STAND. COM. REP. NO. 220

Honolulu, Hawaii

, 2025

RE: H.B. No. 420

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

Your Committee on Housing, to which was referred H.B. No. 420 entitled:

"A BILL FOR AN ACT RELATING TO REMEDIES,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Clarify the statute of repose to make it clear that it applies to contract, tort, and statutory claims, fraudulent concealment is not a defense with respect to the repose period, and require a violation of a building code to be material to be actionable;

(2) Clarify the required contents of a notice of claim of construction defect served on a contractor;

(3) Amend the process and time frame for a claimant to accept a contractor's offer to settle or inspect and authorize the contractor to proceed with repairs;

(4) Limit the amount a claimant can recover if the claimant rejects a contractor's reasonable proposal for inspection or a reasonable offer to remedy; and

(5) Clarify the consequences of rejecting an offer of settlement.

Your Committee received testimony in support of this measure from Pacific Resource Partnership; General Contractors Association of Hawaii; Aliʻi Glass & Metal, Inc.; Hawaii Laborers & Employers Cooperation and Education Trust; Hawaii Regional Council of Carpenters; Hawaiʻi Association of REALTORS; Housing Hawaiʻi's Future; R. M. Towill Corporation; Mutual Housing Association of Hawaiʻi, Inc.; Paradigm Construction LLC; Hawaiʻi YIMBY; Holomua Collaborative; Gentry Homes, Ltd.; D.R. Horton Hawaii; Kasdan Turner Thomson Booth, LLLC; Kapolei Chamber of Commerce; Operating Engineers Local 3; Raynor Hawaii Overhead Doors and Gates Inc.; Case Lombardi, A Law Corporation; KY International, Inc.; Damon Key Leong Kupchak Hastert A Law Corporation; Island Flooring; Z Contractors, Inc.; A-Plus Seamless Raingutters, Inc.; and numerous individuals. Your Committee received testimony in opposition to this measure from one individual.

Your Committee finds that the intent of the Contractor Repair Act was to foster a cooperative, good-faith process between builders and homeowners to address legitimate construction defects. However, the existing system has gone astray of that original intent. Excessive legal claims against new developments have had far-reaching consequences, including increased construction costs, higher insurance premiums, and more restrictive lending conditions. This measure intents to restore a fair dispute-resolution process for resolving construction defects, which will promote a more sustainable and affordable housing market in Hawaii.

Your Committee has amended this measure by:

(1) Changing the effective date to July 1, 3000, to encourage further discussion; and

(2) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 420, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 420, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Housing,

____________________________

LUKE A. EVSLIN, Chair