Download This Bill in Microsoft Word format
Indicates Matter Stricken
Indicates New Matter
S. 84
STATUS INFORMATION
General Bill
Sponsors: Senators McConnell, Moore, Ryberg, Elliott, Alexander, Gregory, Bryant, Fair, Leatherman and Richardson
Document Path: l:\s-jud\bills\mcconnell\jud0031.gfm.doc
Introduced in the Senate on January 11, 2005
Currently residing in the Senate Committee on Judiciary
Summary: Tort Reform Act of 2005 Relating to Construction Defects
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 12/15/2004 Senate Prefiled 12/15/2004 Senate Referred to Committee on Judiciary 1/11/2005 Senate Introduced and read first time SJ-124 1/11/2005 Senate Referred to Committee on Judiciary SJ-124
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO ENACT THE "TORT REFORM ACT OF 2005 RELATING TO CONSTRUCTION DEFECTS" BY AMENDING CHAPTER 11, TITLE 40, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PROFESSIONS AND OCCUPATIONS, BY ADDING ARTICLE 3, SO AS TO PROVIDE FOR RIGHT TO CURE NON-RESIDENTIAL CONSTRUCTION DEFECTS; TO AMEND SECTION 40-59-820, RELATING TO RESIDENTIAL CONSTRUCTION DEFECTS, SO AS TO DEFINE CERTAIN TERMS; TO AMEND SECTION 40-59-830, RELATING TO RESIDENTIAL CONSTRUCTION DEFECTS, SO AS TO REQUIRE COMPLIANCE WITH RIGHT TO CURE BEFORE FILING A CIVIL ACTION; TO AMEND SECTION 40-59-840, RELATING TO RESIDENTIAL CONSTRUCTION DEFECTS, SO AS TO PROVIDE FOR THE TOLLING OF THE STATUTE OF LIMITATIONS WHILE RIGHT TO CURE IS IN PROGRESS; TO AMEND SECTION 40-59-850, RELATING TO RESIDENTIAL CONSTRUCTION DEFECTS, SO AS TO PROVIDE PROCEDURES GOVERNING EXERCISE OF RIGHT TO CURE OPTIONS; AND TO AMEND SECTION 15-3-640, RELATING TO STATUTES OF REPOSE FOR CONSTRUCTION DEFECTS, SO AS TO REDUCE THE OPERATIVE TIME IN THE STATUTE OF REPOSE FROM THIRTEEN TO NINE YEARS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that the sections presented in this act constitute one subject as required by Article III, Section 17 of the South Carolina Constitution, in particular finding that each change and each topic relates directly to or in conjunction with other sections to the subject of tort and other civil action reform as clearly enumerated in the title.
The General Assembly further finds that a common purpose or relationship exists among the sections, representing a potential plurality but not disunity of topics, notwithstanding that reasonable minds might differ in identifying more than one topic contained in the act.
SECTION 2. Chapter 11, Title 40 of the 1976 Code is amended by adding:
Section 40-11-500. This article may be cited as the 'South Carolina Notice and Opportunity to Cure Non-Residential Construction Defects Act.'
Section 40-11-510. As used in this article:
(1) 'Action' means a civil lawsuit or action or arbitration proceeding for damages or indemnity asserting a claim for injury or loss to non-residential property caused by an alleged defect arising out of or related to the design, construction, condition, or sale of the non-residential property, or a remodel of a non-residential property.
(2) 'Claimant' means a non-residential property owner, including a subsequent purchaser, who asserts a claim against a contractor, subcontractor, supplier, or design professional concerning a defect in the design, construction, condition, or sale of a non-residential property or in the remodel of a non-residential property.
(3) 'Construction defect' means a deficiency in or a deficiency arising out of the design, specifications, surveying, planning, supervision, or construction of non-residential improvements that results from any of the following:
(a) defective material, products, or components used in the construction of non-residential improvements;
(b) failure to substantially comply with applicable building codes in effect at the time of construction of non-residential improvements;
(c) failure of the design of non-residential improvements to meet the applicable professional standards of care and applicable building codes at the time of governmental approval of the design of non-residential improvements;
(d) failure to construct non-residential improvements in accordance with accepted trade standards for good and workmanlike construction at the time of construction; or
(e) failure to comply with applicable building codes. Substantial compliance with the applicable building codes in effect at the time of construction conclusively establishes construction in accordance with accepted industry trade standards with respect to all matters specified in those codes.
