MISSISSIPPI LEGISLATURE
2003 Regular Session
To: Judiciary A
By: Representative Eads
AN ACT TO ADDRESS CONSTRUCTION DEFECT CLAIMS; TO DEFINE CERTAIN TERMS; TO PROVIDE NOTICE OF ACTIONS AND CLAIMS ABOUT CONSTRUCTION DEFECTS; TO REQUIRE THE LISTING OF KNOWN DEFECTS; TO PROVIDE FOR ACTIONS BY BOARDS OF DIRECTORS; TO REQUIRE NOTICE FROM CONSTRUCTION PROFESSIONALS; TO PROVIDE FOR THE APPLICATION OF THIS ACT TO CONTRACTS; TO PROVIDE A STATUTE OF LIMITATIONS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act may be cited as "An Act to Address Construction Defect Claims."
SECTION 2. The Legislature finds, declares and determines that limited changes in the law are necessary and appropriate concerning actions claiming damages, indemnity or contribution in connection with alleged construction defects. It is the intent of the Legislature that this act apply to these types of civil actions while preserving adequate rights and remedies for property owners who bring and maintain such actions.
SECTION 3. The following words and phrases shall have the meanings ascribed herein unless the context clearly indicates otherwise:
(a) "Action" means any civil lawsuit or action in contract or tort for damages or indemnity brought against a construction professional to assert a claim, whether by complaint, counterclaim, or cross claim, for damage or the loss of use of real or personal property caused by a defect in the construction of a residence or in the substantial remodel of a residence. "Action" does not include any civil action in tort alleging personal injury or wrongful death to a person or persons resulting from a construction defect.
(b) "Association" means an association, master association or sub association.
(c) "Claimant" means a homeowner or association who asserts a claim against a construction professional concerning a defect in the construction of a residence or in the substantial remodel of a residence.
(d) "Construction professional" means an architect, builder, builder vendor, contractor, subcontractor, engineer or inspection, including, but not limited to, a dealer and a declarant performing or furnishing the design, supervision, inspection, construction or observation of the construction of any improvement to real property, whether operating as a sole proprietor, partnership, corporation or other business entity.
(e) "Homeowner" means:
(i) Any person, company, firm, partnership, corporation or association who contracts with a construction professional for the construction, sale or construction and sale of a residence; and
(ii) An "association" as defined in this section. "Homeowner" includes, but is not limited to, a subsequent purchaser of a residence from any homeowner.
(f) "Residence" means a single-family house, duplex, triplex, quadraplex or a unit in a multiunit residential structure in which title to each individual unit is transferred to the owner under a condominium or cooperative system and shall include common elements and common areas.
(g) "Serve" or "service" means personal service or delivery by certified mail to the last known address of the addressee.
(h) Substantial remodel" means a remodel of a residence, for which the total cost exceeds one-half (1/2) of the asssessed value of the residence for property tax purposes at the time the contract for the remodel work was made.
SECTION 4. (1) In every construction defect action brought against a construction professional, the claimant shall, no later than sixty (60) days before filing an action, serve written notice of claim on the construction professional. The notice of claim shall state that the claimant asserts a construction defect claim against the construction professional and shall describe the claim in reasonable detail sufficient to determine the general nature of the defect.
(2) Within twenty-one (21) days after service of the notice of claim, the construction professional shall serve a written response on the claimant by registered mail or personal service. The written response shall:
(a) Propose to inspect the residence that is the subject of the claim and to complete the inspection within a specified time frame. The proposal shall include the statement that the construction professional shall, based on the inspection, offer to remedy the defect, compromise by payment or dispute the claim.
(b) Offer to compromise and settle the claim by monetary payment without inspection. A construction professional's offer under this subsection (2)(b) to compromise and settle a homeowner's claim may include, but is not limited to, an express offer to purchase the claimant's residence that is the subject of the claim, and to pay the claimant's reasonable relocation costs; or
(c) State that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.
