South Carolina General Assembly
115th Session, 2003-2004

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Bill 433

Indicates Matter Stricken
Indicates New Matter


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COMMITTEE REPORT

May 28, 2003

S. 433

Introduced by Senators McConnell and Ford

S. Printed 5/28/03--H.

Read the first time May 6, 2003.

            

THE COMMITTEE ON JUDICIARY

To whom was referred a Bill (S. 433) to amend the Code of Laws of South Carolina, 1976, by adding Chapter 47 to Title 15 so as to enact the South Carolina Notice and Opportunity to Cure Dwelling Construction Defects Act, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass with amendment:

Amend the bill, as and if amended, by striking all after the enacting words and inserting:

/SECTION    1.    Chapter 59, Title 40 of the 1976 Code is amended by adding:

"Article 5

Notice and Opportunity to Cure

Construction Dwelling Defects

Section 40-59-810.    This article may be cited as the 'South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act'.

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. Compliance with the applicable codes in effect at the time of construction conclusively establishes construction in accordance with accepted trade standards for good and workmanlike construction, with respect to all matters specified in those codes.

(4)    '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)    'Serve' or 'service' means personal service or delivery by certified mail to the last known address of the addressee.

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.

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, no later than ninety days before filing the action, serve a written notice of claim on the contractor. 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 results of the defect, if known.

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.

Section 40-59-850.    (A)    The contractor or subcontractor has thirty days from service of the notice 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. The claimant shall allow inspection of the construction defect at an agreeable time to both parties, if requested under 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 repairs. Failure to respond within thirty days is deemed a denial of the claim.

(B)    The claimant shall serve a response to the contractor's offer, if any, within ten days of receipt of the offer.

(C)    If the parties cannot settle the dispute pursuant to this article, the claimant may proceed with an action in a court of competent jurisdiction.

(D)    Any offers of settlement, repair, or remedy pursuant to this section, are not admissible in a court of law.

Section 40-59-860.    (A)    Nothing in this article applies to actions arising out of claims for personal injury or death, or both.

(B)    Court Administration must develop a designation on the Civil Action Cover Sheet which indicates whether a one hundred twenty-day stay has been granted for a civil action filed pursuant to the South Carolina Notice and Opportunity to Cure Construction Defects Act."

SECTION    3.    This act takes effect upon approval by the Governor and applies to claims arising on or after this act's effective date./

Renumber sections to conform.

Amend title to conform.

JAMES H. HARRISON for Committee.

            

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 47 TO TITLE 15 SO AS TO ENACT THE SOUTH CAROLINA NOTICE AND OPPORTUNITY TO CURE DWELLING CONSTRUCTION DEFECTS ACT TO ESTABLISH PROCEDURES FOR A HOMEOWNER OR PURCHASER TO ASSERT A CLAIM AGAINST A CONTRACTOR, SUBCONTRACTOR, SUPPLIER, OR DESIGN PROFESSIONAL FOR A CONSTRUCTION DEFECT IN A RESIDENTIAL DWELLING, TO REQUIRE A CLAIMANT TO COMPLY WITH THESE PROCEDURES BEFORE COMMENCING LITIGATION FOR A CONSTRUCTION DEFECT, AND TO PROHIBIT A PERSON FROM PROVIDING ANYTHING OF MONETARY VALUE TO A PROPERTY MANAGER OR A MEMBER OR OFFICER OF AN EXECUTIVE BOARD OF A HOMEOWNER'S ASSOCIATION TO INDUCE THE INDIVIDUAL TO ENCOURAGE OR DISCOURAGE THE ASSOCIATION TO FILE A CLAIM FOR CONSTRUCTION DEFECTS AND TO PROVIDE PENALTIES FOR SUCH VIOLATION.

Whereas, the General Assembly finds that South Carolina needs an alternative method to resolve legitimate construction disputes that would reduce the need for litigation, while adequately protecting the rights of homeowners; and

Whereas, the General Assembly declares that an effective alternative dispute resolution mechanism in certain construction defect matters should involve the claimant filing a notice of claim with the construction professional that the claimant asserts is responsible for the defect and providing the construction professional with the opportunity to resolve the claim without litigation. Now, therefore,

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Title 15 of the 1976 Code is amended by adding:

"CHAPTER 47

Notice and Opportunity to Cure

Construction Dwelling Defects

Section 15-47-10.    This chapter may be cited as the 'South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act'.

Section 15-47-20.    As used in this chapter:

(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. Compliance with the applicable codes in effect at the time of construction conclusively establishes construction in accordance with accepted trade standards for good and workmanlike construction, with respect to all matters specified in those codes.

(4)    'Contractor' means a person, firm, partnership, corporation, association, or other organization that is engaged in the business of designing, developing, constructing, or selling dwellings.

(5)    'Design professional' means:

(a)    a person licensed in this State as an architect, landscape architect, engineer, or surveyor; or

(b)    an interior designer.

(6)    'Designer' means:

(a)    a person who designs one- and two-family dwellings, but is exempt from licensing under Title 40, Chapter 3; or

(b)    an interior designer.

(7)    'Dwelling' means a single-family house or duplex or a multifamily unit not to exceed ten 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.

