SB448: Bill Text

SB448,3,2 101.148 Contractor notices. (1) Definitions. In this section:

SB448,3,3 (a) "Claimant" has the meaning given in s. 895.07 (1) (c).

SB448,3,8 (b) "Contractor" means a person that enters into a contract with a potential claimant to construct a dwelling on the potential claimant's land, to complete a remodeling project on a dwelling on the potential claimant's land, or to complete a remodeling project on the potential claimant's manufactured home. "Contractor" includes a subcontractor.

SB448,3,11 (c) "Dwelling" means any structure or part of a structure that is intended for use as a home, residence, or sleeping place by one or more persons maintaining a common household, to the exclusion of all others.

SB448,3,12 (d) "Manufactured home" has the meaning given in s. 101.91 (2).

SB448,3,13 (e) "Remodel" does not include maintenance and repair work.

SB448,3,15 (f) "Supplier" means a person that manufactures or supplies windows or doors for a dwelling.

SB448,3,20 (2) Notice required at time of contracting. (a) Upon entering into a contract to construct a dwelling, to complete a remodeling project on a dwelling, or to complete a remodeling project on a manufactured home, the contractor shall give the potential claimant, if any, a copy of the brochure prepared under s. 895.07 (12) and a notice worded substantially as follows:

SB448,3,22 NOTICE CONCERNING CONSTRUCTION DEFECTS

SB448,4,8 Wisconsin law contains important requirements you must follow before you may file a lawsuit for defective construction against the contractor who constructed your dwelling or completed your remodeling project or against window or door suppliers. For example, section 895.07 (2) and (3) of the Wisconsin statutes requires you to deliver to the contractor a written notice of any construction conditions you allege are defective before you file your lawsuit, and you must provide your contractor or window or door suppliers the opportunity to make an offer to repair or pay for the construction defects. You are not obligated to accept any offer made by the contractor or window or door suppliers, but failure to accept a reasonable offer may limit your recoverable damages. All parties are bound by applicable warranty provisions.

SB448,4,11 (b) The notice required under par. (a) shall be conspicuous and in writing and may be included within the contract between the contractor and the potential claimant.

SB448, s. 2 Section 2. 895.07 of the statutes is created to read:

SB448,4,14 895.07 Claims against contractors and suppliers. (1) Definitions. In this section:

SB448,4,15 (a) "Action" means a civil action or an arbitration under ch. 788.

SB448,4,17 (b) "Claimant" means a homeowner, other than a developer or builder, who asserts a claim against a contractor or supplier concerning a construction defect.

SB448,4,22 (c) "Construction defect" has the meaning assigned by a written, express warranty provided by the contractor or, if no such meaning is assigned by warranty, means a deficiency in the specifications, planning, supervision, construction, or remodeling of a dwelling or in the remodeling of a manufactured home that results from any of the following:

SB448,4,23 1. Defective material.

SB448,4,24 2. Violation of applicable codes.

SB448,4,25 3. Failure to follow accepted trade standards for workmanlike construction.

SB448,5,3 (d) "Contractor" means a person including a subcontractor, that enters into a contract with a potential claimant to construct a dwelling or to complete a remodeling project on a dwelling or manufactured home.

SB448,5,6 (e) "Dwelling" means any structure or part of a structure that is intended for use as a home, residence, or sleeping place by one or more persons maintaining a common household, to the exclusion of all others.

SB448,5,7 (f) "Manufactured home" has the meaning given in s. 101.91 (2).

SB448,5,9 (g) "Serve" or "service" means personal service or delivery by certified mail, return receipt requested, to the last-known address of the addressee.

SB448,5,11 (h) "Supplier" means a person that manufactures or supplies windows or doors for a dwelling.

SB448,5,13 (j) "Working day" means any day except Saturday, Sunday, and holidays designated in s. 230.35 (4) (a).

SB448,5,20 (2) Action; dismissal without prejudice. Before filing an action against a contractor or supplier for a construction defect, the claimant shall serve the contractor with a written notice of the claim that describes the claim in sufficient detail to determine the general nature of the construction defect. If the claimant files an action but fails to serve the notice of claim, the circuit court shall dismiss the action without prejudice, and the action may not be refiled until the claimant has complied with the requirements of this subsection.