(3) (a) If a construction professional disputes the claim or does not respond to the claimant's notice of claim within the time stated in subsection (2) of this section, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
(b) If the claimant rejects the inspection proposal or the settlement offer made by the construction professional pursuant to subsection (2) of this section, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty (30) days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the inspection proposal or settlement offer, then at anytime thereafter the construction professional may terminate the proposal or offer by serving written notice to the claimant, and the clamant may thereafter bring an action against the construction professional for the construction defect claim described in the notice of claim.
(4) (a) If the claimant elects to allow the construction professional to inspect, in accordance with the construction professional's proposal pursuant to subsection (2)(a) of this section, the claimant shall provide the construction 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.
(b) Within fourteen (14) days following completion of the inspection, the construction professional shall serve on the claimant:
(i) A written offer to 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 such construction.
(ii) A written offer to compromise and settle the claim by monetary payment pursuant to subsection (2)(b) of this section; or
(iii) A written statement that the construction professional will not proceed further to remedy the defect.
(c) If the construction professional does not proceed further to remedy the construction defect within the agreed timetable, or if the construction professional fails to comply with the provisions of (b) of this subsection, the claimant may bring an action against the construction professional for the claim described in the notice of claim without further notice.
(d) If the claimant rejects the offer made by the construction professional pursuant to (b)(i) or (ii) of this subsection to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant's rejection on the construction professional. After service of the rejection notice, the claimant may bring an action against the construction professional for the construction defect claim described in the notice of claim. If the construction professional has not received from the claimant, within thirty (30) days after the claimant's receipt of the construction professional's response, either an acceptance or rejection of the offer made pursuant to (b)(i) or (ii) of this subsection, then at anytime thereafter the construction professional may terminate the offer by serving written notice to the claimant.
(5) (a) Any claimant accepting the offer of a construction professional to remedy the construction defect pursuant to subsection (4)(b)(i) of this section shall do so by serving the construction professional with a written notice of acceptance within a reasonable time period after receipt of the offer, and no later than thirty (30) days after the receipt of the offer. The claimant shall provide the construction 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.
(b) The claimant and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer, including, but not limited to, repair of additional defects.
(6) Any action commenced by a claimant prior to compliance with the requirements of this section shall be subject to dismissal without prejudice and may not be recommenced until the claimant has complied with the requirements of this section.
(7) Nothing in this section may be construed to prevent a claimant from commencing an action on the construction defect claim described in the notice of claim if the construction professional fails to perform the construction agreed upon, fails to remedy the defect or fails to perform by the timetable agreed upon pursuant to subsection (2)(a) or (5) of this section.
(8) Prior to commencing any action alleging a construction defect, or after the dismissal of any action without prejudice pursuant to subsection (6) of this section, the claimant may amend the notice of claim to include construction defects discovered after the service of the original notice of claim, and must otherwise comply with the requirements of this section for the additional claims. The service of an amended notice of claim shall relate back to the original notice of claim for purposes of tolling statutes of limitations and repose. Claims for defects discovered after the commencement or recommencement of an action may be added to such action only after providing notice to the construction professional of the defect and allowing for response under subsection (2) of this section.
SECTION 5. (1) In every action brought against a construction professional, the claimant, including a construction professional asserting a claim against another construction professional, shall file with the court and serve on the defendant a list of known construction defects in accordance with this section.
(2) The list of known construction defects shall contain a description of the construction that the claimant alleges to be defective. The list of known construction defects shall be filed with the court and served on the defendant within thirty (30) days after the commencement of the action or within such longer period as the court in its discretion may allow.
(3) The list of known construction defects may be amended by the claimant to identify additional construction defects as they become known to the claimant.
(4) The list of known construction defects must specify, to the extent known to the claimant, the construction professional responsible for each alleged defect identified by the claimant.
