LRBs0546/1
RPN&RNK:kjf/wlj:rs
2005 - 2006 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 3,
TO 2005 SENATE BILL 448
February 15, 2006 - Offered by Senator Olsen.
SB448-SSA3,1,3
1An Act to create 101.148 and 895.07 of the statutes;
relating to: contractor
2notices, claims against certain contractors and suppliers of dwellings, and
3providing a penalty.
Analysis by the Legislative Reference Bureau
This substitute amendment requires contractors that contract to construct or
remodel a person's residence to deliver to the person a brochure explaining the
procedures created in this substitute amendment and that he or she must follow
those procedures before suing a contractor or window or door supplier. Under the
substitute amendment, if the dwelling owner, which may be a condominium
association, is concerned about a possible construction defect, the owner must give
a written notice of claim to the contractor at least 90 working days before starting
a court action against the contractor. The substitute amendment requires the
written notice to detail the nature of the alleged construction defect, including any
evidence that the owner of the dwelling has that substantiates the nature and cause
of the defect.
After the contractor receives the notice, the substitute amendment gives the
contractor time to respond to the notice with a written offer to inspect the property,
make repairs, settle the claim with a monetary payment, or reject the claim. Under
the substitute amendment, if the claim is rejected at this point, or if the contractor
fails to respond timely to the claim, the owner can start a court action against the
contractor. If the contractor makes a settlement offer and the owner rejects the offer,
the owner must do so with a written statement that includes the reasons for the
rejection. The substitute amendment requires the owner to allow the contractor
reasonable access to the dwelling if the contractor wants to inspect the alleged
construction defect. After inspection, the substitute amendment allows the
contractor to submit a settlement offer or reject the claim. If the owner rejects an
offer, the substitute amendment allows the contractor to submit a timely
supplemental offer and requires the owner to respond to the supplemental offer
under the same procedures as for the original offer.
If the property is inspected and requires some destructive testing, the
substitute amendment requires the contractor to return the dwelling to its condition
before the inspection. If the owner of a dwelling agrees to a contractor's settlement
offer and the contractor does not follow through as agreed, the substitute
amendment allows the owner to file in the court action the offer and acceptance as
rebuttable evidence of an agreement.
The substitute amendment allows an owner to repair a construction defect
immediately without giving notice if the repair is necessary for health or safety.
If the dwelling owner begins a court action but fails to follow the procedures,
and the contractor has provided the owner with the proper notice and brochure,
under the substitute amendment the court must dismiss the action without
prejudice. If the dwelling owner begins a court action but fails to follow the
procedures, and the contractor does not provide the owner with the proper notice and
brochure, under the substitute amendment the court stays the action and orders the
parties to comply with the substitute amendment's provisions.
Under the substitute amendment, a contractor may obtain contribution from
a window or door supplier for the cost of repairing the construction defect if the
contractor follows procedures in the substitute amendment similar to those that
apply to the contractor and owner regarding a defect, including notifying the supplier
of the alleged defect and giving the supplier an opportunity to remedy the defect or
to make an offer of settlement.
The substitute amendment requires the Department of Commerce to prepare
a draft of a brochure that explains the process in this substitute amendment and to
provide that draft to contractors. Contractors are required to give a copy of the
brochure to the person whom the contractor contracts with to construct or remodel
a dwelling.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB448-SSA3,2,2
2101.148 Contractor notices. (1) Definitions. In this section:
SB448-SSA3,3,2
1(a) "Consumer" means a person who enters into a written or oral contract with
2a contractor to construct or remodel a dwelling.
SB448-SSA3,3,43
(b) "Contractor" means a person who enters into a written or oral contract with
4a consumer to construct or remodel a dwelling.
SB448-SSA3,3,55
(c) "Deliver" means any of the following:
SB448-SSA3,3,76
1. Depositing the document or written notice in the U.S. mail or with a
7commercial delivery service, addressed to the applicable person.
SB448-SSA3,3,88
2. Giving the document or written notice personally to the applicable person.
SB448-SSA3,3,139
(d) "Dwelling" means any premises or portion of a premises that is used as a
10home or a place of residence and that part of the lot or site on which the dwelling is
11situated that is devoted to residential use. "Dwelling" includes other existing
12structures on the immediate residential premises such as driveways, sidewalks,
13swimming pools, terraces, patios, fences, porches, garages, and basements.