(8)    'Serve' or 'service' means personal service or delivery by certified mail to the last known address of the addressee.

(9)    'Subcontractor' means a contractor who performs work on behalf of another contractor in the construction of a dwelling.

(10)    'Supplier' means a person who provides materials, equipment, or other supplies for the construction of the dwelling.

Section 15-47-30.    If the claimant files a dwelling action without first complying with the provisions of this chapter, on motion of a party to the action, the court must stay the action until the claimant has complied with the requirements of this chapter.

Section 15-47-40.    (A)    In an action brought against a contractor arising out of the construction of a dwelling, the claimant must, no later than ninety days before filing the action, serve written notice of claim on the contractor. The notice of claim must: (1) state that the claimant asserts a construction defect claim, (2) describe the claim or claims in reasonable detail sufficient to determine the general nature of any alleged construction defects, and (3) include a description of the results of the defects, if known.

(B)    Within fifteen days after the initial service of the notice of claim required pursuant to subsection (A), the contractor must serve a copy of the notice to each subcontractor, supplier, and design professional who the contractor reasonably believes is responsible for a defect specified in the notice and include with the notice the specific defect for which the contractor believes the subcontractor, supplier, or design professional is responsible.

(C)    Upon the request of the contractor, subcontractor, supplier, or design professional who has received a notice pursuant to subsection (A) or (B), the claimant must provide to the contractor, subcontractor, supplier, or design professional any evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect including, but not limited to, expert reports, photographs, and videotapes, if that evidence would be discoverable under state law or South Carolina rules of evidence.

(D)    Within thirty days after service of the notice of claim pursuant to subsection (A) or (B), each contractor, subcontractor, supplier, or design professional who has received a notice of claim must serve a written response on the claimant. The written response must:

(1)    offer to compromise and settle the claim by monetary payment without inspection;

(2)    propose to inspect the dwelling that is the subject of the claim; or

(3)    state that the contractor, subcontractor, supplier, or design professional, as appropriate, disputes the claim and will neither remedy the alleged construction defect nor compromise and settle the claim.

(E)    If the contractor, subcontractor, supplier, or design professional disputes the claim pursuant to subsection (D) and does not (1) remedy the alleged construction defect, (2) compromise and settle the claim, or (3) respond to the claimant's notice of claim within the time allowed in subsection (D), the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the notice of claim without further notice.

(F)    If the claimant rejects the settlement offer or the inspection proposal made by the contractor, subcontractor, supplier, or design professional pursuant to subsection (D), the claimant must serve written notice of his rejection on the contractor, subcontractor, supplier, or design professional. The notice must include the basis for the claimant's rejection of the offer or proposal. After service of the notice of rejection, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the initial notice of claim made pursuant to subsection (A) or (B) without further notice.

(G)    If the claimant elects to allow the contractor, subcontractor, supplier, or design professional to inspect the dwelling in accordance with the proposal made by the contractor, subcontractor, supplier, or design professional's proposal pursuant to subsection (D), the claimant must provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect to determine the nature and cause of the alleged defects and the nature and extent of any repairs or replacements necessary to remedy the alleged defects.

(H)    Within fourteen days after completion of the inspection, the contractor, subcontractor, supplier, or design professional, as appropriate, must serve on the claimant:

(1)    a written offer to:

(a)    remedy the construction defect at no cost to the claimant, including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction necessary to remedy the defect described in the claim, and a timetable for the completion of the construction or repair;

(b)    compromise and settle the claim by monetary payment; or

(2)    a written statement that the contractor, subcontractor, supplier, or design professional does not intend to proceed further to remedy the defect.

(I)    If the claimant: (1) accepts the offer of a contractor, subcontractor, supplier, or design professional made pursuant to subsection (H) but the contractor, subcontractor, supplier, or design professional does not proceed to remedy the construction defect within the offer's stated timetable or make the monetary payment; or (2) receives a written statement that the contractor, subcontractor, supplier, or design professional will not proceed to remedy the defect, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional, as appropriate, in the initial notice of claim made pursuant to subsection (A) or (B) without further notice.

(J)    If the claimant rejects the offer made pursuant to item (1) of subsection (H) by the contractor, subcontractor, supplier, or design professional to remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant must serve written notice of the claimant's rejection on the contractor, subcontractor, supplier, or design professional. The notice must include the basis for the claimant's rejection of the offer of the contractor, subcontractor, supplier, or design professional. After service of the rejection, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional, as appropriate, in the initial notice of claim made pursuant to subsection (A) or (B) without further notice.

(K)    If the claimant accepts the offer made pursuant to item (1) of subsection (H) by the contractor, subcontractor, supplier, or design professional to remedy the construction defects, the claimant must serve the contractor, subcontractor, supplier, or design professional with a written notice of acceptance no later than thirty days after receipt of the offer.

(L)    If the claimant accepts the offer made pursuant to subsection (H) by a contractor, subcontractor, supplier, or design professional to repair a defect, the claimant must provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.

