HB1846

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

CONSTRUCTION DEFECTS

§ -1 General rule. (a) There shall be no monetary liability on the part of, and no cause of action for damages shall arise against, any person or other legal entity that is under contract with an applicant for a residential building permit to provide independent quality review of the plans and specifications provided with the application in order to determine compliance with all applicable housing requirements, or any rules or regulations adopted pursuant to that law, or under contract with that applicant to provide independent quality review of the work of improvement to determine compliance with those plans and specifications, if the person or other legal entity meets the requirements of this section and either:

(1) The person, or a person employed by any other legal entity, performing the work as described in this section, has completed not less than five years of verifiable experience in the appropriate field and has obtained certification as a building inspector, combination inspector, or combination dwelling inspector from the International Conference of Building Officials and has successfully passed the technical written examination promulgated by the International Conference of Building Officials for those certification categories; or

(2) The person, or a person employed by any other legal entity, performing the work as described in this section, has completed not less than five years of verifiable experience in the appropriate field and is a licensed professional engineer, licensed general contractor, or a licensed architect rendering independent quality review of the work of improvement or plan examination services within the scope of the licensee's license.

The immunity provided under this section does not apply to any action initiated by the applicant who retained the qualified person.

A "qualified person" for purposes of this section means a person holding a valid certification as one of those inspectors.

(b) Except for qualified persons, this section shall not relieve from, excuse, or lessen in any manner, the responsibility or liability of any person, company, contractor, builder, developer, architect, engineer, designer, or other individual or entity who develops, improves, owns, operates, or manages any residential building for any damages to persons or property caused by construction or design defects. The fact that an inspection by a qualified person has taken place including any reports or other items generated by the qualified person may not be introduced as evidence in a construction defect action. This subsection shall not apply in any action initiated by the applicant who retained the qualified person.

(c) Nothing in this section, as it relates to construction inspectors or plans examiners, shall be construed to alter the requirements for licensure, or the jurisdiction, authority, or scope of practice, of architects, professional engineers, or general contractors.

(d) Nothing in this section shall be construed to alter the immunity of employees of the State under chapter 661.

(e) The qualifying person shall engage in no other construction, design, planning, supervision, or activities of any kind on the work of improvement, nor provide quality review services for any other party on the work of improvement.

(f) The qualifying person, or other legal entity, shall maintain professional errors and omissions insurance coverage in an amount not less than two million dollars.

(g) The immunity provided by subsection (a) does not inure to the benefit of the qualified person for damages caused to the applicant solely by the negligence or wilful misconduct of the qualified person resulting from the provision of services under the contract with the applicant.

§ -2 Definitions. As used in this chapter unless the context clearly indicates otherwise, the following words shall mean as follows:

"Actual moisture barrier" means any component or material, actually installed, that serves to any degree as a barrier against moisture, whether or not intended as such.

"Builder" means a builder, developer, or original seller.

"Claimant" or "homeowner" includes the individual owners of single-family homes, individual unit owners of attached dwellings and, in the case of a common interest development, any association.

"Close of escrow" means the date of the close of escrow between the builder and the original homeowner. With respect to claims by an association, "close of escrow" means the date of substantial completion, or the date the builder relinquishes control over the association's ability to decide whether to initiate a claim under this chapter, whichever is later.

"Designed moisture barrier" means an installed moisture barrier specified in the plans and specifications, contract documents, or manufacturer's recommendations.

"Structure" means any residential dwelling, other building, or improvement located upon a lot or within a common area.

"Unintended water" means water that passes beyond, around, or through a component or the material that is designed to prevent that passage.

§ -3 Actionable defects. (a) In any action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, a subcontractor, material supplier, individual product manufacturer, or design professional, shall, except as specifically set forth in this chapter, be liable for, and the claimant's claims or causes of action shall be limited to violation of, the following standards, except as specifically set forth in this section. This section applies to original construction intended to be sold as an individual dwelling unit. As to condominium conversions, this section does not apply to or does not supersede any other statutory or common law.

(b) With respect to water issues:

(1) A door shall not allow unintended water to pass beyond, around, or through the door or its designed or actual moisture barriers, if any;

(2) Windows, patio doors, deck doors, and their systems shall not allow water to pass beyond, around, or through the window, patio door, or deck door or its designed or actual moisture barriers, including, without limitation, internal barriers within the systems themselves. For purposes of this paragraph, "systems" include, without limitation, windows, window assemblies, framing, substrate, flashings, and trim, if any;

(3) Windows, patio doors, deck doors, and their systems shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, windows, window assemblies, framing, substrate, flashings, and trim, if any;

(4) Roofs, roofing systems, chimney caps, and ventilation components shall not allow water to enter the structure or to pass beyond, around, or through the designed or actual moisture barriers, including, without limitation, internal barriers located within the systems themselves. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, and sheathing, if any;

(5) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow water to pass into the adjacent structure. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashing, and sheathing, if any;

(6) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow unintended water to pass within the systems themselves and cause damage to the systems. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashing, and sheathing, if any;

(7) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to cause damage to another building component;