(4) 'Contractor' means a person licensed or registered pursuant to the provisions of Chapter 11, Title 40 who is engaged in the business of designing, developing, or constructing non-residential properties.
(5) 'Design professional' means a person licensed or registered pursuant to the provisions of Title 40 as an architect, landscape architect, engineer, or surveyor.
(6) 'Non-residential property' means any property, building, structure, or improvement to real property that is not a dwelling as defined in Section 40-59-820.
(7) 'Serve' or 'service' means personal service or delivery by certified mail to the last known address of the addressee.
(8) 'Subcontractor' means a contractor who performs work on behalf of another contractor in the construction of a non-residential property who is licensed or registered pursuant to the provisions of Title 40.
(9) 'Supplier' means a person who provides materials, equipment, or other supplies for the construction of a non-residential property.
Section 40-11-520. If the claimant files an action in court before first complying with the requirements of this article, on motion of a party to the action, the court shall stay the action until the claimant has complied with the requirements of this article.
Section 40-11-530. (A) In an action brought against a contractor, subcontractor, supplier, or design professional arising out of the construction of a non-residential property, the claimant must, no later than ninety days before filing the action, serve a written notice of claim on the contractor, subcontractor, supplier, or design professional. Upon service of the notice, the statute of limitations is tolled until the claim is denied or until completion of repairs by the contractor, subcontractor, supplier, or design professional. The notice of claim must contain the following:
(1) a statement that the claimant asserts a construction defect;
(2) a description of the claim or claims in reasonable detail sufficient to determine the general nature of the construction defect; and
(3) a description of the results of the defect, if known.
(B) The contractor, subcontractor, supplier, or design professional must advise the claimant, within fifteen days of receipt of the claim, if the construction defect is not sufficiently stated and shall request clarification.
Section 40-11-540. (A) The contractor, subcontractor, supplier, or design professional has sixty days from service of the initial notice of claim to inspect, offer to remedy, offer to settle with the claimant, or deny the claim regarding the defects. Within sixty days from the service of the initial notice of claim, the contractor, subcontractor, supplier, or design professional shall serve written notice on the claimant of the contractor's, subcontractor's, supplier's, or design professional's election pursuant to this section. The claimant shall allow inspection of the construction defect at an agreeable time, during normal business hours, to any party, if requested pursuant to this section. The claimant shall give the contractor, subcontractor, supplier, or design professional reasonable access to the property for inspection and if repairs have been agreed to by the parties, reasonable access to effect repairs. Failure of the contractor to respond within sixty days is considered a denial of the claim.
(B) The claimant shall serve a response to the contractor's, subcontractor's, supplier's, or design professional's offer within ten days of receipt of the offer.
(C) If the parties cannot agree to settle the dispute pursuant to this article within ninety days after service of the initial notice of claim on the contractor, subcontractor, supplier, or design professional, the claim is considered denied and the claimant may proceed with a civil action or other remedy provided by contract or by law.
(D) An offer of settlement, repair, or remedy pursuant to this section, is not admissible in an action.
Section 40-11-550. (A) This article does not apply to actions arising out of claims for personal injury, death, or both.
(B) South Carolina Court Administration is directed to develop a designation on the civil action cover sheet which indicates whether a stay has been granted for a civil action filed pursuant to this article."
SECTION 3. A. Section 40-59-820 of the 1976 Code, as added by Act 82 of 2003, is amended to read:
"Section 40-59-820. As used in this article:
(1) 'Action' means any civil lawsuit or action or arbitration proceeding for damages or indemnity asserting a claim for injury or loss to a dwelling or personal property caused by an alleged defect arising out of or related to the design, construction, condition, or sale of the dwelling or a remodel of a dwelling.
