Introduced Version, Senate Bill 0451

January 21, 2003, read first time and referred to Committee on Commerce and Consumer Affairs.

Introduced

First Regular Session 113th General Assembly (2003)

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SENATE BILL No. 451

A BILL FOR AN ACT to amend the Indiana Code concerning property.

Be it enacted by the General Assembly of the State of Indiana:

    SECTION 1. IC 32-27-3 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]:
     Chapter 3. Notice and Opportunity to Repair
    Sec. 1. The definitions in this section apply throughout this chapter.
        (1) "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 remodeling of a residence. "Action" does not include any civil action in tort alleging personal injury to or wrongful death of a person or persons resulting from a construction defect.
        (2) "Association" means an association of co-owners (as defined in IC 32-25-2-2).

        (3) "Claimant" means a home owner who or an association that asserts a claim against a construction professional concerning a defect in the construction of a residence or in the substantial remodeling of a residence.
        (4) "Construction professional" means an architect, a builder, a builder vendor, a contractor, a subcontractor, an engineer, or an 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, a partnership, a corporation, or another business entity.
        (5) "Home owner" means:
            (A) any person, company, firm, partnership, corporation, association, or other business entity that contracts with a construction professional for the construction, sale, or construction and sale of a residence;
            (B) an association; or
            (C) a subsequent purchaser of a residence from a home owner as defined in clause (A) or (B).
        (6) "Residence" means a:
            (A) single family house;
            (B) duplex;
            (C) triplex;
            (D) quadraplex; or
            (E) unit in a multiple unit residential structure in which title to the individual unit is transferred to the owner under a condominium or cooperative system.
        For purposes of clause (E), the term includes common areas and facilities (as defined in IC 32-25-2-4).
        (7) "Serve" or "service" means personal service or delivery by certified mail to the last known address of the addressee.
        (8) "Substantial remodeling" means a remodeling of a residence, the total cost of which exceeds fifty percent (50%) of the assessed value under IC 6-1.1-1-3(a)(2) of the residence at the time that the contract for the remodeling work was made.
    Sec. 2. (a) At least sixty (60) days before filing a construction defect action against a construction professional, the claimant must serve written notice of claim on the construction professional. The notice of claim must state that the claimant asserts a construction defect claim against the construction professional and must

describe the claim in reasonable detail sufficient to determine the general nature of the defect.
    (b) Within twenty-one (21) days after service of a notice of claim under subsection (a), the construction professional must serve a written response on the claimant. The written response must do one (1) of the following:
        (1) Propose to inspect the residence that is the subject of the claim and complete the inspection within a specified time frame. A response made under this subdivision must include 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. A construction professional's offer under this subdivision 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.
        (3) State that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.
    Sec. 3. (a) If the construction professional disputes the claim or does not respond to the claimant's notice of claim within the time set forth in section 2(b) of this chapter, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
     (b) If the construction professional makes:
        (1) a proposal to inspect the residence under under section 2(b)(1) of this chapter; or
        (2) an offer to compromise and settle the claim by monetary payment without inspection under under section 2(b)(2) of this chapter;
and the claimant rejects the proposal or offer, the claimant must serve written notice of the 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. 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.
    (c) If the construction professional does not receive from the claimant either an acceptance or rejection of the construction

professional's inspection proposal or settlement offer within sixty (60) days after the claimant's receipt of the construction professional's response, the construction professional may terminate the proposal or offer by serving written notice on the claimant.
    (d) If the construction professional terminates a proposal or offer under subsection (c), the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim.
    Sec. 4. (a) If the construction professional makes a proposal to inspect the residence under section 2(b)(1) of this chapter and the claimant elects to allow the construction professional to inspect in accordance with the construction professional's proposal, the claimant must provide the construction professional and the construction professional's contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect.
    (b) Within fourteen (14) days after the completion of an inspection pursuant to a proposal under section 2(b)(1) of this chapter, the construction professional must 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 under to section 2(b)(2) of this chapter; or
        (3) a written statement that the construction professional will not proceed further to remedy the defect.
     (c) If the construction professional:
        (1) makes a written offer to remedy the construction defect under subsection (b)(1) but does not proceed further to remedy the construction defect within the agreed timetable; or
        (2) fails to serve a written offer or statement on the claimant under subsection (b);
the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
    (d) If the construction professional makes an offer under subsection (b)(1) or (b)(2) to remedy the construction defect or to