(8) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to limit the installation of the type of flooring materials typically used for the particular application;

(9) Hardscape, including paths and patios, irrigation systems, landscaping systems, and drainage systems, that are installed as part of the original construction, shall not be installed in such a way as to cause water or soil erosion to enter into or come in contact with the structure so as to cause damage to another building component;

(10) Stucco, exterior siding, exterior walls, including, without limitation, exterior framing, and other exterior wall finishes and fixtures and the systems of those components and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall be installed in such a way so as not to allow unintended water to pass into the structure or to pass beyond, around, or through the designed or actual moisture barriers of the system, including any internal barriers located within the system itself. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any;

(11) Stucco, exterior siding, and exterior walls and their systems shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any;

(12) Retaining walls and site walls, and their associated drainage systems, shall not allow unintended water to pass beyond, around, or through its designed or actual moisture barriers including, without limitation, any internal barriers, so as to cause damage. This standard does not apply to those portions of any wall or drainage system that are designed to have water flow beyond, around, or through them;

(13) Retaining walls and site walls, and their associated drainage systems, shall only allow water to flow beyond, around, or through the areas designated by design;

(14) The lines and components of the plumbing system, sewer system, and utility systems shall not leak;

(15) Plumbing lines, sewer lines, and utility lines shall not corrode so as to impede the useful life of the systems;

(16) Sewer systems shall be installed in such a way as to allow the designated amount of sewage to flow through the system;

(17) Shower and bath enclosures shall not leak water into the interior of walls, flooring systems, or the interior of other components; and

(18) Ceramic tile and tile countertops shall not allow water into the interior of walls, flooring systems, or other components so as to cause damage.

(1) Foundations, load bearing components, and slabs shall not contain significant cracks or significant vertical displacement;

(2) Foundations, load bearing components, and slabs shall not cause the structure, in whole or in part, to be structurally unsafe;

(3) Foundations, load bearing components, slabs, and underlying soils shall be constructed so as to materially comply with the design criteria set by applicable government building codes, regulations, and ordinances for chemical deterioration or corrosion resistance in effect at the time of original construction; and

(4) A structure shall be constructed so as to materially comply with the design criteria for earthquake and wind load resistance, as set forth in the applicable government building codes, regulations, and ordinances in effect at the time of original construction.

(d) With respect to soil issues:

(1) Soils and engineered retaining walls shall not cause, in whole or in part, damage to the structure built upon the soil or engineered retaining wall;

(2) Soils and engineered retaining walls shall not cause, in whole or in part, the structure to be structurally unsafe; and

(3) Soils shall not cause, in whole or in part, the land upon which no structure is built to become unusable for the purpose represented at the time of original sale by the builder or for the purpose for which that land is commonly used.

(e) With respect to fire protection issues:

(1) A structure shall be constructed so as to materially comply with the design criteria of the applicable government building codes, rules, and ordinances for fire protection of the occupants in effect at the time of the original construction;

(2) Fireplaces, chimneys, chimney structures, and chimney termination caps shall be constructed and installed in such a way so as not to cause an unreasonable risk of fire outside the fireplace enclosure or chimney; and

(3) Electrical and mechanical systems shall be constructed and installed in such a way so as not to cause an unreasonable risk of fire.

(f) With respect to plumbing and sewer issues, plumbing and sewer systems shall be installed to operate properly and shall not materially impair the use of the structure by its inhabitants. However, no action may be brought for a violation of this subsection more than four years after close of escrow.

(g) With respect to electrical system issues, electrical systems shall operate properly and shall not materially impair the use of the structure by its inhabitants. However, no action shall be brought pursuant to this subsection more than four years after close of escrow.

(h) With respect to issues regarding other areas of construction:

(1) Exterior pathways, driveways, hardscape, sidewalls, sidewalks, and patios installed by the original builder shall not contain cracks that display significant vertical displacement or that are excessive. However, no action shall be brought upon a violation of this paragraph more than four years after close of escrow;

(2) Stucco, exterior siding, and other exterior wall finishes and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall not contain significant cracks or separations;

(3) To the extent not otherwise covered by these standards, manufactured products, including, but not limited to, windows, doors, roofs, plumbing products and fixtures, fireplaces, electrical fixtures, HVAC units, countertops, cabinets, paint, and appliances shall be installed so as not to interfere with the products' useful life, if any. For purposes of this paragraph, "useful life" means a representation of how long a product is warranted or represented, through its limited warranty or any written representations, to last by its manufacturer, including recommended or required maintenance. If there is no representation by a manufacturer, a builder shall install manufactured products so as not to interfere with the product's utility. For purposes of this paragraph, "manufactured product" means a product that is completely manufactured offsite. If no useful life representation is made, or if the representation is less than one year, the period shall be no less than one year. If a manufactured product is damaged as a result of a violation of these standards, damage to the product is a recoverable element of damages. This paragraph does not limit recovery if there has been damage to another building component caused by a manufactured product during the manufactured product's useful life. This chapter does not apply in any action seeking recovery solely for a defect in a manufactured product located within or adjacent to a structure;