(2) 'Claimant' means a homeowner, including a subsequent purchaser, who asserts a claim against a contractor, subcontractor, supplier, or design professional concerning a defect in the design, construction, condition, or sale of a dwelling or in the remodel of a dwelling.
(3) 'Construction defect' means a deficiency in or a deficiency arising out of the design, specifications, surveying, planning, supervision, or observation of construction or construction of residential improvements that results from any of the following:
(a) defective material, products, or components used in the construction of residential improvements;
(b) violation of the applicable codes in effect at the time of construction of residential improvements;
(c) failure of the design of residential improvements to meet the applicable professional standards of care at the time of governmental approval of the design of residential improvements; or
(d) failure to construct residential improvements in accordance with accepted trade standards for good and workmanlike construction at the time of construction.; or
(e) failure to comply with applicable building codes. Compliance Substantial compliance with the applicable codes in effect at the time of construction conclusively establishes construction in accordance with accepted industry trade standards for good and workmanlike construction, with respect to all matters specified in those codes.
(4) 'Contractor' means a person licensed or registered pursuant to the provisions of Chapter 11, Title 40, who is engaged in the business of designing, developing, or constructing dwellings.
(5) 'Dwelling' means a single-family house or duplex or a multifamily unit not to exceed sixteen units and not to exceed three stories in height, and which is intended for residential use. A dwelling includes the systems and other components and improvements that are part of a single or multifamily unit at the time of construction.
(5)(6) 'Serve' or 'service' means personal service or delivery by certified mail to the last known address of the addressee.
(7) 'Subcontractor' means an entity who contracts to perform construction services for a contractor or another subcontractor."
B. Section 40-59-830 of the 1976 Code, as added by Act 82 of 2003, is amended to read:
"Section 40-59-830. If the claimant files an action in court before first complying with the requirements of this article, on motion of a party to the action, the court shall stay the action until the claimant has complied with the requirements of this article. No claimant may file a construction defect action in court before first complying with the requirements of this article."
C. Section 40-59-840 of the 1976 Code, as added by Act 82 of 2003, is amended to read:
"Section 40-59-840. (A) In an action brought against a contractor or subcontractor arising out of the construction of a dwelling, the claimant must serve, no later than ninety days before filing the action, serve a written notice of claim on the contractor or subcontractor. Upon service of the notice, the statute of limitations is tolled until the claim is denied or until completion of repairs by the contractor, subcontractor, or their agents. The notice of claim must contain the following:
(1) a statement that the claimant asserts a construction defect;
(2) a description of the claim or claims in reasonable detail sufficient to determine the general nature of the construction defect; and
(3) a description of any the results of the defect, if known.
(B) The contractor or subcontractor shall advise the claimant, within fifteen days of receipt of the claim, if the construction defect is not sufficiently stated and shall request clarification."
D. Section 40-59-850 of the 1976 Code, as added by Act 82 of 2003, is amended to read:
"Section 40-59-850. (A) The contractor or subcontractor has thirty days from service of the initial notice of claim to inspect, offer to remedy, offer to settle with the claimant, or deny the claim regarding the defects. The claimant shall receive written notice of the contractor's or subcontractor's, as applicable, election under this section Within thirty days from the service of the initial notice of claim, the contractor or subcontractor shall serve written notice on the claimant of the contractor's or subcontractor's election pursuant to this section. The claimant shall allow inspection of the construction defect at an agreeable time to both parties, if requested pursuant to this section. The claimant shall give the contractor and any subcontractors reasonable access to the dwelling for inspection and if repairs have been agreed to by the parties, reasonable access to affect effect repairs. Failure to respond within thirty days is deemed considered a denial of the claim.
(B) The claimant shall serve a response to the contractor's or subcontractor's offer, if any, within ten days of receipt of the offer.
(C) If the parties cannot agree to settle the dispute pursuant to this article, within ninety days after service of the initial notice of claim on the contractor or subcontractor, the claim is considered denied and the claimant may proceed with a civil action or other remedy provided by contract or by law.
(D) Any offers of settlement, repair, or remedy pursuant to this section, are not admissible in an action."