compromise and settle the claim by monetary payment and the claimant rejects the offer, 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.
    (e) If the construction professional makes an offer under subsection (b)(1) or (b)(2) and does not receive an acceptance or rejection of the offer from the claimant within sixty (60) days after the claimant's receipt of the construction professional's response, the construction professional may terminate the offer by serving written notice on the claimant.
    Sec. 5. (a) To accept the offer of a construction professional to remedy the construction defect under section (4)(b)(1) of this chapter, the claimant must serve on the construction professional a written notice of acceptance within a reasonable time period after receipt of the offer, and not later than sixty (60) days after receipt of the offer.
    (b) A claimant who accepts a construction professional's offer under section 4(b)(1) of this chapter must provide the construction professional and the construction professional's 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.
    (c) After the acceptance of an offer under section 4(b)(1) of this chapter, 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 construction to repair additional defects.
    Sec. 6. Any action commenced by a claimant before compliance with the requirements of this chapter is subject to dismissal without prejudice, and may not be recommenced until the claimant complies with the requirements of this section.
    Sec. 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 according to the timetable agreed upon under section 4(b)(1) or 5 of this chapter.
    Sec. 8. (a) Before commencing any action alleging a construction defect, or after the dismissal of any action without prejudice under

section 6 of this chapter, the claimant may amend the notice of claim to include construction defects discovered after the service of the original notice of claim. The claimant must comply with the requirements of this section with respect to the additional defects discovered.
    (b) The service of an amended notice of claim relates back to the original notice of claim for purposes of the applicable statutes of limitations and repose. Claims for defects discovered after the commencement or recommencement of an action may be added to the action only after providing notice to the construction professional of the defect and allowing for response under section 4(b) of this chapter.
    Sec. 9. (a) If a claimant:
        (1) unreasonably rejects a reasonable written offer of settlement made under this chapter; or
        (2) does not permit the construction professional a reasonable opportunity to inspect or to repair the defect under a reasonable offer of settlement;
and thereafter commences an action governed by this chapter, the court may deny the claimant attorney's fees and costs and award attorney's fees and costs to the construction professional.
    (b) Any sums paid under a homeowners warranty, other than sums paid in satisfaction of claims that are collateral to any coverage issued to or by the construction professional, must be deducted from any recovery.
    (c) If a contractor fails to comply with the requirements of this chapter, the claimant is not obligated to comply further with the provisions of this chapter.
    Sec. 10. (a) In every action brought against a construction professional, the claimant, including a construction professional asserting a claim against another construction professional, must 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 must contain a description of the construction that the claimant alleges to be defective. The list of known construction defects must be filed with the court and served on the defendant within sixty (60) 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 must 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 the subcontractor or supplier must serve on the subcontractor or supplier the list of construction defects in accordance with this section within sixty (60) days after service of the complaint against the subcontractor or supplier, or within such period as the court in its discretion may allow.
    Sec. 11. (a) Upon entering into a contract for sale, construction, or substantial remodeling of a residence, a construction professional must provide notice to each home owner of the construction professional's right to offer to cure construction defects before a home owner may commence litigation against the construction professional. The notice must be conspicuous and may be included as part of the underlying contract signed by the home owner.
    (b) The notice required by this subsection must be in substantially the following form:
         "IC 32-27-3 CONTAINS 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 chapter does not preclude or bar any action if notice is not given to the home owner as required by this section.
    Sec. 12. Nothing in this chapter shall be construed to hinder or otherwise affect the employment, agency, or contractual relationship between and among home owners 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.
Sec. 13. (a) If a written notice of claim is served under section 2 of this chapter within the time prescribed for the filing of an action against a construction professional based on an alleged construction defect, the applicable statute of limitations for construction related claims is tolled with respect to the alleged construction defect described in the notice of claim from the day on which the notice of claim is served until sixty (60) days after the period of time during which the filing of an action is barred under this chapter.
(b) With respect to an alleged construction defect to which this chapter applies, all claims or causes of action accrue and the applicable statute of limitation runs as set forth in IC 32-30-1-5. If a written notice is filed under section 2 of this chapter within the time prescribed for the filing of an action against a construction professional based on an alleged construction defect, the period within which an action may be filed under the applicable statue of limitations is extended to include the period during which the filing of an action is barred under this chapter plus sixty (60) days.