House File 678 H-1105 Amend House File 678 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < Section 1. NEW SECTION . 686.1 Definitions. 4 As used in this chapter, unless the context otherwise 5 requires: 6 1. “Action” means any civil action or arbitration proceeding 7 for damages or indemnity asserting a claim for injury to 8 property, real or personal, arising out of the unsafe or 9 defective condition of an improvement to real property based on 10 tort, breach of contract, or express or implied warranty. 11 2. “Association” means an entity or homeowners association 12 created for the purposes of managing the operations of a 13 community as set forth in a declaration of covenants or 14 declaration of submission of property to horizontal property 15 regime filed of record in the county that the property is 16 located. 17 3. “Claimant” means a private owner, a subsequent private 18 owner, or an association, who asserts a claim in a class action 19 for damages against a general contractor or subcontractor 20 concerning a construction defect. “Claimant” shall not include 21 a public corporation as defined in section 573.1. 22 4. “Construction defect” means an alleged or actual unsafe 23 or defective condition of an improvement to real property. 24 5. “General contractor” means a person who does work or 25 furnishes materials by contract, express or implied, with an 26 owner. 27 6. “Owner” means the legal or equitable titleholder of 28 record to real property or the holder of a leasehold interest. 29 7. “Serve” , “served” , or “service” means delivery by 30 certified mail with a United States postal service record 31 of evidence of delivery or attempted delivery to the last 32 known address of the addressee, by hand delivery with written 33 evidence of delivery, or by delivery by any courier with 34 written evidence of delivery. 35 -1- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 1/ 8 #1.

8. “Subcontractor” means a person furnishing material 1 or performing labor upon any building, erection, or other 2 improvement to land, except those having contracts directly 3 with the owner. 4 Sec. 2. NEW SECTION . 686.2 Action —— compliance. 5 1. A claimant shall not file an action without first 6 complying with the requirements of this chapter. If a claimant 7 files an action alleging a construction defect without first 8 complying with the requirements of this chapter, on timely 9 motion by a party to the action, the court shall stay the 10 action, without prejudice, and the action shall not proceed 11 until the claimant has complied with the requirements. 12 2. An action filed prior to the expiration of the 13 statute of limitations set forth in section 614.1, which is 14 stayed pursuant to this section and for which the statute of 15 limitations runs during the time the claimant is complying with 16 this statute, shall not be deemed barred by the applicable 17 statute of limitation for the pending action if the claimant 18 complies with the requirements of this chapter and the action 19 is otherwise allowed to proceed. 20 Sec. 3. NEW SECTION . 686.3 Notice and opportunity to 21 repair. 22 1. Prior to commencing an action alleging a construction 23 defect, the claimant shall, at least one hundred twenty days 24 before filing an action, serve written notice of claim on the 25 general contractor and subcontractor. The notice of claim 26 shall refer to this chapter and must describe the claim in 27 reasonable detail sufficient to determine the general nature of 28 each alleged construction defect, a description of the damage 29 or loss resulting from the defect, if known, and any work or 30 inspections completed to determine the cause of the damage 31 or loss or correct the construction defect. This subsection 32 does not preclude a claimant from filing an action sooner than 33 one hundred twenty days, after service of written notice as 34 expressly provided in subsection 6, 7, or 8. 35 -2- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 2/ 8