SB448-SSA3,3,1514
(e) "Remodel" means to alter or reconstruct a dwelling. "Remodel" does not
15include maintenance or repair work.
SB448-SSA3,3,21
16(2) Notice required at time of contracting. (a) Before entering into a written
17contract to construct or remodel a dwelling, or, if the parties enter into an oral
18contract, as soon as reasonably possible, but before commencing any work to
19construct or remodel a dwelling, the contractor shall deliver to the consumer a copy
20of the brochure prepared under s. 895.07 (13) and a notice worded substantially as
21follows:
SB448-SSA3,3,2322
NOTICE CONCERNING CONSTRUCTION
23
DEFECTS
SB448-SSA3,4,824
Wisconsin law contains important requirements you must follow before you
25may file a lawsuit for defective construction against the contractor who constructed
1your dwelling or completed your remodeling project or against a window or door
2supplier or manufacturer. Section 895.07 (2) and (3) of the Wisconsin statutes
3requires you to deliver to the contractor a written notice of any construction
4conditions you allege are defective before you file your lawsuit, and you must provide
5your contractor or window or door supplier the opportunity to make an offer to repair
6or remedy the alleged construction defects. You are not obligated to accept any offer
7made by the contractor or window or door supplier. All parties are bound by
8applicable warranty provisions.
SB448-SSA3,4,109
(b) The notice required under par. (a) shall be conspicuous and in writing and
10may be included within the contract between the contractor and the consumer.
SB448-SSA3,4,13
12895.07 Claims against contractors and suppliers. (1) Definitions. In this
13section:
SB448-SSA3,4,1414
(a) "Action" means a civil action or an arbitration under ch. 788.
SB448-SSA3,4,1815
(b) "Association" means a homeowner's association, condominium association
16under s. 703.02 (1m), unit owner's association, or a nonprofit corporation created to
17own and operate portions of a planned community that may assess unit owners for
18the costs incurred in the performance of the association's obligations.
SB448-SSA3,4,2019
(c) "Claim" means a request or demand to remedy a construction defect caused
20by a contractor or supplier related to the construction or remodeling of a dwelling.
SB448-SSA3,4,2321
(d) "Claimant" means the owner, tenant, or lessee of a dwelling, or an
22association, who has standing to sue a contractor or supplier regarding a
23construction defect.
SB448-SSA3,5,224
(e) "Construction defect," in those cases when the contractor or supplier has
25provided a warranty to a consumer, means the definition of "defect" in the warranty.
1In all other cases, "construction defect" means a deficiency in the construction or
2remodeling of a dwelling that results from any of the following:
SB448-SSA3,5,33
1. Defective material.
SB448-SSA3,5,44
2. Violation of applicable codes.
SB448-SSA3,5,55
3. Failure to follow accepted trade standards for workmanlike construction.
SB448-SSA3,5,76
(f) "Consumer" means a person who enters into a written or oral contract with
7a contractor to construct or remodel a dwelling.
SB448-SSA3,5,98
(g) "Contractor" means a person that enters into a written or oral contract with
9a consumer to construct or remodel a dwelling.
SB448-SSA3,5,1410
(h) "Dwelling" means any premises or portion of a premises that is used as a
11home or a place of residence and that part of the lot or site on which the dwelling is
12situated that is devoted to residential use. "Dwelling" includes other existing
13structures on the immediate residential premises such as driveways, sidewalks,
14swimming pools, terraces, patios, fences, porches, garages, and basements.
SB448-SSA3,5,1615
(i) "Remodel" means to alter or reconstruct a dwelling. "Remodel" does not
16include maintenance or repair work.
SB448-SSA3,5,1817
(j) "Serve" or "service" means personal service or delivery by certified mail,
18return receipt requested, to the last-known address of the addressee.
SB448-SSA3,5,2019
(k) "Supplier" means a person that manufactures or provides windows or doors
20for a dwelling.
SB448-SSA3,5,2221
(L) "Working day" means any day except Saturday, Sunday, and holidays
22designated in s. 230.35 (4) (a).
SB448-SSA3,5,25
23(2) Notice and opportunity to repair. (a) Before commencing an action
24against a contractor or supplier regarding a construction defect, a claimant shall do
25all of the following:
SB448-SSA3,6,5
11. No later than 90 working days before commencing the action, deliver written
2notice to the contractor containing a description of the claim in sufficient detail to
3explain the nature of the alleged defect and a description of the evidence that the
4claimant knows or possesses, including expert reports, that substantiates the nature
5and cause of the alleged construction defect.