(4) Heating, if any, shall be installed so as to be capable of maintaining a room temperature of seventy degrees Fahrenheit at a point three feet above the floor in any living space;

(5) Living space air-conditioning, if any, shall be provided in a manner consistent with applicable size and efficiency design criteria;

(6) Attached structures shall be constructed to comply with inter-unit noise transmission standards set by the applicable government building codes, ordinances, or regulations in effect at the time of the original construction. If there is no applicable code, ordinance, or regulation, this paragraph does not apply. However, no action shall be brought pursuant to this paragraph more than one year after the original occupancy of the adjacent unit;

(7) Irrigation systems and drainage shall operate properly so as not to damage landscaping or other external improvements. However, no action shall be brought pursuant to this paragraph more than one year after close of escrow;

(8) Untreated wood posts shall not be installed in contact with soil so as to cause unreasonable decay to the wood based upon the finish grade at the time of original construction. However, no action shall be brought pursuant to this paragraph more than two years after close of escrow;

(9) Untreated steel fences and adjacent components shall be installed so as to prevent unreasonable corrosion. However, no action shall be brought pursuant to this paragraph more than four years after close of escrow;

(10) Paint and stains shall be applied in such a manner so as not to cause deterioration of the building surfaces for the length of time specified by the paint or stain manufacturers' representations, if any. However, no action shall be brought pursuant to this paragraph more than five years after close of escrow;

(11) Roofing materials shall be installed so as to avoid materials falling from the roof;

(12) The landscaping systems shall be installed in such a manner so as to survive for not less than one year. However, no action shall be brought pursuant to this paragraph more than two years after close of escrow;

(13) Ceramic tile and tile backing shall be installed in such a manner that the tile does not detach;

(14) Dryer ducts shall be installed and terminated pursuant to manufacturer installation requirements. However, no action shall be brought pursuant to this paragraph more than two years after close of escrow; and

(15) Structures shall be constructed in such a manner so as not to impair the occupants' safety because they contain public health hazards as determined by a duly authorized public health official, health agency, or governmental entity having jurisdiction. This paragraph does not limit recovery for any damages caused by a violation of any other paragraph of this section on the grounds that the damages do not constitute a health hazard.

§ -4 Functions and components of a structure. The standards set forth in this chapter are intended to address every function or component of a structure. To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage.

§ -5 Builder obligations. As to fit and finish items, a builder shall provide a homeowner with a minimum one-year express written limited warranty covering the fit and finish of the following building components: cabinets, mirrors, flooring, interior and exterior walls, countertops, paint finishes, and trim, but shall not apply to damage to those components caused by defects in other components governed by the other provisions of this chapter. Any fit and finish matters covered by this warranty are not subject to the provisions of this chapter. If a builder fails to provide the express warranty required by this section, the warranty for these items shall be for a period of one year.

§ -6 Enhanced protection agreement. (a) A builder may, but is not required to, offer greater protection or protection for longer time periods in its express contract with the homeowner than that set forth in section -3. A builder may not limit the application of section -3 or lower its protection through the express contract with the homeowner. This type of express contract constitutes an "enhanced protection agreement".

(b) If a builder offers an enhanced protection agreement, the builder may choose to be subject to its own express contractual provisions in place of the provisions set forth in section -3. If an enhanced protection agreement is in place, section -3 no longer applies other than to set forth minimum provisions by which to judge the enforceability of the particular provisions of the enhanced protection agreement.

(c) If a builder offers an enhanced protection agreement in place of the provisions set forth in section -3, the election to do so shall be made in writing with the homeowner no later than the close of escrow. The builder shall provide the homeowner with a complete copy of section -3 and advise the homeowner that the builder has elected not to be subject to its provisions. If any provision of an enhanced protection agreement is later found to be unenforceable as not meeting the minimum standards of section -3, a builder may use this chapter in lieu of those provisions found to be unenforceable.

(d) If a builder has elected to use an enhanced protection agreement, and a homeowner disputes that the particular provision or time periods of the enhanced protection agreement are not greater than, or equal to, the provisions of section ‑3 as they apply to the particular deficiency alleged by the homeowner, the homeowner may seek to enforce the application of the standards set forth in this chapter as to those claimed deficiencies. If a homeowner seeks to enforce a particular standard in lieu of a provision of the enhanced protection agreement, the homeowner shall give the builder written notice of that intent at the time the homeowner files a notice of claim pursuant to section -10.

§ -7 Actionable defects in lieu of enhanced protection agreement. If a homeowner seeks to enforce section -3 in lieu of the enhanced protection agreement in a subsequent litigation or other legal action, the builder shall have the right to have the matter bifurcated, and to have an immediately binding determination of the builder's responsive pleading within sixty days after the filing of that pleading, but in no event after the commencement of discovery, as to the application of either section -3 or the enhanced protection agreement as to the deficiencies claimed by the homeowner. If the builder fails to seek that determination in the timeframe specified, the builder waives the right to do so and the standards set forth in this chapter shall apply. As to any subsequent homeowner, that homeowner shall be deemed in privity for purposes of an enhanced protection agreement only to the extent that the builder has recorded the enhanced protection agreement on title or provided actual notice to the subsequent homeowner of the enhanced protection agreement. If the enhanced protection agreement is not recorded on title or no actual notice has been provided, the standards set forth in this chapter apply to any subsequent homeowner's claims.