2. a. Within sixty days after service of the notice 1 of claim, the person served with the notice of claim under 2 subsection 1 is entitled to perform a reasonable inspection 3 of the property or of each unit subject to the claim to 4 assess each alleged construction defect. The claimant shall 5 provide the person served with notice under subsection 1 and 6 the person’s general contractors, subcontractors, or agents 7 reasonable access to the property during normal working hours 8 to inspect the property to determine the nature and cause of 9 each alleged construction defect and the nature and extent 10 of any repairs or replacements necessary to remedy each 11 construction defect. The person served with notice under 12 subsection 1 shall reasonably coordinate the timing and manner 13 of any and all inspections with the claimant to minimize the 14 number of inspections. The inspection may include reasonable 15 destructive testing by mutual agreement under the following 16 terms and conditions: 17 (1) If the person served with notice under subsection 1 18 determines that destructive testing is necessary to determine 19 the nature and cause of the alleged construction defects, the 20 person shall notify the claimant in writing. 21 (2) The notice shall describe the destructive testing 22 to be performed, the person selected to do the testing, the 23 estimated anticipated damage and repairs to or restoration of 24 the property resulting from the testing, the estimated amount 25 of time necessary for the testing and to complete the repairs 26 or restoration, and the financial responsibility offered for 27 covering the costs of repairs or restoration. 28 (3) The testing shall be done at a mutually agreeable time. 29 (4) The claimant or a representative of the claimant may be 30 present to observe the destructive testing. 31 b. If the claimant refuses to agree and permit reasonable 32 destructive testing, the claimant shall have no claim for 33 damages which could have been avoided or mitigated had 34 destructive testing been allowed when requested and had a 35 -3- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 3/ 8

feasible remedy been promptly implemented. 1 3. The general contractor or subcontractor may serve a 2 copy of the notice of claim to each subcontractor or general 3 contractor whom the general contractor or subcontractor 4 reasonably believes is responsible for a construction defect 5 specified in the notice of claim and shall note the specific 6 construction defect for which the subcontractor or general 7 contractor is alleged to be responsible. The notice described 8 in this subsection shall not be construed as an admission of 9 any kind. A general contractor or subcontractor may inspect 10 the property in the manner described in subsection 2. 11 4. Within thirty days after service of the notice of 12 claim pursuant to subsection 3, the general contractor or 13 subcontractor must serve a written response to the general 14 contractor or subcontractor who served the notice of claim. 15 The written response shall include a report, if any, of 16 the scope of any inspection of the property, the findings 17 and results of the inspection, a statement of whether the 18 subcontractor or general contractor is willing to make repairs 19 to the property or whether the claim is disputed, a description 20 of any repairs the subcontractor or general contractor is 21 willing to make to remedy the alleged construction defect, and 22 a timetable for the completion of the repairs. This response 23 may also be served on the initial claimant by the general 24 contractor or subcontractor. 25 5. Within seventy-five days after service of the notice of 26 claim, the person who was served the notice under subsection 1 27 shall serve a written response to the claimant. The response 28 shall be served to the attention of the person who signed the 29 notice of claim, unless otherwise designated in the notice 30 of claim. The written response must provide for one of the 31 following: 32 a. A written offer to remedy the alleged construction defect 33 at no cost to the claimant, a description of the proposed 34 repairs necessary to remedy the construction defect, and a 35 -4- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 4/ 8

timetable for the completion of such repairs. 1 b. A written offer to compromise and settle the claim by 2 monetary payment, that will not obligate the person’s insurer, 3 and a timetable for making payment. 4 c. A written offer to compromise and settle the claim by 5 a combination of repairs and monetary payment that will not 6 obligate the person’s insurer, and which includes a detailed 7 description of the proposed repairs and a timetable for the 8 completion of such repairs and making payment. 9 d. A written statement that the person disputes the claim 10 and will not remedy the construction defect or compromise and 11 settle the claim. 12 e. A written offer of a monetary payment, including 13 insurance proceeds, to be determined by the person and the 14 person’s insurer, which the claimant may accept or reject. 15 6. If the person served with a notice of claim pursuant 16 to subsection 1 disputes the claim and will neither remedy 17 the construction defect nor compromise and settle the claim, 18 or does not respond to the claimant’s notice of claim within 19 the time provided in subsection 5, the claimant may, without 20 further notice, proceed with an action against that person for 21 the claim described in the notice of claim. Nothing in this 22 chapter shall be construed to preclude a partial settlement or 23 compromise of the claim as agreed to by the parties and, in 24 that event, the claimant may, without further notice, proceed 25 with an action on the unresolved portions of the claim. 26 7. A claimant who receives a timely settlement offer shall 27 accept or reject the offer by serving written notice of such 28 acceptance or rejection on the person making the offer within 29 forty-five days after receiving the settlement offer. If 30 a claimant initiates an action without first accepting or 31 rejecting the offer, the court shall stay the action upon 32 timely motion until the claimant complies with this subsection. 33 8. If the claimant timely and properly accepts the offer 34 to repair an alleged construction defect, the claimant shall 35 -5- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 5/ 8

