LRBs0466/1
RPN&RNK:kjf&wlj:ch
2005 - 2006 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO 2005 SENATE BILL 448
January 25, 2006 - Offered by Senator Olsen.
SB448-SSA1,1,3
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 provide the dwelling's owner a brochure explaining
the procedures created in this substitute amendment and giving written notice 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.
Under the substitute amendment, if an owner of a dwelling rejects a reasonable
settlement offer or does not permit the contractor to repair the defect under an
agreed settlement offer, the owner's damages are limited to the fair market value of
the costs of the repairs, or the amount of the monetary offer of settlement, and the
owner may not recover punitive damages, costs, or attorney fees incurred after the
rejection.
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 owner of a dwelling if the contractor and owner contract to construct
or remodel a dwelling.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB448-SSA1,3,2
2101.148 Contractor notices. (1) Definitions. In this section:
SB448-SSA1,3,53
(a) "Consumer" means the owner, tenant, or lessee of a dwelling, or an
4association or other entity with control over the common areas appurtenant to a
5dwelling.
SB448-SSA1,3,76
(b) "Contractor" means a person who enters into a written or oral contract with
7a consumer to construct or remodel a dwelling.
SB448-SSA1,3,128
(c) "Dwelling" means any premises or portion of a premises that is used as a
9home or a place of residence and that part of the lot or site on which the dwelling is
10situated that is devoted to residential use. "Dwelling" includes other existing
11structures on the immediate residential premises such as driveways, sidewalks,
12swimming pools, terraces, patios, fences, porches, garages, and basements.
SB448-SSA1,3,1413
(d) "Remodel" means to alter or reconstruct a dwelling. "Remodel" does not
14include maintenance work.
SB448-SSA1,3,19
15(2) Notice required at time of contracting. (a) Before entering into a written
16contract to construct or remodel a dwelling, or, if the parties enter into an oral
17contract, as soon as reasonably possible, but before commencing any work to
18construct or remodel a dwelling, the contractor shall give the consumer a copy of the
19brochure prepared under s. 895.07 (13) and a notice worded substantially as follows:
SB448-SSA1,3,2120
NOTICE CONCERNING CONSTRUCTION
21
DEFECTS
SB448-SSA1,4,722
Wisconsin law contains important requirements you must follow before you
23may file a lawsuit for defective construction against the contractor who constructed
24your dwelling or completed your remodeling project or against a window or door
25supplier or manufacturer. For example, section 895.07 (2) and (3) of the Wisconsin
1statutes requires you to deliver to the contractor a written notice of any construction
2conditions you allege are defective before you file your lawsuit, and you must provide
3your contractor or window or door supplier the opportunity to make an offer to repair
4or pay for the construction defects. You are not obligated to accept any offer made
5by the contractor or window or door supplier, but failure to accept a reasonable offer
6may limit your recoverable damages. All parties are bound by applicable warranty
7provisions.
SB448-SSA1,4,98
(b) The notice required under par. (a) shall be conspicuous and in writing and
9may be included within the contract between the contractor and the consumer.
SB448-SSA1,4,12
11895.07 Claims against contractors and suppliers. (1) Definitions. In this
12section:
SB448-SSA1,4,1313
(a) "Action" means a civil action or an arbitration under ch. 788.
SB448-SSA1,4,1514
(b) "Claim" means a request or demand to remedy a construction defect caused
15by a contractor or supplier related to the construction or remodeling of a dwelling.
SB448-SSA1,4,1816
(c) "Claimant" means the owner, tenant, or lessee of a dwelling, or an
17association, such as a condominium association or homeowners association, who has
18standing to sue a contractor or supplier regarding a construction defect.
SB448-SSA1,4,2319
(d) "Construction defect," in those cases when the contractor or supplier has
20provided a warranty, means the definition of "defect" in the warranty. In all other
21cases, "construction defect" means a deficiency in the specifications, planning,
22supervision, construction, or remodeling of a dwelling that results from any of the
23following:
SB448-SSA1,4,2424
1. Defective material.
SB448-SSA1,4,2525
2. Violation of applicable codes.
SB448-SSA1,5,1
13. Failure to follow accepted trade standards for workmanlike construction.
SB448-SSA1,5,32
(e) "Contractor" means a person that enters into a written or oral contract with
3a potential claimant to construct or remodel a dwelling.