SB448,6,7 (3) Notice and opportunity to repair. (a) No later than 90 working days before initiating an action against a contractor or supplier under this section, the claimant shall serve written notice of claim under sub. (2) on the contractor. The notice of claim shall state that the claimant asserts a construction defect claim or claims and is providing notice under this paragraph. The notice of claim shall describe the claim or claims in sufficient detail to explain the nature of the alleged construction defect and the results of the construction defect. The claimant shall provide to the contractor all evidence the claimant knows or possesses, including expert reports, photographs, electronic mail, and videotapes that depict the nature and cause of the alleged construction defect. In addition, the claimant shall provide to the contractor any evidence discoverable under ch. 804 that depicts the nature and cause of the construction defect, including expert reports, photographs, and videotapes.

SB448,6,15 (b) Within 15 working days after the claimant serves notice of claim under par. (a), or within 25 working days if the contractor makes a claim for contribution from a supplier under sub. (9) (a), each contractor that has received the notice of claim may serve on the claimant, and on any other contractor that has received the notice of claim and on any supplier that has received a claim for contribution under sub. (9) (a), a written response to the claim or claims that either offers to settle the claim by monetary payment, the making of repairs, or a combination of both, without inspection, or proposes to inspect the dwelling that is the subject of the claim.

SB448,6,23 (c) Within 15 working days after a supplier has received notice that a contractor is seeking contribution under sub. (9) (a), the supplier may serve the contractor with a written response that offers to settle the contribution claim by payment, by repair, or by both payment and repair without inspection or that offers to inspect the dwelling that is the subject of the contribution claim. If a contribution claim is made, the contractor shall forward all responses from the supplier to the claimant. The supplier and contractor shall use their best efforts to coordinate their responses to claims and contribution claims.

SB448,7,2 (d) If the contractor wholly rejects the claim and will neither remedy the alleged construction defect nor settle the claim, or does not respond to the claimant's notice of claim within the time under par. (b), the claimant may bring an action against the contractor for the claims described in the notice of claim without further notice.

SB448,7,11 (e) If the claimant rejects a settlement offer made by the contractor, the claimant shall provide written notice of the claimant's rejection to the contractor. The notice shall include the specific factual and, if known, legal reasons for the claimant's rejection of the contractor's proposal or offer. If the claimant believes that the settlement offer omits reference to any portion of the claim, or was unreasonable, the claimant shall in its written notice include those items that the claimant believes were omitted and set forth in detail all reasons why the claimant believes the settlement offer is unreasonable. The contractor shall forward the claimant's response to a supplier upon whom a contribution claim has been made.

SB448,8,8 (f) If a proposal for inspection is made under par. (b), the claimant shall, within 15 working days of receiving the contractor's proposal, provide the contractor and any supplier on whom a contribution claim has been made and its agents, experts, and consultants prompt and complete access to the dwelling to inspect the dwelling, document any alleged construction defects, and perform any testing required to evaluate fully the nature, extent, and cause of the claimed construction defects and the nature and extent of any repairs or replacements that may be necessary to remedy them. If destructive testing is required, the contractor shall give the claimant and all persons on whom a notice of claim or contribution claim has been served advance notice of the testing at least 5 working days before commencement of the testing and shall, after completion of the testing, return the dwelling to its pre-testing condition. If any inspection or testing reveals a condition that requires additional testing to allow the contractor to evaluate fully the nature, cause, and extent of the construction defect, the contractor shall provide notice to the claimant and all persons on whom a notice of claim or contribution claim has been served of the need for the additional testing and the claimant shall provide access under this paragraph. If a claim is asserted on behalf of the owners of multiple dwellings, or multiple owners of units within a multifamily complex, then the contractor shall be entitled to inspect each of the dwellings or units. The claimant shall either provide a specific day for the inspection upon reasonable notice for an inspection or require the contractor to request in writing a day, at least 3 working days before the inspection.

SB448,8,11 (g) Within 10 working days following completion of the inspection and receipt of all testing results under par. (f), the contractor may serve on the claimant any of the following:

SB448,8,15 1. A written offer to remedy fully or partially the construction defect at no cost to the claimant. The offer shall include a description of any additional construction necessary to remedy the construction defect and a timetable for the completion of the construction.

SB448,8,16 2. A written offer to settle the claim by monetary payment.

SB448,8,17 3. A written offer including a combination of repairs and monetary payment.

SB448,8,19 4. A written statement that the contractor will not proceed further to remedy the construction defect.

SB448,9,3 (h) If a claimant accepts a contractor's offer made under par. (g) within 15 working days after receipt of the offer, or if the offer is deemed accepted under par. (n), and the contractor does not proceed to make the monetary payment or remedy the construction defect within the agreed timetable, the claimant may bring an action against the contractor for the claim described in the notice of claim without further notice. The claimant may also file the contractor's offer and claimant's acceptance in the circuit court action, and the offer and acceptance creates a rebuttable presumption that a binding and valid settlement agreement has been created and should be enforced by the court.

