HB4873 94TH GENERAL ASSEMBLY

LRB094 17849 AJO 53150 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB4873

Introduced 01/19/06, by Rep. Randall M. Hultgren

SYNOPSIS AS INTRODUCED:

New Act

Creates the Notice and Opportunity to Repair Act. Provides that a construction professional shall be liable to a homeowner for damages caused by the acts or omissions of the professional and his or her agents, employees, or subcontractors. Requires the service of notice to the professional of the complained-of defect in the construction by the homeowner prior to commencement of a lawsuit. Allows the professional to make an offer of repair or settlement and to rescind this offer if the claimant fails to respond within 30 days. Requires the claimant to file with the court a list of known construction defects. Directs the professional to provide a statutory notice to the homeowner upon the execution of a contract. Applies to construction defect claims that arise before, on, or after July 15, 2007, if the claim is the subject of an action commenced on or after July 15, 2007.

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning real estate.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Notice and Opportunity to Repair Act.

Section 5. Findings. The General Assembly finds that limited changes in the law are necessary and appropriate concerning actions claiming damages, indemnity, or contribution in connection with alleged residential construction defects.

Section 10. Purpose. It is the intent of the General Assembly that this Act apply to the types of civil actions described in Section 5 while preserving adequate rights and remedies for property owners who bring and maintain those actions.

Section 15. Definitions. In this Act:

"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 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.

"Claimant" means a homeowner 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.

"Construction professional" means an architect, builder, builder-vendor, contractor, subcontractor, engineer, or inspector, including, but not limited to, any person 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.

"Homeowner" means 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. "Homeowner" includes, but is not limited to, a subsequent purchaser of a residence from any homeowner.

"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 the Condominium Property Act and includes general and limited common elements as defined in that Act.

"Serve" or "service" means personal service or delivery by certified mail to the last known address of the addressee.

"Substantial remodel" means a remodel of a residence for which the total cost exceeds the maximum amount for a small claim under Supreme Court Rules.

Section 20. Applicability.

(a) This Act:

(1) Applies to any claim that arises before, on, or after July 15, 2007, as the result of a construction defect, except a claim for personal injury or wrongful death, if the claim is the subject of an action commenced on or after July 15, 2007.

(2) Prevails over any conflicting law otherwise applicable to the claim or cause of action.

(b) This Act does not:

(1) bar or limit any defense otherwise available except, as otherwise provided in this Act; or

(2) create a new theory upon which liability may be based.

Section 25. Contractor liability. In a claim to recover damages resulting from a construction defect, a contractor is liable for his or her acts or omissions or the acts or omissions of his or her agents, employees, or subcontractors and is not liable for any damages caused by:

(1) the acts or omissions of a person other than the contractor or his or her agent, employee, or subcontractor;

(2) the failure of a person other than the contractor or his or her agent, employee, or subcontractor to take reasonable action to reduce the damages or maintain the residence;

(3) normal wear, tear, or deterioration;

(4) normal shrinkage, swelling, expansion, or settlement; or

(5) any construction defect disclosed to a claimant before his purchase of the residence, if the disclosure was provided in writing and in language that is understandable and was signed by the claimant.

Section 30. Notice of claim of construction defects; response by construction professional.

(a) In every construction defect action brought against a construction professional, the claimant shall, no later than 60 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.

(b) Within 21 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:

(1) propose to inspect the residence that is the subject of the claim and to complete the inspection within a specified time frame; including the statement that the construction professional shall, based on the inspection, offer to remedy the defect, compromise by payment, or dispute the claim;

(2) offer to compromise and settle the claim by monetary payment without inspection; which 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

(3) state that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.

(c) If the construction professional disputes the claim or does not respond to the claimant's notice of claim within the time stated in subsection (b) 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.

If the claimant rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (b), 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 30 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 any time 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.

(d) If the claimant elects to allow the construction professional to inspect in accordance with the construction professional's proposal pursuant to paragraph (1) of subsection (b) 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.