SECTION 4. Section 15-3-640 of the 1976 Code is amended to read:
"Section 15-3-640. (A) No actions to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property may be brought more than thirteen nine years after substantial completion of such an the improvement. For purposes of this section, an action based upon or arising out of the defective or unsafe condition of an improvement to real property includes is an action:
(1) an action to recover damages for breach of a contract to construct or repair an improvement to real property;
(2) an action to recover damages for the negligent construction or repair of an improvement to real property;
(3) an action to recover damages for personal injury, death, or damage to property;
(4) an action to recover damages for economic or monetary loss;
(5) an action in contract or in tort or otherwise;
(6) an action for contribution or indemnification for damages sustained on account of an action described in this subdivision;
(7) an action against a surety or guarantor of a defendant described in this section;
(8) an action brought against any current or prior owner of the real property or improvement, or against any other person having a current or prior interest in the real property or improvement;
(9) an action against owners or manufacturers of components, or against any person furnishing materials, or against any person who develops real property, or who performs or furnishes the design, plans, specifications, surveying, planning, supervision, testing, or observation of construction, or construction of an improvement to real property, or a repair to an improvement to real property.
(B) This section does not apply to actions to recover damages based on exterior insulation and finishing systems.
(C) This section describes an outside limitation of thirteen nine years after the substantial completion of the improvement, within which normal statutes of limitations continue to run.
(D) Any A building permit for the construction of an improvement to real property shall must contain in bold type notice to the owner or possessor of the property of his rights under this section to contract for a guarantee of the structure being free from defective or unsafe conditions beyond thirteen nine years after substantial completion of the improvement. The Department of Consumer Affairs shall publish in conspicuous places the right of any an owner or a possessor to contract for such extended liability under this section. Nothing in this section shall prohibit any prohibits a person from entering into any a contractual agreement prior to the substantial completion of the improvement or component being free from defective or unsafe conditions beyond thirteen years after substantial completion of the improvement or component, with the exception of actions to recover damages based on exterior insulation and finishing systems, which must be brought within thirteen years of substantial completion of the project.
(E) For any improvement to real property, a certificate of occupancy issued by a county or municipality shall constitute proof of substantial completion of the improvement under the provisions of Section 15-3-630, unless the contractor and owner, by written agreement, establish a different date of substantial completion."
SECTION 5. (A) An insurer licensed to transact business in this State must report to the South Carolina Department of Insurance all savings directly related to a decrease in litigation and claims paid pursuant to litigation after the effective date of this act.
(B) The Department of Insurance shall review data reported on annual statements by liability insurers, including, but not limited to, paid claims, reserves, loss adjustment expenses, and such additional data as the department may require by promulgation of its Bulletins, to determine the amount of savings, if any, related to a decrease in litigation and decrease, if any, in claims paid pursuant to litigation after the effective date of this act. The department may require special reports from insurers to determine if savings are realized as a result of the provisions of this act. The department shall compile a report of savings realized as a result of the provisions of this act and submit it for General Assembly review upon request. Costs or expenses associated with the compilation of this report on savings shall be paid by the insurers pursuant to the provisions of Chapter 13 of Title 38.
The Department of Insurance shall review premium and losses by line of insurance to determine if appropriate adjustments have been made based upon department estimates of savings realized pursuant to the provisions of this act.
SECTION 6. The provisions of this act do not affect any right, privilege, or provision of the South Carolina Tort Claims Act as contained in Chapter 78, Title 15 of the 1976 Code of South Carolina or the South Carolina Solicitation of Charitable Funds Act as contained in Chapter 56 of Title 33.
SECTION 7. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
SECTION 8. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 9. Upon approval by the Governor, this act takes effect July 1, 2005, except that:
(1) Section 15-3-640, as contained in SECTION 4, applies to construction completed after January 1, 2005;
(2) Article 3 of Chapter 11 of Title 40, as contained in SECTION 2, applies to construction completed after this act's effective date; and
(3) Sections 40-59-820, 40-59-830, 40-59-840, and 40-59-850, as contained in SECTIONS 3A., B., C., and D., apply to construction completed after this act's effective date.
This web page was last updated on Friday, December 4, 2009 at 3:26 P.M.