SB448,9,7 (i) If a claimant receives a written statement that the contractor will not proceed further to remedy the construction defect, the claimant may bring an action against the contractor for the claim described in the notice of claim without further notice.

SB448,9,15 (j) If the claimant rejects the offer made by the contractor to remedy the construction defect or to settle the claim by monetary payment or a combination of each, the claimant shall serve written notice of the claimant's rejection on the contractor within 15 working days after receipt of the offer. The notice shall include the specific factual and, if known, legal reasons for the claimant's rejection of the contractor's offer. If the claimant believes the contractor's settlement offer is unreasonable, the claimant shall set forth in detail all reasons why the claimant believes the settlement offer is unreasonable.

SB448,9,18 (k) Upon receipt of a claimant's rejection and the reasons for the rejection, the contractor may, within 5 working days after receiving the rejection, make a supplemental offer of repair or monetary payment to the claimant.

SB448,9,25 (L) If the claimant rejects the supplemental offer made by the contractor under par. (k) to remedy the construction defect or to settle the claim by monetary payment or a combination of each, the claimant shall serve written notice of the claimant's rejection on the contractor within 15 working days after receipt of the supplemental offer. The notice shall include the specific factual and, if known, legal reasons for the claimant's rejection of the contractor's supplemental settlement offer. If the claimant believes the contractor's supplemental settlement offer is unreasonable, the claimant shall set forth in detail all reasons why the claimant believes the supplemental settlement offer is unreasonable. If the contractor declines to make a supplemental offer, or if the claimant rejects the supplemental offer, the claimant may bring an action against the contractor for the claim described in the notice of claim without further notice.

SB448,10,15 (m) If a claimant rejects a reasonable offer or reasonable supplemental offer made under this subsection, or does not permit the contractor to repair the construction defect pursuant to an accepted offer of settlement, the claimant may not recover an amount in excess of the fair market value of the offer of settlement, or the actual cost of the repairs made, whichever is less, or the amount of a monetary offer of settlement. For purposes of this paragraph, the trier of fact shall determine the reasonableness of an offer of settlement. If the claimant has rejected a reasonable offer or reasonable supplemental offer, and any other law allows the claimant to recover costs and attorney fees, then the claimant may recover no costs or attorney fees incurred after the date of its rejection.

SB448,10,24 (n) A claimant accepting the offer of the contractor to remedy a construction defect shall do so by serving the contractor with a written notice of acceptance within a reasonable period of time after receipt of the contractor's settlement offer, but no later than 15 working days after receipt of the offer. If no response is served upon the contractor within the 15-working day period, then the offer shall be deemed accepted. If all requirements under this section have been fulfilled, and if the claimant has rejected any outstanding offers, the claimant may bring an action against the contractor for the claim described in the notice of claim without further notice.

SB448,11,5 (o) If a claimant accepts a contractor's offer to repair a construction defect described in a notice of claim, the claimant shall provide the contractor and its agents, experts, and consultants prompt and unfettered access to the dwelling to perform and complete the construction by the timetable stated in the settlement offer.

SB448,11,11 (p) If, during the pendency of the notice, inspection, offer, acceptance, or repair process, an applicable limitation period would otherwise expire, the limitation period is tolled pending completion of the notice of claim process described in this section. This paragraph shall not be construed to revive a limitation period that has expired before the date on which a claimant's written notice of claim is served or extend any applicable statute of repose.

SB448,11,14 (q) After the sending of the initial notice of claim and initial contribution claim, a claimant, a contractor, and a supplier may, by written mutual agreement, alter the procedure for the notice of claim process described in this section.

SB448,11,17 (4) Contractor or supplier not liable for certain damages. In an action relating to a dwelling involving a construction defect, a contractor or supplier shall not be liable for damages involving or caused by any of the following:

SB448,11,19 (a) Normal shrinkage due to drying or settlement of construction components within the tolerance of construction standards.

SB448,11,22 (b) The contractor's or supplier's reliance on written information relating to the dwelling that was obtained from official government records or provided by a government entity.

SB448,11,24 (c) Any construction defect known by or disclosed to a claimant in writing before his or her purchase of the dwelling.

SB448,11,25 (d) Any construction defect in a dwelling that is purchased in "as is" condition.

SB448,12,3 (e) If the claimant is not the first owner of the dwelling, any construction defect known by the claimant or that could have been discovered by the claimant through the exercise of reasonable diligence before the claimant's purchase of the dwelling.

