S 300 Session 109 (1991-1992)
S 0300 General Bill, By Setzler
A Bill to amend Title 39, Code of Laws of South Carolina, 1976, relating to
trade and commerce, by adding Chapter 67 so as to enact The Homebuyers
Protection and Warranty Act.
11/12/90 Senate Prefiled
11/12/90 Senate Referred to Committee on Labor, Commerce and Industry
01/08/91 Senate Introduced and read first time SJ-104
01/08/91 Senate Referred to Committee on Labor, Commerce and
Industry SJ-104
A BILL
TO AMEND TITLE 39, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO TRADE AND COMMERCE, BY ADDING
CHAPTER 67 SO AS TO ENACT THE HOMEBUYERS
PROTECTION AND WARRANTY ACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The purpose of this act is to protect the new homebuyer
by providing certain express minimum warranties which must be given
when the seller disclaims implied warranties including, but not limited
to, implied warranties of habitability and fitness.
SECTION 2. Title 39 of the 1976 Code is amended by adding:
"CHAPTER 67
Homebuyers Protection and Warranty Act
Section 39-67-10. This chapter may be cited as the 'Homebuyers
Protection and Warranty Act'.
Section 39-67-20. As used in this chapter:
(1) 'Building standards' means the standards contained in the
Building Code, Mechanical - Plumbing Code and Electrical Code in
effect in the county or municipality where a dwelling is located, at the
time construction of that dwelling commences, together with such
additional performance standards, if any, which the builder undertakes
to meet.
(2) 'Building inspector' means the person appointed or employed
by a county or municipality to enforce building standards.
(3) 'Home' means a single to four family house, a for-sale
multiunit residential structure in which title to the individual units is to
be transferred to purchasers or a condominium unit.
(4) 'Initial purchaser' means a person for whom a home is built or
the first person to whom a home is sold for occupancy by him or his
family as a residence.
(5) 'Initial purchase price' means the price paid for the home by
the initial purchaser, exclusive of that portion of the price paid for land,
outbuildings, driveways, sidewalks, patios, unconnected garages,
swimming pools, and other improvements not connected to and forming
a part of the home.
(6) 'Purchaser' means the initial purchaser of a home and any of
his successors in title to a home during the time the statutory warranties
are in effect.
(7) 'Builder' means the person, corporation, partnership, or other
entity which constructs a home for the purpose of sale.
(8) 'Major structural defect' means actual physical damage to the
following designated load-bearing portions of the home caused by
failure of the load-bearing portions which affect their load-bearing
functions to the extent that the home becomes unsafe, unsanitary, or
otherwise unlivable: (a) foundation systems and footings; (b) beams; (c)
girders; (d) lintels; (e) columns; (f) walls and partitions; (g) floor
systems; and (h) roof framing systems.
(9) 'Warranty commencement date' means the date that legal or
equitable title to a new home is conveyed to its initial purchaser or the
date that a new home is first occupied by the initial tenant, or initial
purchaser, or the immediate family of its initial purchaser, whichever
occurs first.
Section 39-67-30. The builder of a home may provide an express
written warranty to the initial purchaser which provides:
(1) The written warranty must provide that the builder warrants
as follows with respect to the home:
(a) that for one year following the warranty commencement date,
the home must be free from defects due to noncompliance with the
building standards and free from defects caused by faulty workmanship
or defective materials;
(b) that for two years following the warranty commencement
date, the new home must be free from defects caused by faulty
installation of plumbing, electrical, heating, cooling, and ventilating
systems;
(c) that for ten years following the warranty commencement date
the home must be free from major structural defects;
(2) All or any part of the coverage delineated by item (1) may be
provided by the builder by means of insurance coverage issued by an
insurance company authorized to issue such coverage. A reference in
this chapter to the written warranty must be construed as including the
insurance coverage, if any.
(3) The written warranty and the insurance coverage, if any, must
set forth a reasonable procedure to be used by a purchaser to report
defects to the building or insurance company.