(5) If a subcontractor or supplier is added as a party to an action under this section, the party making the claim against such subcontractor or supplier shall serve on the subcontractor or supplier the list of construction defects in accordance with this section within thirty (30) days after service of the complaint against the subcontractor or supplier or within such period as the court in its discretion may allow.
SECTION 6. (1) (a) In the event the board of directors institutes an action asserting defects in the construction of two (2) or more residences, common elements or common areas, this section shall apply. For purposes of this section, "action" has the same meaning as set forth in Section 3 of this act.
(b) The board of directors shall substantially comply with the provisions of this section.
(2) (a) Prior to the service of the summons and complaint on any defendant with respect to an action governed by this section, the board of directors shall mail or deliver written notice of the commencement or anticipated commencement of such action to each homeowner at the last known address described in the association's records.
(b) The notice required by (a) of this subsection shall state a general description of the following:
(i) The nature of the action and the relief sought; and
(ii) The expenses and fees that the board of directors anticipates will be incurred in prosecuting the action.
(3) Nothing in this section may be construed to:
(a) Require the disclosure in the notice or the disclosure to a unit owner of attorney-client communications or other privileged communications;
(b) Permit the notice to serve as a basis for any person to assert the waiver of any applicable privilege or right of confidentiality resulting from, or to claim immunity in connection with, the disclosure of information in the notice; or
(c) Limit or impair the authority of the board of directors to contract for legal services or limit or impair the ability to enforce such a contract for legal services.
SECTION 7. (1) The construction professional shall provide notice to each homeowner upon entering into a contract for sale, construction or substantial remodel of a residence, of the construction professional's right to offer to cure construction defects before a homeowner may commence litigation against the construction by the homeowner. In the sale of a condominium unit, the requirement for delivery of such notice shall be deemed satisfied if contained in a public offering statement.
(2) The notice required by this subsection shall be in substantially the following form:
"This act contains important requirements you must follow before you may file a lawsuit for defective construction against the seller or builder of your home. sixty (60) days before you file your lawsuit, you must deliver to the seller or builder a written notice of any construction conditions you allege are defective and provide your seller or builder the opportunity to make an offer to repair or pay for the defects. you are not obligated to accept any offer made by the builder or seller. there are strict deadlines and procedures under state law, and failure to follow them may affect your ability to file a lawsuit."
(3) This act shall not preclude or bar any action if notice is not given to the homeowner as required by this section.
SECTION 8. Nothing in this act shall be construed to hinder or otherwise affect the employment, agency or contractual relationship between and among homeowners and construction professionals during the process of construction or remodeling and does not preclude the termination of those relationships as allowed under current law. Nothing in this act shall negate or otherwise restrict a construction professional's right to access or inspection provided by law, covenant, easement or contract.
SECTION 9. If a written notice of claim is served under Section 4 of this act within the time prescribed for the filing of an action under this act, the statutes of limitations for construction-related claims are tolled until sixty (60) days after the period of time during which the filing of an action is barred under Section 4 of this act.
SECTION 10. All claims or causes of action as set forth in this act and the applicable statute of limitation shall begin to run only during the period within six (6) years after substantial completion of construction or during the period within six (6) years after the services enumerated in this act. The phrase "substantial completion of construction" shall mean the state of completion reached when an improvement upon real property may be used or occupied for its intended use. Any cause of action which has not accrued within six (6) years after such substantial completion of construction, or within six (6) years after such termination of services, whichever is later, shall be barred, provided that this limitation shall not be asserted as a defense by any owner, tenant or other person in possession and control of the improvement at the time such cause of action accrues. The limitations prescribed in this section apply to all claims or causes of action as set forth in this act brought in the name or for the benefit of the state which are made or commenced after July 1, 2003.
If a written notice is filed under Section 4 of this act within the time prescribed for the filing of an action under this act, the period of time during which the filing of an action is barred under Section 4 of this act plus sixty (60) days shall not be a part of the period limited for the commencement of an action nor for the application of this section.
SECTION 11. This act shall take effect and be in force from and after July 1, 2003.