SB448,12,5 (f) Refusal of anyone to allow the contractor or supplier or the contractor's or supplier's agents to perform their warranty service work.

SB448,12,8 (5) Warranty terms. The claimant and contractor or supplier are bound by any contractor or supplier warranty terms pertaining to products or services supplied for the dwelling.

SB448,12,17 (6) Additional construction defects and notice and opportunity to repair. A construction defect that is discovered after an initial claim or contribution claim notice has been provided may not be alleged in an action until the claimant or contractor has given the contractor or supplier who performed the original construction work or provided supplies written notice of the new claim or contribution claim regarding the alleged new construction defect based on the claimant's or contractor's most current records. The contractor or supplier shall have an opportunity to resolve the notice of the new claim or contribution claim in the manner provided in subs. (3) and (9).

SB448,12,25 (7) Release; insurance. If a claimant or contractor accepts an offer made in compliance with this section and the contractor or supplier fulfills the offer in compliance with this section, an action brought by the claimant or contractor for the claim described in the notice of claim shall be dismissed with prejudice and the contractor or supplier is, for insurance purposes, legally obligated to make the repairs or the monetary payment as if the claimant or contractor had recovered a judgment against the contractor or supplier in the amount of the cost of the repairs or the amount of the monetary payment.

SB448,13,5 (8) Action of associations. (a) In this subsection, "association" means a homeowner's association, condominium association under s. 703.02 (1m), unit owner's association, or a nonprofit corporation created to own and operate portions of a planned community that may assess unit owners for the costs incurred in the performance of the association's obligations.

SB448,13,10 (b) A person may not provide or offer to provide anything of value, directly or indirectly, to a property manager of an association or to a member or officer of an association to induce the property manager, member, or officer to encourage the association to file or discourage the association from filing a claim for damages arising from a construction defect.

SB448,13,14 (c) A property manager retained by an association or a member or officer of an association may not accept anything of value, directly or indirectly, in exchange for encouraging to file or discouraging from filing a claim for damages on behalf of the association arising from a construction defect.

SB448,13,16 (d) A person who knowingly violates par. (b) or (c) may be fined not more than $500 or imprisoned not more than 30 days, or both.

SB448,13,20 (e) An association may bring an action against a contractor to recover damages resulting from construction defects in any of the common elements or limited common elements of a condominium, as defined in s. 703.02 (2) and (10). Such an action may be maintained only after all of the following occur:

SB448,13,23 1. The association first obtains the written approval of each unit's owner whose interest in the common elements or limited common elements will be subject of the action.

SB448,13,25 2. A vote is held of the units' owners to which at least a majority of the votes of the members of the association are allocated.

SB448,14,4 3. The full board of directors of the association and the contractor have met in person and conferred in a good faith attempt to resolve the association's claim, or the contractor has definitively declined or ignored the requests to meet with the board of directors of the association.

SB448,14,6 4. The association has otherwise satisfied all of the pre-action requirements for a claimant to commence an action under this section.

SB448,14,11 (f) At least 3 working days in advance of any vote to commence an action by an association to recover damages resulting from construction defects in any of the common elements or limited common elements of a condominium, the attorney representing the association shall provide to each unit's owner a written statement that includes, in reasonable detail all of the following:

SB448,14,13 1. The construction defects and damages or injuries to the common elements or limited common elements.

SB448,14,14 2. The cause of the construction defects, if the cause is known.

SB448,14,16 3. The nature and the extent that is known of the damage or injury resulting from the construction defects.

SB448,14,18 4. The location of each construction defect within the common elements or limited common elements, if known.

SB448,14,20 5. A reasonable estimate of the cost of the action, including reasonable attorney fees and costs, expert fees, and the costs of testing.

SB448,14,22 6. All disclosure that the unit owner is required to make upon the sale of the unit.

SB448,15,2 (g) An association or an attorney for an association may not employ a person to perform destructive tests to determine any damage or injury to a unit, common element, or limited common element caused by a construction defect unless all of the following are true:

SB448,15,3 1. The person has expertise in the testing.

SB448,15,6 2. The association has obtained the prior written approval of each unit's owner whose unit or interest in the common element or limited common element will be affected by the testing.

SB448,15,7 3. The person performing the tests has provided a written schedule for repairs.

SB448,15,9 4. The person performing the tests is required to repair all damage resulting from the tests in accordance with state laws and applicable local ordinances.

SB448,15,11 5. The association or the person so employed obtains all permits required to conduct the tests and to repair any damage resulting from the tests.