(4) The written warranty must provide that, upon timely notice to
the builder or insurer, if any, in accordance with the claim procedure set
forth in the written warranty or insurance, of a defect covered by the
written warranty or insurance, the builder or insurer, within a reasonable
time, shall repair, replace, or pay the purchaser the reasonable cost of
repairing or replacing the defect. The choice among repair, replacement,
or payment may be made by the builder or insurer, as appropriate, at its
sole option. Repair of a major structural defect may be limited to: (a)
the repair of damage to the load-bearing elements of the home
itself which is necessary to restore their load-bearing ability; and (b) the
repair of those items of the home damaged by the major structural defect
which make the home unsafe, unsanitary, or otherwise unlivable.
(5) The written warranty and insurance, if any, may exclude any
or all of the following:
(a) defects in outbuildings including detached garages and
detached carports, except outbuildings which contain the plumbing,
electrical, heating, cooling, or ventilation systems serving the home;
swimming pools and other recreational facilities; driveways; walkways;
patios; boundary walls; retaining walls; bulkheads; fences; landscaping,
including sodding, seeding, shrubs, trees, and plantings; off-site
improvements including streets, roads, drainage, and utilities or any
other improvements not a part of the home itself;
(b) after the first year, concrete floors of basements and
concrete floors of attached garages that are built separate from
foundation walls or other structural elements of the home;
(c) damage to real property which is not part of the home covered
by the warranty and which is not included in the purchase price of the
home;
(d) any damage to the extent it is caused or made worse by:
(i) negligence, improper maintenance, or improper operation by anyone
other than the builder or its employees, agents, or subcontractors; or (ii)
failure by anyone other than the builder or its employees, agents, or
subcontractors to comply with the warranty requirements of
manufacturers of appliances, equipment, or fixtures; or (iii) failure by
the purchaser to give notice to the builder of any defects within a
reasonable time; or (iv) changes of the grading of the ground by anyone
other than the builder, its employees, agents, or subcontractors; or (v)
changes, alterations, or additions made to the home by anyone after
initial occupancy by the purchaser, except those performed by the
builder, or its agents or subcontractors; or (vi) dampness or condensation
due to the failure of the purchaser to maintain adequate ventilation.
(e) any loss or damage which the purchaser has not taken timely
action to minimize;
(f) any defect in, or caused by, materials or work supplied by
anyone other than the builder or its employees, agents, or
subcontractors;
(g) normal wear and tear or normal deterioration;
(h) loss or damage which does not constitute a defect in the
construction of the home by the builder or his employees, agents, or
subcontractors;
(i) loss or damage resulting from accidents, riot and civil
commotion, fire, explosion, smoke, water escape, falling objects,
aircraft, vehicles, acts of God, lightning, windstorm, hail, flood,
mudslide, earthquake, volcanic eruption, wind driven water, and changes
in the level of the underground water table which are not reasonably
foreseeable;
(j) damage caused by soil movement for which compensation is
provided by legislation or which is covered by other insurance.
(k) insect damage;
(l) any loss or damage which arises while the home is being used
primarily for nonresidential purposes;
(m) failure of the builder to complete construction of the home;
(n) any condition which does not result in actual physical
damage to the home;
(o) bodily injury or damage to personal property;
(p) costs of shelter, transportation, food, moving, storage, or
other incidental expenses related to relocation during repair;
(q) any defect not reported to the builder or insurance
company, as appropriate, before the expiration of the period of coverage
of that defect plus a thirty-day grace period;
(r) consequential damages;
(s) any defect in an electrical, plumbing, heating, air
conditioning, or similar fixture not manufactured by the builder for
which the manufacturer provides a warranty regardless of duration;
(t) any defect in an appliance or consumer goods sold in
conjunction with the home, including, but not limited to, washers,
dryers, ceiling fans, refrigerators, stoves, ice makers, garbage disposals,
dishwashers, and humidifiers;
(u) any loss or damage to a home caused by soil conditions or
movement if the home is constructed on land owned by the initial
purchaser and the builder obtains a written waiver from the initial
purchaser for all loss or damage caused by soil conditions or soil
movement;
(v) any deviation from the building standards, whether or not
such deviation results in a defect, where a building inspector has
inspected the home and issued or rendered a certificate of occupancy,
final inspection, or otherwise indicated that the home is in compliance
with the building standards;
(6) The written warranty and any insurance coverage under items
(1) and (2) must be automatically transferable, without charge, to any
subsequent purchaser who acquires title to the home, provided that
transfer of the home does not extend the duration of any coverage of the
written warranty or the insurance coverage.
