S 0470 General Bill, By Elliott, Alexander, Martin and Reese

Similar(H 3729)
 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".

   02/08/95  Senate Introduced and read first time SJ-11
   02/08/95  Senate Referred to Committee on Labor, Commerce and
                     Industry SJ-11

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:

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 house 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) `Residential Builders Commission' means the commission created and empowered pursuant to Sections 40-59-10, et seq.

(10) `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 the 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 makes 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; offsite 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 another other than the builder or its employees, agents, or subcontractors;

(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;

(iii) failure by the purchaser to give notice to the builder of any defects within a reasonable time;

(iv) changes of the grading of the ground by anyone other than the builder, its employees, agents, or subcontractors;

(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;

(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 movements 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 the deviation is within the tolerances or acceptable variances promulgated by the Residential Builders Commission.

(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 the 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 extend 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, or are contained in any insurance policy.

(2) The following notice and disclaimer are printed in at least ten point boldface type on both the contract for the sale and purchase of the home and the deed transferring title:

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 builder provides insurance as provided in Section 39-67-30(2) or an executed bond with a surety approved by the Residential Builders Commission in such sum and of such duration as the Residential Builders Commission determines based upon the number of warranties given by a particular builder and the initial purchase prices of homes warranted.

(4) 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 must 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 this 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, 1995, and applies with respect to homes sold to initial purchasers after June 30, 1995.