§ -8 Election regarding prelitigation procedures. A builder's election to use an enhanced protection agreement addresses only the issues set forth in section -3 and does not constitute an election to use or not use section -10. The decision to use or not use section -10 is governed by section -10.

§ -9 Homeowner obligations. A homeowner is obligated to follow all reasonable maintenance obligations and schedules communicated in writing to the homeowner by the builder and product manufacturers, as well as commonly accepted maintenance practices. A failure by a homeowner to follow these obligations, schedules, and practices may subject the homeowner to the affirmative defenses of this chapter.

§ -10 Prelitigation procedures. Prior to filing an action against any party alleged to have contributed to a violation of the standards set forth in section -3, the claimant shall initiate the following prelitigation procedures:

(1) The claimant or the claimant's legal representative shall provide written notice via certified mail, overnight mail, or personal delivery to the builder, in the manner prescribed in this section, of the claimant's claim that the construction of the claimant's residence violates any of the standards set forth in section -3. The notice shall provide the claimant's name, address, and preferred method of contact, and shall state that the claimant alleges a violation pursuant to this chapter against the builder, and shall describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation. In the case of a group of homeowners or an association, the notice may identify the claimants solely by address or other description sufficient to apprise the builder of the locations of the subject residences. That document shall have the same force and effect as a notice of commencement of a legal proceeding; and

(2) The notice requirements of this section do not preclude a homeowner from seeking redress through any applicable normal customer service procedure as set forth in any contractual, warranty, or other builder-generated document; and, if a homeowner seeks to do so, that request shall not satisfy the notice requirements of this section.

§ -11 Builder obligations. (a) A builder shall do all of the following:

(1) Within thirty days of a written request by a homeowner or the homeowner's legal representative, the builder shall provide copies of all relevant plans, specifications, mass or rough grading plans, final soils reports, public reports, and available engineering calculations, that pertain to a homeowner's residence specifically or as part of a larger development tract. The request shall be honored if it states that it is made relative to structural, fire safety, or soils provisions of this chapter. However, a builder is not obligated to provide a copying service, and reasonable copying costs shall be borne by the requesting party. A builder may require that the documents be copied onsite by the requesting party, except that the homeowner may, at the homeowner's option, use the homeowner's own copying service, which may include an offsite copy facility that is bonded and insured. If a builder can show that the builder maintained the documents, but that they later became unavailable due to loss or destruction that was not the fault of the builder, the builder may be excused from the requirements of this paragraph, in which case the builder shall act with reasonable diligence to assist the homeowner in obtaining those documents from any applicable government authority or from the source that generated the document. However, in that case, the time limits specified by this section do not apply;

(2) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, the builder shall provide to the homeowner or the homeowner's legal representative copies of all maintenance and preventive maintenance recommendations that pertain to the homeowner's residence within thirty days of service of a written request for those documents. Those documents shall also be provided to the homeowner in conjunction with the initial sale of the residence;

(3) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, a builder shall provide to the homeowner or the homeowner's legal representative copies of all manufactured products maintenance, preventive maintenance, and limited warranty information within thirty days of a written request for those documents. These documents shall also be provided to the homeowner in conjunction with the initial sale of the residence;

(4) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, a builder shall provide to the homeowner or the homeowner's legal representative copies of all of the builder's limited contractual warranties in accordance with this chapter in effect at the time of the original sale of the residence within thirty days of a written request for those documents. Those documents shall also be provided to the homeowner in conjunction with the initial sale of the residence; and

(5) A builder shall maintain the name and address of an agent for notice pursuant to this chapter with the director of commerce and consumer affairs or, alternatively, elect to use a third party for that notice if the builder has notified the homeowner in writing of the third party's name and address, to whom claims and requests for information under this section may be mailed. The name and address of the agent for notice or third party shall be included with the original sales documentation and shall be initialed and acknowledged by the purchaser and the builder's sales representative.

(b) This section applies to instances in which a builder contracts with a third party to accept claims and act on the builder's behalf. A builder shall give actual notice to the homeowner that the builder has made such an election, and shall include the name and address of the third party.

(c) A builder shall record on title a notice of the existence of these procedures and a notice that these procedures impact the legal rights of the homeowner. This information shall also be included with the original sales documentation and shall be initialed and acknowledged by the purchaser and the builder's sales representative.

(d) A builder shall provide with the original sales documentation, a written copy of this chapter which shall be initialed and acknowledged by the purchaser and the builder's sales representative.

(e) As to any documents provided in conjunction with the original sale, the builder shall instruct the original purchaser to provide those documents to any subsequent purchaser.

(f) Any builder who fails to comply with any of these requirements within the time specified is not entitled to the protections of this chapter, and the homeowner is released from the requirements of this chapter and may proceed with the filing of an action, in which case the remaining provisions of this chapter shall continue to apply to the action.