(7) The written warranty and insurance, if any, may limit the
builder's and insurer's total liability to all purchasers for all defects,
losses, or damages to the initial purchase price.
(8) Items (1) through (7) set forth minimum standards for the
written warranty. A builder who delivers to the initial purchaser a
written warranty providing coverage additional to that required by this
chapter is considered to have complied fully with this section. The
written warranty need not be in language similar to that of this chapter
if its coverage is at least that required by this chapter.
(9) The written warranty and insurance, if any, may contain
provisions for the binding arbitration of any disputed claim. Any
arbitration pursuant to a provision of the written warranty must comply
with, and may be binding only to the extent provided in Chapter 48,
Title 15, the Uniform Arbitration Act, and must contain the notice
provided in that chapter.
Section 39-67-40. A builder may only effectively and fully
disclaim all implied warranties, including warranties of habitability and
fitness, if the following conditions are met:
(1) The minimum warranties defined in Section 39-67-30 are
provided for in the written contract or attachment to the contract
between the builder and the initial purchaser of the home.
(2) The following notice and disclaimer are printed in at least ten
point bold face type:
THE SELLER (builder, grantor, etc., as appropriate) PROVIDES
ONLY THAT LIMITED WARRANTY WHICH IS SET FORTH IN
THE ATTACHED WRITTEN WARRANTY. THIS LIMITED
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
HABITABILITY AND FITNESS.
BY SIGNING THIS AGREEMENT THE PURCHASER
ACKNOWLEDGES THAT THE WRITTEN WARRANTY IS
ATTACHED TO THIS CONTRACT AND THAT THE PURCHASER
IS WAIVING ANY RIGHT TO ALL OTHER WARRANTIES
(INCLUDING IMPLIED WARRANTIES OF HABITABILITY AND
FITNESS) WHICH MAY BE GREATER THAN THE WRITTEN
WARRANTY.
(3) The disclaimer is fully effective as to all purchasers and any
subsequent purchasers of the home.
Section 39-67-50. (A) Subject to Section 39-67-30(9) providing
for binding arbitration, if a builder or insurer, if any, fails to perform
under the terms of the written warranty or insurance, respectively, any
affected purchaser has a cause of action for actual damages. These
damages with respect to a single defect may not exceed the reasonable
cost of repair or replacement of the defect and damages with respect to
all defects in the home may not exceed the original purchase price of the
home. No other damages may be awarded, except that if the court or
arbitrators find that the builder acted in bad faith reasonable attorney's
fees, not to exceed twenty percent of the amount received may be
awarded in the discretion of the court or arbitrators.
(B) Any action or arbitration pursuant to this chapter must be
commenced within one year after the expiration of the warranty period
for which a defect is claimed or is forever barred.
(C) This chapter provides the exclusive remedies, warranties, and
limiting periods as between the builder and all purchasers and
subsequent purchasers relative to the construction of homes and related
improvements and no other provision of law relative to warranties or
defects applies if a builder has provided the minimum warranty
contained in this chapter. No action lies in tort or negligence for any
defect which is covered by the minimum warranty or excludable
therefrom as provided in this chapter.
Section 39-67-60. (A) Nothing contained in this chapter may be
construed to affect or limit a warranty of title with respect to land.
(B) This chapter may be construed liberally so as to give the
broadest possible effect to the warranties and disclaimers provided in
this chapter. If there is a dispute as to whether a specific written
warranty complies with this chapter, the written warranty must be
construed in the manner most likely to result in the warranty meeting the
minimum standards provided in this chapter. Disclaimers must be
construed broadly so as to limit builder and insurer liability to the terms
of the written warranty without imposing liability outside the terms of
the written warranty."
SECTION 3. This act takes effect July 1, 1991, and applies with respect
to homes sold to initial purchasers after June 30, 1991."
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