SB448-SSA3,6,76
2. Provide the contractor or supplier with the opportunity to repair or to remedy
7the alleged construction defect.
SB448-SSA3,6,118
(b)
Within 15 working days after the claimant serves notice of claim under par.
9(a), or within 25 working days if the contractor makes a claim for contribution from
10a supplier under sub. (7) (a), each contractor that has received the notice of claim
11shall serve on the claimant any of the following:
SB448-SSA3,6,1512
1. A written offer to repair or remedy the construction defect at no cost to the
13claimant. The offer shall include a description of any additional construction
14necessary to remedy the construction defect and a timetable for the completion of the
15construction.
SB448-SSA3,6,1616
2. A written offer to settle the claim by monetary payment.
SB448-SSA3,6,1717
3. A written offer including a combination of repairs and monetary payment.
SB448-SSA3,6,2318
4. A written statement that the contractor rejects the claim. The contractor
19shall state in the written response to the claim the reason for rejecting the claim and
20include a comprehensive description of all evidence the contractor knows or
21possesses, including expert reports, that substantiates the reason for rejecting the
22claim. The contractor shall also include in the written response to the claim any
23settlement offer received from a supplier.
SB448-SSA3,6,2424
5. A proposal for inspection of the dwelling under par. (c).
SB448-SSA3,7,22
1(c) If a proposal for inspection is made under par. (b), the claimant shall, within
215 working days of receiving the contractor's proposal, provide the contractor and
3any supplier on whom a contribution claim has been made and its agents, experts,
4and consultants reasonable access to the dwelling to inspect the dwelling, document
5any alleged construction defects, and perform any testing required to evaluate fully
6the nature, extent, and cause of the claimed construction defects and the nature and
7extent of any repairs or replacements that may be necessary to remedy them. If
8destructive testing is required, the contractor shall deliver the claimant and all
9persons on whom a notice of claim or contribution claim has been served advance
10notice of the testing at least 5 working days before commencement of the testing and
11shall, after completion of the testing, return the dwelling to its pre-testing condition
12within a reasonable time after completion of the testing, at the contractor's expense.
13If any inspection or testing reveals a condition that requires additional testing to
14allow the contractor to evaluate fully the nature, cause, and extent of the
15construction defect, the contractor shall deliver notice to the claimant and all persons
16on whom a notice of claim or contribution claim has been served of the need for the
17additional testing and the claimant shall provide reasonable access to the dwelling.
18If a claim is asserted on behalf of the owners of multiple dwellings, then the
19contractor shall be entitled to inspect each of the dwellings subject to the claim. The
20claimant shall either provide a specific day for the inspection upon reasonable notice
21for an inspection or require the contractor to request in writing a date for the
22inspection, at least 3 working days before the inspection.
SB448-SSA3,7,2523
(d)
Within 10 working days following completion of the inspection and testing
24under par. (c), the contractor shall serve on the claimant a notice that includes any
25of the offers or statements under par. (b) 1. to 4.
SB448-SSA3,8,9
1(e) If the claimant rejects a settlement offer made by the contractor, the
2claimant shall, within 15 working days after receiving the offer, serve written notice
3of that rejection to the contractor. The notice shall include the reasons for the
4claimant's rejection of the contractor's offer. If the claimant believes that the
5settlement offer omits reference to any portion of the claim, or was unreasonable, the
6claimant's written notice shall include those items that the claimant believes were
7omitted and set forth the reasons why the claimant believes the settlement offer is
8unreasonable. The contractor shall deliver the claimant's response to a supplier
9upon whom a contribution claim has been made.
SB448-SSA3,8,1310
(f)
Upon receipt of a claimant's rejection and the reasons for the rejection, the
11contractor shall, within 5 working days after receiving the rejection, serve the
12claimant a written supplemental offer to repair or to remedy the construction defect
13or serve on the claimant written notice that no additional offer will be made.