SB448-SSA1,5,84
(f) "Dwelling" means any premises or portion of a premises that is used as a
5home or a place of residence and that part of the lot or site on which the dwelling is
6situated that is devoted to residential use. "Dwelling" includes other existing
7structures on the immediate residential premises such as driveways, sidewalks,
8swimming pools, terraces, patios, fences, porches, garages, and basements.
SB448-SSA1,5,109
(g) "Remodel" means to alter or reconstruct a dwelling. "Remodel" does not
10include maintenance work.
SB448-SSA1,5,1211
(h) "Serve" or "service" means personal service or delivery by certified mail,
12return receipt requested, to the last-known address of the addressee.
SB448-SSA1,5,1413
(i) "Supplier" means a person that manufactures or provides windows or doors
14for a dwelling.
SB448-SSA1,5,1615
(j) "Working day" means any day except Saturday, Sunday, and holidays
16designated in s. 230.35 (4) (a).
SB448-SSA1,6,4
17(2) Notice and opportunity to repair. (a) No later than 90 working days before
18initiating an action against a contractor or supplier, a claimant shall serve written
19notice of claim on the contractor. Before initiating an action against a contractor or
20supplier, a claimant shall provide the contractor or supplier with the opportunity to
21respond to the claim and repair the construction defect under this section. The notice
22of claim shall state that the claimant asserts a construction defect claim. The notice
23of claim shall describe the claim in sufficient detail to explain the nature of the
24alleged construction defect and the results of the construction defect and shall offer
25the opportunity to correct the construction defect. The claimant shall include in the
1notice of claim a description of the alleged construction defect and include a
2comprehensive description of all evidence that the claimant knows or possesses,
3including expert reports, that substantiates the nature and cause of the alleged
4construction defect.
SB448-SSA1,6,85
(b)
Within 15 working days after the claimant serves notice of claim under par.
6(a), or within 25 working days if the contractor makes a claim for contribution from
7a supplier under sub. (7) (a), each contractor that has received the notice of claim
8shall serve on the claimant any of the following:
SB448-SSA1,6,129
1. A written offer to remedy fully or partially the construction defect at no cost
10to the claimant. The offer shall include a description of any additional construction
11necessary to remedy the construction defect and a timetable for the completion of the
12construction.
SB448-SSA1,6,1313
2. A written offer to settle the claim by monetary payment.
SB448-SSA1,6,1414
3. A written offer including a combination of repairs and monetary payment.
SB448-SSA1,6,2015
4. A written statement that the contractor rejects the claim, and the contractor
16shall state in the written response to the claim the reason for rejecting the claim and
17include a comprehensive description of all evidence the contractor knows or
18possesses, including expert reports, that substantiates the reason for rejecting the
19claim. The contractor shall also include in the written response to the claim any
20settlement offer received from a supplier.
SB448-SSA1,6,2121
5. A proposal for the inspection of the dwelling under par. (c).
SB448-SSA1,7,1822
(c) If a proposal for inspection is made under par. (b), the claimant shall, within
2315 working days of receiving the contractor's proposal, provide the contractor and
24any supplier on whom a contribution claim has been made and its agents, experts,
25and consultants reasonable access to the dwelling to inspect the dwelling, document
1any alleged construction defects, and perform any testing required to evaluate fully
2the nature, extent, and cause of the claimed construction defects and the nature and
3extent of any repairs or replacements that may be necessary to remedy them. If
4destructive testing is required, the contractor shall give the claimant and all persons
5on whom a notice of claim or contribution claim has been served advance notice of
6the testing at least 5 working days before commencement of the testing and shall,
7after completion of the testing, return the dwelling to its pre-testing condition within
8a reasonable time after completion of the testing, at the contractor's expense. If any
9inspection or testing reveals a condition that requires additional testing to allow the
10contractor to evaluate fully the nature, cause, and extent of the construction defect,
11the contractor shall provide notice to the claimant and all persons on whom a notice
12of claim or contribution claim has been served of the need for the additional testing
13and the claimant shall provide reasonable access to the dwelling. If a claim is
14asserted on behalf of the owners of multiple dwellings, then the contractor shall be
15entitled to inspect each of the dwellings. The claimant shall either provide a specific
16day for the inspection upon reasonable notice for an inspection or require the
17contractor to request in writing a date for the inspection, at least 3 working days
18before the inspection.