SB448,15,13 6. Reasonable prior notice and opportunity to observe the tests is given to the contractor against whom an action may be brought as a result of the tests.

SB448,15,19 (h) An association may commence an action only upon a vote or written agreement of the owners of the units to which at least a majority of the votes of the members of the association are allocated. In such a case, the association shall provide written notice to the owner of each unit of the meeting at which the commencement of an action is to be considered or action is to be taken at least 15 working days before the meeting.

SB448,15,23 (i) The board of directors of an association may, without giving notice to the units' owners, employ a contractor and other persons necessary to make immediate repairs to a unit or common element within the condominium as are required to protect the health and safety of the units' owners.

SB448,16,12 (9) Contribution. (a) A contractor may not seek contribution from a supplier for a claim that a claimant makes against the contractor unless the contractor provides the supplier with a written notice of the claimant's claim and the contribution claim within 5 working days after the contractor's receipt of the claim. The contractor shall explain the contribution claim in sufficient detail to explain the nature and results of the alleged construction defect. The contractor shall provide the supplier all evidence the contractor knows or possesses, including expert reports, photographs, electronic mail, and videotapes that depict the nature and cause of the alleged construction defect. In addition, the contractor shall provide to the supplier any evidence discoverable under ch. 804 that depicts the nature and cause of the alleged construction defect, including expert reports, photographs, and videotapes. The evidence provided to the supplier shall include all of the evidence provided to the contractor by the claimant. The contractor may not later use evidence in an action under this section that the contractor withholds or fails to produce.

SB448,16,19 (b) Within 15 working days after a supplier has received notice that a contractor is seeking contribution under par. (a), the supplier may serve the contractor with a written response that offers to settle the contribution claim by payment, by repair, or by both payment and repair without inspection or that offers to inspect the dwelling that is the subject of the contribution claim. The contractor shall forward the supplier's response to the claimant. The supplier and contractor shall use their best efforts to coordinate their responses to claims and contribution claims.

SB448,16,24 (c) If the supplier wholly rejects the contribution claim and will neither remedy the alleged construction defect nor settle the claim, or does not respond to the contractor's notice of contribution claim within the time under par. (b), the contractor may bring an action against the supplier for the claims described in the notice of contribution claim without further notice.

SB448,17,11 (d) If the contractor rejects a settlement offer made by the supplier, the contractor shall provide written notice of the contractor's rejection to the supplier and, if the supplier is represented by legal counsel, the supplier's attorney. The notice shall include the specific factual and, if known, legal reasons for the contractor's rejection of the supplier's proposal or offer. If the contractor believes that the settlement offer omits reference to any portion of the claim, or was unreasonable, the contractor shall in its written notice include those items that the contractor believes were omitted and set forth in detail all reasons why the contractor believes the settlement offer is unreasonable. In any subsequent action in which the contractor asserts that the settlement offer was unreasonable, the contractor may not raise any reasons that were not included in its response to the supplier.

SB448,18,8 (e) If a supplier proposes to inspect the dwelling that is the subject of the contribution claim, the contractor and claimant shall, within 15 working days after receiving the supplier's proposal, provide the supplier and its agents, experts, and consultants prompt and complete access to the dwelling to inspect the dwelling, document any alleged construction defects, and perform any testing required to evaluate fully the nature, extent, and cause of the claimed construction defects and the nature and extent of any repairs or replacements that may be necessary to remedy them. If destructive testing is required, the supplier shall give the contractor and claimant and all persons on whom a notice of claim or contribution claim has been served advance notice of the testing at least 5 working days before commencement of the testing and shall, after completion of the testing, return the dwelling to its pre-testing condition. If any inspection or testing reveals a condition that requires additional testing to allow the supplier to evaluate fully the nature, cause, and extent of the construction defect, the supplier shall provide notice to the contractor and claimant and all persons on whom a notice of claim or contribution claim has been served of the need for the additional testing and the contractor and claimant shall provide access under this paragraph. If a claim is asserted on behalf of the contractor of multiple dwellings, or multiple owners of units within a multifamily complex, then the supplier shall be entitled to inspect each of the dwellings or units. The contractor and claimant shall either provide a specific day for the inspection upon reasonable notice for an inspection or require the supplier to request in writing a day, at least 3 working days before the inspection.

SB448,18,11 (f) Within 10 working days following completion of the inspection and receipt of all testing results under par. (e), the supplier may serve on the contractor any of the following:

SB448,18,15 1. A written offer to remedy fully or partially the construction defect at no cost to the contractor. The offer shall include a description of any additional construction necessary to remedy the construction defect and an anticipated timetable for the completion of the construction.