inexcusably failed to perform substantially in accordance with the terms of the contract, because that remains to be proven. These Right-to-Cure laws would eradicate New Yorkers' right to Contract Termination, but only for a targeted few - the tax-paying homeowners / construction consumers.
Additionally, if the United States Government were to enact such a law nationally (which is a real possibility) all home-improvement consumers across this great nation of ours would lose this right. I don't know if all states currently have such contract laws, but I believe it is a "certain inalienable Right." Why are state legislators throwing taxpayers to the wolves?
The NAHB Research Center is a not-for-profit subsidiary of the National Association of Home Builders (NAHB). In NAHB Research Center's report titled: "Making the Quality Connection: Improving the Building Industry Insurance Situation Through Quality Assurance Programs" they list one of their intentions as: "Establish laws providing for the right to repair, or the right to cure construction defect claims in each state."
The Associated General Contractors of America (AGC) is a national trade association of more than 33,000 firms, including 7,500 of America's leading general contracting firms. They are Promoting, to the 109th Congress, the "Right to Cure Regulatory Violations Prior to Contractors Facing Monetary Fines." The Right-to-Cure legislation would establish a timeframe giving a construction company the chance to repair construction violations, prior to facing monetary fines. Look out! This could mean trouble. Are we looking at a national Right-to-Cure Law?
On May 25, 2005 Oklahoma-Governor, Brad Henry vetoed builder-sponsored, SB 431, the Homeowner Construction Defect Protection Act: In his veto message, Henry said the legislation "places substantial requirements on the consumer and unduly restricts the consumer's rights when there are construction defects. It may necessitate that the consumer consult with an attorney when attempting to resolve a construction defect."
This year, Oklahoma became the 29th state to enact an Opportunity to Repair Law. SB1749 was signed into law, and went into effect on November 1, 2006. It is a two-page, very abbreviated, version of these "Opportunity to Repair" laws. This bill essentially says that: If provisions are made in a contract, the homeowner shall not file a lawsuit against the contractor until after presenting a written notice of construction defects to the contractor; and allowing said contractor to inspect any defects, and either offer to repair defects or compensate homeowner for such defects within thirty (30) days after receipt of the notice of defects.
Those builders are extremely wily; with the passing of this bill, the door just opened for builders to do just what they wanted to do last year, when that bill was vetoed. Now, Oklahoma builders have FREE REIN (reign) to do whatever they want. The Oklahoma State Home Builders Association has already been working with their legal counsel to get new language into all their contracts by November. I'm sure curious to know what they have come up with.
Cindy Schnackel, national secretary of a consumer watch group called HADD - Homeowners Against Deficient Dwellings said, "The law may be a case of the fox guarding the hen house." Schnackel has also said that the bill has been "gutted" as to wording, but not to let this harmless-sounding bill fool you. It's STILL a homebuilders-promoted "right to repair law" that is written for builder protection, not consumer protection. She suspects that this tamed-down version will just come back up, like a sour lunch; and be amended to read just as bad as it did originally.Pennsylvania, March 2006: Stealth legislation was "suddenly on the brink of becoming law after a multiyear push by the building industry and not one formal public hearing." [Philadelphia Inquirer] This Builder's Right-to-Repair bill limits the damage award to the cost of the repairs if the property owner rejects a "reasonable" offer by the contractor, or does not allow the contractor to repair the problem. Pennsylvania House Bill 1467 also "bars a consumer from going to court for at least 75 days, with a strict timetable for letters and responses. Miss a hurdle, and you are barred from filing suit. To be prudent, you'd probably want legal help right away - an ironic result for a law meant to stave off costly litigation. And that "right to repair"? It's fine in a truly civil disagreement. But if a contractor has done shoddy work, would you willingly invite him back?" Suggestion: Maybe, we should all keep a closer eye on what our state governments are doing.
March 17, 2006 - Today, Governor Edward G. Rendell vetoed House Bill 1467, the so-called Residential Construction Dispute Resolution Act, which would have stifled the ability of property owners to sue. Pennsylvania's Governor Rendell contended that the law would potentially create expensive legal disputes, driving up both sides' legal and insurance costs and, ultimately, the cost of a new home.
But most exciting; he agrees with me. I'm so thrilled; I have to quote him here.
"In fact, in this review, I became convinced that a
law to register contractors and homebuilders, accompanied by appropriate
public reporting requirements, is critical to boosting the protection our
citizens expect and deserve their government to provide. I
also believe we need to legislatively establish a fund to compensate victims
for damages caused by unscrupulous builders who do not have insurance and
cannot, or will not, pay for the full value of the problems they create.
I do hope that any state, or other municipality, having or considering these laws, respects the consumer's rights to be treated fairly, and have the quality job they paid for. Any related law should have provisions to protect consumers against unscrupulous treatment. Such as: A contractor is allowed to effect repairs using competent workmen, barring: the project built was unsafe or did not meet several building codes; the contractor substituted materials contracted for without the owner's permission; or the contractor otherwise betrayed the trust of the homeowner.
Any contractor who did not fulfill their contracts by using unskilled labor after promising skilled labor or building a fundamentally sub-standard product does not deserve to be allowed to repair their work. With construction, in particular, it should be: "Do the job right the first time, or don't do it at all."
Yeah, contractors are promoting this law, saying their insurance is high and they need a chance to stay out of court; but by keeping buyers from suing over legitimate defects? "Ultimately, the truth is that legislators can pass all the laws they want; but in order for the laws to work in practice, the people affected must be willing to apply them in good faith."