provide the offeror and the offeror’s agents reasonable access 1 to the claimant’s property during normal working hours to 2 perform the repair by the agreed-upon timetable as stated 3 in the offer. If the offeror does not make the payment or 4 repair the construction defect within the agreed time and in 5 the agreed manner, except for reasonable delays beyond the 6 control of the offeror, including but not limited to weather 7 conditions, delivery of materials, claimant’s actions, or 8 issuance of any required permits, the claimant may, without 9 further notice, proceed with an action against the offeror 10 based upon the claim in the notice of claim. If the offeror 11 makes payment or repairs to the defect within the agreed 12 time and in the agreed manner, the claimant is barred from 13 proceeding with an action for the claim described in the notice 14 of claim or as otherwise provided in the accepted settlement 15 offer. 16 9. This section does not prohibit or limit a claimant from 17 making any necessary emergency repairs to the property as are 18 required to protect the health, safety, and welfare of any 19 person. 20 10. Any offer or failure to offer, pursuant to subsection 5, 21 to remedy a construction defect or to compromise and settle the 22 claim by monetary payment does not constitute an admission of 23 liability with respect to the defect and is not admissible in 24 an action that is subject to this chapter. 25 11. This section does not relieve the person who is served 26 a notice of claim under subsection 1 from complying with all 27 contractual provisions of any liability insurance policy as 28 a condition precedent to coverage for any claim under this 29 section. 30 Sec. 4. NEW SECTION . 686.4 Multiple construction defects. 31 The procedures in this chapter apply to each construction 32 defect. However, a claimant may include multiple defects in 33 one notice of claim. A claimant may amend the initial list of 34 construction defects to identify additional or new construction 35 -6- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 6/ 8

defects as the defects become known to the claimant. The court 1 shall allow the action to proceed to trial only as to alleged 2 construction defects that were noticed and for which the 3 claimant has complied with this chapter and as to construction 4 defects reasonably related to, or caused by, the construction 5 defects previously noticed. Nothing in this section shall 6 preclude subsequent or further actions. 7 Sec. 5. NEW SECTION . 686.5 Limitations of chapter. 8 This chapter does not do any of the following: 9 1. Bar or limit any rights, including the right of specific 10 performance to the extent such right would be available in the 11 absence of this chapter, any causes of action, or any theories 12 on which liability may be based, except as specifically 13 provided in this chapter. 14 2. Bar or limit any defense, or create any new defense, 15 except as specifically provided in this chapter. 16 3. Create any new rights, causes of action, or theories on 17 which liability may be based. 18 Sec. 6. NEW SECTION . 686.6 Effect of arbitration clauses. 19 To the extent that an arbitration clause in a contract for 20 the sale, design, or construction of real property conflicts 21 with this chapter, this chapter shall control. 22 Sec. 7. NEW SECTION . 686.7 Application. 23 1. This chapter applies to construction defects in new 24 construction. This chapter does not apply to construction 25 defects in renovations or remodels. 26 2. This chapter only applies to actions brought pursuant to 27 a class action. 28 Sec. 8. EFFECTIVE DATE. This Act, being deemed of immediate 29 importance, takes effect upon enactment. 30 Sec. 9. APPLICABILITY. This Act applies to actions for 31 which litigation has not commenced prior to the effective date 32 of this Act. > 33 -7- HF678.1430 (1) 88 (amending this HF 678 to CONFORM to SF 532) asf/rn 7/ 8