(M)    The claimant's failure to allow a reasonable inspection requested by the contractor, subcontractor, supplier, or design professional, or provide a good faith, written response to a contractor, subcontractor, supplier, or design professional's offer is admissible in an action pursuant to this chapter, and creates a rebuttable presumption that the claimant's damages could have been mitigated.

(N)    The failure of a contractor, subcontractor, supplier, or design professional to respond, in good faith pursuant to subsection (D), to the claimant's initial notice of claim made pursuant to subsection (A) or (B) precludes the contractor, subcontractor, supplier, or design professional from asserting that the claimant did not comply with the provisions of this chapter.

(O)    The claimant's written notice made pursuant to subsection (A) tolls the applicable statute of limitations and statute of repose under Title 15, Chapter 3 for one hundred twenty days after the date the contractor, subcontractor, supplier, or design professional receives the notice.

Section 15-47-50.    A construction defect which is discovered after the claimant has provided a contractor with the notice of claim pursuant to Section 15-47-40(A) must not be the subject of a civil action until the claimant has given the contractor, subcontractor, supplier, or design professional who performed the original construction:

(1)    written notice of the alleged defect pursuant to Section 15-47-40; and

(2)    a reasonable opportunity to repair the alleged construction defect in the manner provided for in Section 15-47-40.

Section 15-47-60.    (A)    A contractor, subcontractor, supplier, or design professional who receives notice of a construction defect pursuant to Section 15-47-40 may present the notice to an insurer that issued a policy of insurance covering all or part of the conduct or business of the contractor, subcontractor, supplier, or design professional.

(B)    A notice provided to an insurer pursuant to subsection (A):

(1)    constitutes the making of a claim under the policy; and

(2)    requires the contractor, subcontractor, supplier, or design professional and the insurer to perform any obligations or duties required by the policy upon the making of a claim.

Section    15-47-70.    (A)    Upon entering into a contract for sale, construction, or substantial remodel of a dwelling, the contractor, subcontractor, supplier, or design professional must provide notice to the owner of the dwelling of the right of the contractor, subcontractor, supplier, or design professional to offer to cure construction defects before the claimant may commence litigation against the contractor, subcontractor, supplier, or design professional. This notice must be conspicuous and may be included as part of the underlying contract.

(B)    The notice required by subsection (A) must be in substantially the following form:

'SOUTH CAROLINA LAW REQUIRES THAT YOU MAY NOT PROCEED WITH A LAWSUIT ALLEGING A DEFECT ARISING OUT OF OR RELATED TO THE DESIGN, CONSTRUCTION, OR CONDITION OF YOUR HOME UNTIL YOU NOTIFY THE CONTRACTOR OF THE ALLEGED DEFECT AND GIVE THE CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS THE OPPORTUNITY TO REPAIR THE DEFECT OR COMPENSATE YOU FOR THE DEFECT. TO COMPLY WITH THIS LAW, YOU MUST DELIVER TO THE CONTRACTOR A WRITTEN NOTICE OF ANY CONDITIONS YOU ALLEGE ARE DEFECTIVE. THE NOTICE TO THE CONTRACTOR, AND ALL SUBSEQUENT NOTICES BETWEEN YOU AND THE CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS MUST BE MADE IN WRITING AND DELIVERED IN PERSON OR MAILED BY CERTIFIED MAIL. AFTER NOTIFYING THE CONTRACTOR OF THE DEFECT, YOU MAY BE REQUIRED TO GIVE THE CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS ACCESS TO YOUR HOME TO INSPECT THE ALLEGED DEFECT. THAT CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, AND DESIGN PROFESSIONALS HAVE 30 DAYS TO RESPOND TO YOUR NOTICE. THE CONTRACTOR IS NOT UNDER ANY OBLIGATION TO REPAIR THE DEFECT AND YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE CONTRACTOR OR ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS. IF YOU ACCEPT THE CONTRACTOR'S OFFER TO MAKE REPAIRS, YOU ALSO WILL BE REQUIRED TO GIVE THE CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, AND DESIGN PROFESSIONALS REASONABLE ACCESS TO YOUR HOME TO EFFECT THE REPAIRS. THIS IN NO WAY WAIVES YOUR RIGHTS AS PRESCRIBED BY APPLICABLE STATUTES TO PROCEED WITH A LAWSUIT, IF YOU BELIEVE THE ALLEGED DEFECT WAS NOT CORRECTED.'

Section 15-47-80.    A contractor who constructs or improves a residential dwelling must, within thirty days after the close of the sale, provide in writing to the initial purchaser of the residence:

(1)    the name, license number, business address, and telephone number of each licensed subcontractor, supplier, and design professional who performed any work related to the design or construction of the dwelling; and

(2)    a brief description of the work performed by each licensed subcontractor, supplier, and design professional.

Section 15-47-90.    Nothing in this chapter applies to actions arising out of claims for personal injury or death, or both."

SECTION    2.    Court Administration must develop a designation on the Civil Action Cover Sheet which indicates whether a one hundred twenty-day stay has been granted for a civil action filed pursuant to the S.C. Notice and Opportunity to Cure Construction Defects Act.

SECTION    3.    This act takes effect upon approval by the Governor and applies to claims arising on or after this act's effective date.

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