§ -12 Receipt of notice. A builder or the builder's representative shall acknowledge, in writing, receipt of the notice of the claim within fourteen days after receipt of the notice of the claim. If the notice of the claim is served by the claimant's legal representative, or if the builder receives a written representation letter from a homeowner's attorney, the builder shall include the attorney in all subsequent substantive communications, including, without limitation, all written communications occurring pursuant to this chapter, and all substantive and procedural communications, including all written communications, following the commencement of any subsequent complaint or other legal action, except that if the builder has retained or involved legal counsel to assist the builder in this process, all communications by the builder's counsel shall only be with the claimant's legal representative, if any.

§ -13 Intent of prelitigation procedures. (a) The prelitigation procedures establish a nonadversarial procedure which, if the procedure does not resolve the dispute between the parties, may result in a subsequent action under other provisions of the law. A builder may attempt to commence nonadversarial contractual provisions other than the nonadversarial procedures and remedies set forth in this chapter, but may not, in addition to its own nonadversarial contractual provisions, require adherence to the nonadversarial procedures and remedies set forth in this chapter, regardless of whether the builder's own alternative nonadversarial contractual provisions are successful in resolving the dispute or are ultimately deemed enforceable.

(b) At the time the sales agreement is executed, the builder shall notify the homeowner whether the builder intends to engage in the nonadversarial procedure of this chapter or attempt to enforce alternative nonadversarial contractual provisions. If the builder elects to use alternative nonadversarial contractual provisions in lieu of this chapter, the election is binding, regardless of whether the builder's alternative nonadversarial contractual provisions are successful in resolving the ultimate dispute or are ultimately deemed enforceable.

(c) Nothing in this chapter is intended to affect existing statutory or decisional law pertaining to the applicability, viability, or enforceability of alternative dispute resolution methods, alternative remedies, or contractual arbitration, judicial reference, or similar procedures requiring a binding resolution to enforce the other provisions of law or any other disputes between homeowners and builders. Nothing in this chapter is intended to affect the applicability, viability, or enforceability, if any, of contractual arbitration or judicial reference after a nonadversarial procedure or provision has been completed.

§ -14 Failure to acknowledge receipt of notice. If a builder fails to acknowledge receipt of the notice of a claim within the time specified, elects not to go through the process set forth in this chapter, or fails to request an inspection within the time specified, or at the conclusion or cessation of an alternative nonadversarial proceeding, this chapter does not apply and the homeowner is released from the requirements of this chapter and may proceed with the filing of an action. However, the standards set forth in other provisions of the law shall continue to apply to the action.

§ -15 Election to inspect claimed unmet standards. (a) If a builder elects to inspect the claimed unmet standards, the builder shall complete the initial inspection and testing within fourteen days after acknowledgment of receipt of the notice of the claim, at a mutually convenient date and time. If the homeowner has retained legal representation, the inspection shall be scheduled with the legal representative at a mutually convenient date and time, unless the legal representative is unavailable during the relevant time periods. All costs of builder inspection and testing, including any damage caused by the builder inspection, shall be borne by the builder. The builder shall also provide written proof that the builder has liability insurance to cover any damages or injuries occurring during inspection and testing. The builder shall restore the property to its pretesting condition within forty-eight hours of the testing. The builder shall, upon request, allow the inspections to be observed and electronically recorded, videotaped, or photographed by the claimant or the claimant's legal representative.

(b) Nothing that occurs during a builder's or claimant's

inspection or testing may be used or introduced as evidence to support a spoilation defense by any potential party in any subsequent litigation.

(c) If a builder deems a second inspection or testing reasonably necessary, and specifies the reasons therefor in writing within three days following the initial inspection, the builder may conduct a second inspection or testing. A second inspection or testing shall be completed within forty days of the initial inspection or testing. All requirements concerning the initial inspection or testing shall also apply to the second inspection or testing.

(d) If the builder fails to inspect or test the property within the time specified, the claimant is released from the requirements of this section and may proceed with the filing of an action. However, the standards set forth in other provisions of law shall continue to apply to the action.

(e) If a builder intends to hold a subcontractor, design professional, individual product manufacturer, or material supplier, including an insurance carrier, warranty company, or service company, responsible for its contribution to the unmet standard, the builder shall provide notice to that person or entity sufficiently in advance to allow them to attend the initial or, if requested, second inspection of any alleged unmet standard and to participate in the repair process. The claimant and the claimant's legal representative, if any, shall be advised in a reasonable time prior to the inspection as to the identity of all persons or entities invited to attend. This subsection shall not apply to the builder's insurance company. Except with respect to any claims involving a repair actually conducted under this chapter, nothing in this subsection shall be construed to relieve a subcontractor, design professional, individual product manufacturer, or material supplier of any liability under an action brought by a claimant.

