Claims against builders of dwellings for construction
defects have become increasingly common. The Arizona
Legislature recently adopted a set of statutes designed
to give builders notice of claimed defects and an opportunity
to repair them prior to the filing of a lawsuit by the
purchasers of allegedly defective dwellings.
The purchaser of a defective dwelling may file a complaint
with the Arizona Registrar of Contractors against the
builder or a subcontractor, architect, engineer or other
construction personnel. Such a purchaser may also file
a civil lawsuit for damages. The "Notice and Opportunity
to Repair Act" provides an opportunity for the
builder to make repairs prior to the purchaser filing
a civil lawsuit alleging defects in a dwelling. Such
a lawsuit is referred to in the Act as a "dwelling
action." The Act specifies time limits and notification
processes for the seller and purchaser prior to the
filing of a dwelling action.
At least ninety days before filing a dwelling action,
the purchaser must provide to the seller written notice
and opportunity to repair the defective dwelling. Within
sixty days after receipt of notice, the seller must
provide a good faith response, including any offer to
repair or replace the defective item and a reasonable
date for completion. Within twenty days after receipt
of seller's offer, the purchaser shall either accept
the purchaser's offer, reject the offer or make a counteroffer.
Within ten days after receipt of the purchaser's response,
the seller may make a best and final offer.
The Act requires the purchaser to allow the seller
to inspect the dwelling after receiving notification
of defects to determine the extent and cause of the
defects. If the seller's inspection includes testing,
the seller is required to restore the dwelling to its
pretesting condition.
The period within which a dwelling action must be
filed is tolled until ninety days after the seller receives
the purchaser's notice of the defect or a reasonable
time period agreed to by the parties. If a purchaser
files a dwelling action without following the notice
and other procedures required by the Act, the court
may stay the action for ninety days to allow the parties
to comply with the Act. If the action is brought by
a homeowners' association on behalf of purchasers of
five or more dwellings without following the notice
and other procedures required by the Act, the ninety
day stay to allow the parties to comply with the Act
is mandatory unless the defect constitutes a safety
hazard.
The Act provides for a successful party to recover
attorneys' fees, expert witness fees and costs in a
contested dwelling action. To be deemed a successful
party, a seller must win at trial or be liable for less
than his or her final offer to the purchaser to settle
the matter. In order for the purchaser to be deemed
a successful party, the purchaser must be awarded more
than he or she was offered to settle by the seller.
The Act also requires a contract for a newly constructed
dwelling to provide notice of a purchaser's right to
file a complaint against the builder with the Registrar
of Contractors.
It is probably very rare for a purchaser of a dwelling
to file a lawsuit alleging that the dwelling is defective
without first contacting the builder and in some manner
trying to get the problem fixed. The "Notice and
Opportunity to Repair Act" does, however, create
a set of procedures that may make it more likely for
such problems to be resolved before a lawsuit is filed,
or at least before it gets very far.
