Efforts to bring together homeowners and construction industry representatives to proactively address home warranty disputes has resulted in new legislation that will facilitate faster resolution of warranty issues and provide an alternative to costly legal battles. Moisture intrusion problems associated with stucco construction have been a significant issue for area homeowners.

While a package of homeowner warranty protection bills was vetoed by Governor Tim Pawlenty last year, legislation sponsored by State Senator Kathy Saltzman (DFL-Woodbury) that will provide a more timely and less costly process for resolving homeowner warranty disputes passed the Senate and House with strong bipartisan support and was signed into law by Governor Tim Pawlenty on May 13, 2010.

 The legislation comes from recommendations of an interim Homeowner Warranty Task Force. A provision to form a working group that would explore a more timely and less costly resolution process to home warranty claims before they escalate to the level of litigation was added by Saltzman to legislation she carried last year.

 While Governor Pawlenty vetoed the legislation, he noted support for language in the bill that would bring interested parties together “to develop a timely and prescriptive process for resolving homeowner warranty disputes without litigation” and requested the Department of Labor and Industry to move forward with that process.

 The Warranty Working Group, which began meeting last August and included homeowners, contractors and builders, and representatives from the construction section of the state bar association and insurance industry, started by identifying three key problems with the current warranty process: most resolutions take too long, they are too expensive, and there is little focus on preventing construction defects before they occur.

 Recommendations from the working group’s report were used by Saltzman to draft the legislation and focus on identifying the source of the problem and getting it fixed as quickly as possible. Key provisions in the bill include:

 1) Tightening Up Notice And Opportunity To Repair

 This sets specific deadlines for the builder to respond to a homeowner and allows all claims to be put on hold for 180 days while a scope of work is negotiated between a builder and homeowner. It also requires a builder or remodeler to provide a written offer to repair within 15 days of the inspection. The repair must include the scope of the proposed work and the timeframe in which the work will start and end. If the builder does not respond to the homeowner's notice, a lawsuit may be started after the 30-day response deadline.

 2) Requiring A Builder To Spell Out Performance Standards

 Builders will be required to give homeowners a copy of the performance standards for the home warranty before a contract is signed along with a copy of the Notice and Opportunity to Repair process.

 3) Instituting A Pre-Litigation Panel

 If the parties do not agree on the scope of work, a panel of neutral experts would be available to help settle warranty disputes while avoiding the costs and time of litigation. This would be a non-binding panel.

 “This legislation represents a major accomplishment in finding consensus on a issue that affects both homeowners and our construction industry,” said Senator Saltzman. “In attending task force meetings, I appreciated the efforts that everyone put forth to find a solution to a problem that has affected so many residents in our community.

 “This isn’t a cure all for all home warranty disputes,” she added, “but these new policies will provide a better process for homeowners and builders to reach resolution on warranty damages before lawsuits are filed. I am also pleased the Warranty Task Force will continue to meet and address several outstanding issues and make our home warranty law better.”

Companion legislation was sponsored by Reps. Marsha Swails (DFL-Woodbury) and Julie Bunn (DFL-Lake Elmo)in the House of Representatives. In 2007, Sen. Saltzman carried legislation that required the use of pan flashing when installing new windows. Builders advocated for the legislation because pan flashing significantly reduces water intrusion and raises the durability of homes.