SB448-SSA3,8,2414
(g) If the claimant rejects the supplemental offer made by the contractor under
15par. (f) to remedy the construction defect or to settle the claim by monetary payment
16or a combination of each, the claimant shall serve written notice of the claimant's
17rejection on the contractor within 15 working days after receipt of the supplemental
18offer. The notice shall include the reasons for the claimant's rejection of the
19contractor's supplemental settlement offer. If the claimant believes the contractor's
20supplemental settlement offer is unreasonable, the claimant shall set forth the
21reasons why the claimant believes the supplemental settlement offer is
22unreasonable. If the contractor declines to make a supplemental offer, or if the
23claimant rejects the supplemental offer, the claimant may bring an action against
24the contractor for the claim described in the notice of claim without further notice.
SB448-SSA3,9,5
1(h) If a claimant accepts any offer made under this subsection, and the
2contractor or supplier does not proceed to repair or remedy the construction defect
3under the terms of the offer or within the agreed upon timetable, the claimant may
4bring an action against the contractor or supplier for the claim described in the notice
5of claim without further notice.
SB448-SSA3,9,96
(i) If a claimant accepts a contractor's offer to repair a construction defect
7described in a notice of claim, the claimant shall provide the contractor and its
8agents, experts, and consultants reasonable access to the dwelling to perform and
9complete the construction by the timetable stated in the settlement offer.
SB448-SSA3,9,1310
(j) If a claimant receives a written statement that the contractor rejects the
11claim, or if the contractor does not respond to the claimant's notice, the claimant may
12bring an action against the contractor for the claim described in the notice of claim
13without further notice.
SB448-SSA3,9,2014
(k) If a claimant commences an action against a supplier and the supplier has
15not been provided notice of the claim by the contractor and an opportunity to repair
16or remedy the construction defect described in the claim as provided under to sub.
17(7), the court or arbitrator shall dismiss without prejudice or stay the action until the
18claimant serves the supplier with a copy of the notice of claim and provides the
19supplier an opportunity to repair or remedy the construction defect in the same
20manner as provided a contractor under this section.
SB448-SSA3,9,25
21(3) Action; dismissal without prejudice. If the claimant commences an action
22but fails to comply with the requirements of sub. (2) (a) and the contractor or supplier
23establishes that the claimant was provided the notice and brochure under s. 101.148
24(2), the circuit court or arbitrator shall dismiss the action without prejudice. If the
25claimant commences an action but fails to comply with the requirements of sub. (2)
1(a) and the contractor or supplier cannot establish that the notice and brochure was
2delivered to the claimant under s. 101.148 (2), the circuit court or arbitrator shall
3stay the action and order the parties to comply with the requirements of sub. (2) (a)
4and s. 101.148 (2). Before commencing an action against a supplier seeking
5contribution for a claim that a claimant has served on a contractor, the contractor
6shall serve the supplier with a notice of contribution claim under sub. (7). If the
7contractor commences an action against a supplier but fails to serve the notice of
8contribution claim, the circuit court or arbitrator shall stay the action until the
9contractor has complied with the requirements of this subsection and sub. (7).
SB448-SSA3,10,12
10(4) Warranty terms. The claimant and contractor or supplier are bound by any
11contractor or supplier warranty terms pertaining to products or services supplied for
12the dwelling.
SB448-SSA3,10,19
13(5) Additional construction defects and notice and opportunity to repair. 14A construction defect that is discovered after an initial claim or contribution claim
15notice has been provided may not be alleged in an action until the claimant or
16contractor has served the contractor or supplier written notice of the new claim or
17contribution claim regarding the alleged new construction defect. The contractor or
18supplier shall have an opportunity to resolve the notice of the new claim or
19contribution claim in the manner provided in subs. (2) and (7).
SB448-SSA3,10,23
20(6) Action of contractor or supplier. In any action initiated by a contractor
21or supplier in which a claimant raises an affirmative defense or counterclaim
22alleging a construction defect, the claimant is not required to comply with this
23section.
SB448-SSA3,11,5
24(7) Contribution. (a) Before commencing an action seeking contribution from
25a supplier for a claim that a claimant makes against the contractor, the contractor
1shall serve the supplier with a written notice of the claimant's claim and a
2contribution claim within 5 working days after the contractor's receipt of the claim,
3except that a contractor may make a contribution claim later than 5 days after the
4contractor's receipt of the initial claim if the contractor has not done any of the
5following:
SB448-SSA3,11,66
1. Taken any action to repair the defect.
SB448-SSA3,11,77
2. Performed destructive testing.