§ -16 Post-inspection. Within thirty days of the initial or, if requested, second inspection or testing, the builder may offer in writing to repair the violation. The offer to repair shall also compensate the homeowner for all applicable damages within the timeframe for the repair set forth in this chapter. Any such offer shall be accompanied by a detailed, specific, step-by-step statement identifying the particular violation that is being repaired, explaining the nature, scope, and location of the repair, and setting a reasonable completion date for the repair. The offer shall also include the names, addresses, telephone numbers, and license numbers of the contractors whom the builder intends to have perform the repair. Those contractors shall be fully insured for, and shall be responsible for, all damages or injuries that they may cause to occur during the repair, and evidence of that insurance shall be provided to the homeowner upon request. Upon written request by the homeowner or the homeowner's legal representative, and within the timeframes set forth in this chapter, the builder shall also provide any available technical documentation, including, without limitation, plans and specifications, pertaining to the claimed violation within the particular home or development tract. The offer shall also advise the homeowner in writing of the homeowner's right to request up to three additional contractors from which to select to do the repair pursuant to this chapter.

§ -17 Authorization to repair. Upon receipt of the offer to repair, the homeowner shall have thirty days to authorize the builder to proceed with the repair. The homeowner may alternatively request, at the homeowner's sole option and discretion, that the builder provide the names, addresses, telephone numbers, and license numbers for up to three alternative contractors who are not owned or financially controlled by the builder and who regularly conduct business in the county where the structure is located. If the homeowner so elects, the builder is entitled to an additional noninvasive inspection, to occur at a mutually convenient date and time within twenty days of the election, so as to permit the other proposed contractors to review the proposed site of the repair. Within thirty-five days after the request of the homeowner for alternative contractors, the builder shall present the homeowner with a choice of contractors. Within twenty days after that presentation, the homeowner shall authorize the builder or one of the alternative contractors to perform the repair.

§ -18 Offer to mediate. The offer to repair shall also be accompanied by an offer to mediate the dispute if the homeowner so chooses. The mediation shall be limited to a four-hour mediation, except as otherwise mutually agreed, before a nonaffiliated mediator selected and paid for by the builder. At the homeowner's sole option, the homeowner may agree to split the cost of the mediation, and if the homeowner does so, the mediator shall be selected jointly. The mediator shall have sufficient availability such that the mediation occurs within fifteen days after the request to mediate is received and occurs at a mutually convenient location within the county where the action is pending. If a builder has made an offer to repair a violation, and the mediation has failed to resolve the dispute, the homeowner shall allow the repair to be performed either by the builder, its contractor, or the selected contractor.

§ -19 Failure to offer to repair. If the builder fails to make an offer to repair or otherwise strictly comply with this chapter within the times specified, the claimant is released from the requirements of this chapter and may proceed with the filing of an action. If the contractor performing the repair does not complete the repair in the time or manner specified, the claimant may file an action. If this occurs, the standards set forth in the other provisions of this chapter shall continue to apply to the action.

§ -20 Repair by builder. (a) In the event that a resolution under this chapter involves a repair by the builder, the builder shall make an appointment with the claimant, make all appropriate arrangements to effectuate a repair of the claimed unmet standards, and compensate the homeowner for all damages resulting therefrom free of charge to the claimant. The repair shall be scheduled through the claimant's legal representative, if any, unless the legal representative is unavailable during the relevant time periods. The repair shall be commenced on a mutually convenient date within fourteen days of acceptance or, if an alternative contractor is selected by the homeowner, within fourteen days of the selection, or, if a mediation occurs, within seven days of the mediation, or within five days after a permit is obtained if one is required. The builder shall act with reasonable diligence in obtaining any such permit.

(b) The builder shall ensure that work done on the repairs is done with the utmost diligence, and that the repairs are completed as soon as reasonably possible, subject to the nature of the repair or some unforeseen event not caused by the builder or the contractor performing the repair. Every effort shall be made to complete the repair within one hundred and twenty days.

§ -21 Observation and recordation of repair. The builder shall, upon request, allow the repair to be observed and electronically recorded, videotaped, or photographed by the claimant or the claimant's legal representative. Nothing that occurs during the repair process may be used or introduced as evidence to support a spoliation defense by any potential party in any subsequent litigation.

§ -22 Availability of copies. The builder shall provide the homeowner or the homeowner's legal representative, upon request, with copies of all correspondence, photographs, and other materials pertaining to relating in any manner to the repairs.

§ -23 Partial repair. If the builder elects to repair some, but not all, of the claimed unmet standards, the builder shall, at the same time it makes its offer, set forth with particularity in writing the reasons, and the support for those reasons, for not repairing all claimed unmet standards.

§ -24 Failure to complete repairs. If the builder fails to complete the repair within the time specified in the repair plan, the claimant is released from the requirements of this chapter and may proceed with the filing of an action. If this occurs, the standards set forth in the other provisions of the law shall continue to apply to the action.

§ -25 Release or waiver prohibited. The builder may not obtain a release or waiver of any kind in exchange for the repair work mandated by this chapter. At the conclusion of the repair, the claimant may proceed with filing an action for violation of the applicable standard or for a claim of inadequate repair, or both, including all applicable damages available.