(e) Within 14 days following completion of the inspection, the construction professional shall serve on the claimant:

(1) 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;

(2) a written offer to compromise and settle the claim by monetary payment pursuant to paragraph (2) of subsection (b) of this Section; or

(3) a written statement that the construction professional will not proceed further to remedy the defect.

(f) 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 subsection (e), the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.

(g) If the claimant rejects the offer made by the construction professional pursuant to paragraph (1) of subsection (e) or paragraph (2) of subsection (e) of this Section to either remedy the construction defect or 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 the claim. If the construction professional has not received from the claimant, within 30 days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the offer made pursuant to paragraph (1) of subsection (e) or paragraph (2) of subsection (e) of this Section, then at any time thereafter the construction professional may terminate the offer by serving written notice to the claimant.

(h) Any claimant accepting the offer of a construction professional to remedy the construction defect pursuant to paragraph (1) of subsection (e) 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 30 days after receipt of the offer. 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 perform and complete the construction by the timetable stated in the offer. 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.

(i) Any action commenced by a claimant prior to compliance with the requirements of this Section shall be subject to dismissal without prejudice and shall not be recommenced until the claimant has complied with the requirements of this Section.

(j) 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 paragraph (1) of subsection (b) or subsection (h) of this Section.

(k) Prior to commencing any action alleging a construction defect, or after the dismissal of any action without prejudice pursuant to subsection (i) of this Section, the claimant may amend the notice of claim to include construction defects discovered after the service of the original notice 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 (b) of this Section.

Section 35. Effect of non-compliance.

(a) If a claimant unreasonably rejects a reasonable written offer of settlement made as part of a response made pursuant to Section 30 of this Act or does not permit the contractor or independent contractor a reasonable opportunity to inspect or to repair the defect pursuant to an accepted offer of settlement and thereafter commences an action governed by this Act, the court in which the action is commenced may:

(1) deny the claimant's attorney's fees and costs; and

(2) award attorney's fees and costs to the contractor.

(b) Any sums paid under a homeowner's warranty, other than sums paid in satisfaction of claims that are collateral to any coverage issued to or by the contractor, shall be deducted from any recovery.

(c) If a contractor fails to comply with the requirements of this Act, the claimant shall not be obligated to further comply with the provisions of this Act and shall be allowed to commence an action without satisfying any other requirement of this Act; none of the provisions of this Act shall be applied to the detriment of the claimant.

Section 40. Construction defect list.

(a) 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.

(b) 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 30 days after the commencement of the action or within such longer period as the court in its discretion may allow.

(c) The list of known construction defects may be amended by the claimant to identify additional construction defects as they become known to the claimant.

(d) The list of known construction defects shall specify, to the extent known to the claimant, the construction professional responsible for each alleged defect identified by the claimant.

(e) 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 30 days after service of the complaint against the subcontractor or supplier or within such period as the court in its discretion may allow.

Section 45. Mandatory notice.

(a) 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. The notice shall be conspicuous and may be included as part of the underlying contract signed by the homeowner.

(b) The notice required by subsection (a) of this Section shall be in substantially the following form:

SECTIONS 1 THROUGH 40 OF THE NOTICE AND OPPORTUNITY TO REPAIR ACT CONTAIN IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE SELLER OR BUILDER OF YOUR HOME. SIXTY (60) 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.

(c) This Act shall not preclude or bar any action if notice is not given to the homeowner as required by this Section.

Section 50. No effect on other rights. Nothing in this Act shall be construed to hinder or otherwise affect the employment, agency, or contractual relationship between homeowners and construction professionals during the process of construction or remodeling and does not preclude the termination of those relationships as allowed under the law. Nothing in this Act shall negate or otherwise restrict a construction professional's right to access or inspection provided by law, covenant, easement, or contract.

Section 55. Tolling of statutes of limitations and repose. If a written notice of claim is served under Section 30 of this Act within the time prescribed for the filing of an action under this Act, the statutes of limitations for construction-related claims are tolled until 75 days after the period of time during which the filing of an action is barred under the applicable statute of limitations.