§ -26 Extension of statute of limitations. If the applicable statute of limitations has otherwise run during this process, the time period for filing a complaint or other legal remedies for violation of any provision of law, or for a claim of inadequate repair, is extended from the time of the original claim by the claimant to one hundred days after the repair is completed, whether or not the particular violation is the one being repaired. If the builder fails to acknowledge the claim within the time specified, elects not to go through this statutory process, or fails to request an inspection within the time specified, the time period for filing a complaint or other legal remedies for violation of any provision of this chapter is extended from the time of the original claim by the claimant to forty-five days after the time for responding to the notice of claim has expired. If the builder elects to attempt to enforce its own nonadversarial procedure in lieu of the procedure set forth in this chapter, the time period for filing a complaint or other legal remedies for any violation is extended from the time of the original claim by the claimant to one hundred days after either the completion of the builder's alternative nonadversarial procedure, or one hundred days after the builder's alternative nonadversarial procedure is deemed unenforceable, whichever is later.

§ -27 Obligatory request for mediation. If the builder has invoked this chapter and completed a repair, prior to filing an action, if there has been no previous mediation between the parties, the homeowner or the homeowner's legal representative shall request mediation in writing. The mediation shall be limited to four hours, except as otherwise mutually agreed before a nonaffiliated mediator selected and paid for by the builder.

At the homeowner's sole option, the homeowner may agree to split the cost of the mediation and if the homeowner does so, the mediator shall be selected jointly. The mediator shall have sufficient availability such that the mediation will occur within fifteen days after the request for mediation is received and shall occur at a mutually convenient location within the county where the action is pending.

In the event that a mediation is used at this point, any applicable statute of limitations shall be tolled from the date of the request to mediate until the next court day after the mediation is completed, or the one-hundred-day period, whichever is later.

§ -28 Cash offers without repair. (a) Nothing in this chapter prohibits the builder from making only a cash offer and no repair. In this situation, the homeowner is free to accept the offer, or the homeowner may reject the offer and proceed with the filing of an action. If the latter occurs, the standards of other provisions of law shall continue to apply to the action.

(b) The builder may obtain a reasonable release in exchange for the cash payment. The builder may negotiate the terms and conditions of any reasonable release in terms of scope and consideration in conjunction with a cash payment under this chapter.

§ -29 Time periods to be strictly construed. (a) The time periods and all other requirements in this chapter are to be strictly construed, and, unless extended by the mutual agreement of the parties in accordance with this chapter, shall govern their rights and obligations. If a builder fails to act in accordance with this section within the timeframes mandated, unless extended by the mutual agreement of the parties as evidenced by a postclaim written confirmation by the affected homeowner demonstrating that the homeowner has knowingly and voluntarily extended the statutory timeframe, the claimant may proceed with filing an action. If this occurs, the standards of the other provisions of the law shall continue to apply to the action.

(b) If the claimant does not conform with the requirements of this chapter, the builder may bring a motion to stay any subsequent court action or other proceeding until the requirements of this chapter have been satisfied. The court, in its discretion, may award the prevailing party on such a motion, the prevailing party's attorney's fees and costs in bringing or opposing the motion.

§ -30 Joined causes of action. If a claim combines causes of action or damages not covered under this chapter, including, without limitation, personal injuries, class actions, other statutory remedies, or fraud-based claims, the claimed unmet standards shall be administered according to this chapter, although evidence of the property in its unrepaired condition may be introduced to support the respective elements of any such cause of action. As to any fraud-based claim, if the fact that the property has been repaired under this chapter is deemed admissible, the trier of fact shall be informed that the repair was not voluntarily accepted by the homeowner. As to any class action claims that address solely the incorporation of a defective component into a residence, the named and unnamed class members need not comply with this chapter.

§ -31 Subsequently discovered claims of unmet standards. Subsequently discovered claims of unmet standards shall be administered separately under this chapter, unless otherwise agreed to by the parties. However, in the case of a detached single family residence in the same home, if the subsequently discovered claim is for a violation of the same standard as that which has already been initiated by the same claimant and is the subject of a currently pending action, the claimant need not reinitiate the process as to the same standard. In the case of an attached project, if the subsequently discovered claim is for a violation of the same standard for a connected component system in the same building as has already been initiated by the same claimant, and is the subject of a currently pending action, the claimant need not reinitiate this process as to that standard.

§ -32 Admissibility of repair effort. If any enforcement of these standards is commenced, the fact that a repair effort was made may be introduced to the trier of fact. However, the claimant may use the condition of the property prior to the repair as the basis for contending that the repair work was inappropriate, inadequate, or incomplete, or that the violation still exists. The claimant need not show that the repair work resulted in further damage nor that damage has continued to occur as a result of the violation.

§ -33 Introduction of conduct. Evidence of both parties' conduct during the process contained in this chapter may be introduced during a subsequent enforcement action, if any, with the exception of any mediation. Any repair efforts undertaken by the builder shall not be considered settlement communications or offers of settlement and are not inadmissible in evidence on such a basis.

§ -34 Applicability of standards described in other laws. Each and every provision of any other chapter shall apply to subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract. In addition to any affirmative defenses, a subcontractor, material supplier, design professional, individual product manufacturer, or other entity may also offer common law and contractual defenses as applicable to any claimed violation of a standard. All actions by a claimant or builder to enforce an express contract, or any provision thereof, against a subcontractor, material supplier, individual product manufacturer, or design professional is preserved. Nothing in this chapter modifies the law pertaining to joint and several liability for subcontractors, material suppliers, individual product manufacturer, and design professionals that contribute to any specific violation of this chapter. However, this section does not apply to any subcontractor, material supplier, individual product manufacturer, or design professional to which strict liability would apply.

§ -35 Limitations period. (a) Except as specifically set forth in this chapter, no action may be brought to recover under this chapter more than ten years after substantial completion of the improvement but not later than the date of recordation of a valid notice of completion.

(b) As used in this section, "action" includes an action for indemnity brought against a person arising out of that person's performance or furnishing of services or materials referred to in this chapter.

(c) The limitation prescribed by this section shall not be asserted by way of defense by any person in actual possession or control, as owner, tenant or otherwise, of such an improvement, at the time any deficiency in the improvement constitutes the proximate cause for which it is proposed to make a claim or bring an action.

(d) Existing statutory and decisional law regarding tolling of the statute of limitations shall apply to the time periods for filing an action or making a claim under this chapter. If a builder arranges for a contractor to perform a repair pursuant to section -10, as to the builder the time period for calculating the statute of limitation shall pertain to the substantial completion of the original construction and not to the date of repairs under this chapter. The time limitations established by this chapter do not apply to any action by a claimant for a contract or express contractual provision. Causes of action and damages to which this chapter does not apply are not limited by this section. In order to make a claim for violation of the standards set forth in section -3, a homeowner need only demonstrate, in accordance with the applicable evidentiary standard, that the home does not meet the applicable standard, subject to the affirmative defenses set forth in section -39. No further showing of causation or damages is required to meet the burden of proof regarding a violation of a standard set forth in section -3, provided that the violation arises out of, pertains to, or is related to, the original construction.

§ -36 Other actions barred. (a) Except as provided in this chapter, no other cause of action for a claim covered by this chapter or for damages recoverable under section -37 is allowed. This chapter does not apply to any action by a claimant to enforce a contract or express contractual provision, or any action for fraud, personal injury, or violation of a statute. Damages awarded for the items set forth in section -37 in such other cause of action shall be reduced by the amounts recovered pursuant to section -37 for violation of the standards set forth in this chapter.

(b) As to any claims involving a detached single-family home, the homeowner's right to the reasonable value of repairing any nonconformity is limited to the repair costs, or the diminution in current value of the home caused by the nonconformity, whichever is less, subject to the personal use exception as developed under common law.

§ -37 Recoverable damages. If a claim for damages is made under this chapter, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this chapter, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards, the reasonable cost of removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place of a business licensed to be operated from the home, reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute.

§ -38 Parties bound. The provisions, standards, rights, and obligations set forth in this chapter are binding upon all original purchasers and their successors-in-interest. For purposes of this chapter, condominium associations shall be considered to be original purchasers and shall have standing to enforce the provisions, standards, rights, and obligations set forth in this chapter.

§ -39 Builder's affirmative defense. A builder, under the principles of comparative fault pertaining to affirmative defenses, may be excused, in whole or in part, from any obligation, damage, loss, or liability if the builder can demonstrate any of the following affirmative defenses in response to a claimed violation:

(1) To the extent it is caused by an unforeseen act of nature which caused the structure not to meet the standard. For purposes of this section an "unforeseen act of nature" means a weather condition, earthquake, or event of human origin such as war, terrorism, or vandalism, in excess of the design criteria expressed by the applicable building codes, regulations, and ordinances in effect at the time of original construction;

(2) To the extent it is caused by a homeowner's unreasonable failure to minimize or prevent those damages in a timely manner, including the failure of the homeowner to allow reasonable and timely access for inspections and repairs under this chapter. This includes the failure to give timely notice to the builder after discovery of a violation, but does not include damages due to the untimely or inadequate response of a builder to the homeowner's claim;

(3) To the extent it is caused by the homeowner or the homeowner's agent, employee, subcontractor, independent contractor, or consultant by virtue of their failure to follow the builder's or manufacturer's recommendations, or commonly accepted homeowner maintenance obligations. In order to rely upon this defense as it relates to a builder's recommended maintenance schedule, the builder shall show that the homeowner had written notice of these schedules and recommendations and that the recommendations and schedules were reasonable at the time they were issued;

(4) To the extent it is caused by the homeowner or the homeowner's agent's or an independent third party's alterations, ordinary wear and tear, misuse, abuse, or neglect, or by the structure's use for something other than its intended purpose;

(5) To the extent that the time period for filing actions bars the claimed violation;

(6) As to a particular violation for which the builder has obtained a valid release;

(7) To the extent that the builder's repair was successful in correcting the particular violation of the applicable standard; and

(8) As to any causes of action to which this statute does not apply, all applicable affirmative defenses are preserved."

SECTION 2. Chapter 672E, Hawaii Revised Statutes, is repealed.

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. This Act shall take effect upon its approval, and applies to the sale of residential units on and after January 1, 2008.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1846
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII