Legislature(2003 - 2004)
05/08/2003 01:36 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
CSHB 151(JUD)am-DWELLING DESIGN/CONSTRUCTION CLAIMS
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:36 p.m. Present were SENATORS
STEVENS and SEEKINS. The Chair announced HB 151 to be up for
consideration.
REPRESENTATIVE KEVIN MEYER, sponsor of HB 151, said it provides
homeowners and construction professionals with a process to
solve construction issues on new homes or homes that are being
remodeled. He stated, "HB 151 requires homeowners to provide
written notice to the construction professionals of any defects
at least 90 days prior to taking a civil action against the
builder."
He explained that most of the time, this action isn't necessary
because most owners have a relationship with the builder and
could simply call the builder with a concern. However, if the
builder is too busy to take care of those concerns, this process
is in place. If the homeowner's complaints have not been
resolved within a 90-day period, the homeowner can proceed with
litigation. Under this bill, the homeowner has one year from the
time he or she detects the problem, but it cannot exceed the 10-
year statute of limitation for civil suits. Once the process has
begun, the statute of limitation is stopped until the homeowner
becomes aware that a settlement using this process will not
succeed.
REPRESENTATIVE MEYER said this litigation is important for many
of reasons. In Alaska, contractors and builders are required to
carry general liability insurance and many liability insurance
providers have stopped providing insurance or will provide it
only at a very expensive rate. The rise in insurance coverage,
sometimes $3,000 to $5,000, is often passed on to the homebuyer.
He said three conforming amendments need to be made as a result
of amendments adopted on the House floor and those were
incorporated into a proposed committee substitute.
SENATOR FRENCH arrived at 1:40 p.m.
SENATOR STEVENS moved to adopt SCS CSHB 151(L&C) as the working
document. There were no objections and it was so ordered.
CHAIR BUNDE asked if there has been any opposition.
REPRESENTATIVE MEYER replied that he has heard no opposition
from the public or the construction community.
SENATOR STEVENS asked him to explain the language on page 2,
line 18, about how the written notice takes place.
REPRESENTATIVE MEYER indicated that serving of notice is defined
on page 8, line 7, as delivery by personal service or by
certified mail.
MR. MIKE MILLIGAN, Kodiak resident, said he works in the
construction industry and supports this bill. He generally
supports local control and consensus and favors legislation that
doesn't require a winner or a loser.
MR. RICHARD TILLY, President, Interior Alaska Building
Association, supports HB 151. He thought it would show the
building industry and insurance industry that builders are
trying to deal with a resolution process for minor building
issues.
SENATOR DAVIS arrived at 1:45 p.m.
MS. ROBIN WARD said she was recently in Washington D.C. working
on this issue with 50 other state representatives in an effort
to make the industry more attractive to the insurance industry.
Although Alaska does not have many of the problems the Lower 48
has, Alaskans have to pay the same premiums because insurers
operate nationwide. She said that insurance premiums on her
homes will go up $2,000 per home next year.
MR. STEVE ORR, Mat-Su builder, supported HB 151, not only
because his insurance went up 1,500% this year (adding $2,000
per house for a total of $3,300), but because a bill like this
will end a two-year senseless battle that he has been in.
MR. ALAN WILSON, Alaska Home Builders Association - Juneau,
supported HB 151 and said his comments had been covered.
SENATOR FRENCH said his concern is that the two parties might
get into some kind of a stalling process and a huge amount of
time could go by, which isn't a good way to do business. He
wanted to know if the 21-day clock is ticking during the initial
exchange while the construction professional awaits videos or
something like that from the homeowner.
REPRESENTATIVE MEYER replied that he thought the clock stopped
during talks.
MR. JOHN BITTNEY, Alaska State Homebuilders Association,
referred him to page 2, line 4, to answer that question.
SENATOR FRENCH asked if that means the 21-day clock is not
ticking or that the right to eventually file a suit is not
ticking. He said he has two clocks in mind. One is the general
right to sue in court. The bill says a person does not have the
right to go to court and sue until they have been through this
process. He pointed out:
That's giving up something. That's giving up a
person's right to go to court and file suit. If you
only have to give that up for 21 days, I think that's
pretty reasonable. You can see the end of the time
period coming up pretty quickly, but what I don't want
to see is have the builder say, well, you can't go to
court until you give me the evidence to back up your
claim. So, then you could get into a standoff and
you'd never get anywhere....
CHAIR BUNDE said he would hold this bill temporarily until that
question gets resolved.
CSHB 151(JUD)am-DWELLING DESIGN/CONSTRUCTION CLAIMS
CHAIR BUNDE announced that CSHB 151(JUD)am was up for
consideration again and that Representative Meyer would address
the earlier question.
REPRESENTATIVE MEYER said that Representative Gara's amendment
had to do with the concept of tolling and didn't pertain to the
21-day clock, but instead to the 10-year statute of limitations.
He said the concern about the builder requiring substantial
evidence and how that would impact the 21-day time frame
wouldn't be an issue because the builder knows the problem has
to be resolved in 21 days. As soon as a builder received
notification, he would make his own inspection.
SENATOR FRENCH wanted to clarify that time won't be tolled and
the pressure is on the builder to get back to look at the house.
REPRESENTATIVE MEYER agreed.
SENATOR FRENCH expressed concerned that all houses aren't built
on the road network and if a dispute came up, a builder might
not want to invest the money to fly back out to a rural area. He
didn't want the homeowner stuck in some kind of a discovery
dispute and be in a standoff because he can't get to court and
can't get the builder to drop his demand for photographs and
video tape documentation, etcetera of the home defect.
REPRESENTATIVE MEYER responded that he shares his concern but
felt that all builders statewide would know the process and
understand if they built in a remote area they would have to do
it right.
SENATOR STEVENS asked if builders will no longer have to carry
general liability insurance if this bill passes.
REPRESENTATIVE MEYER replied that builders are required to carry
general liability insurance, but currently insurance rates are
extremely high because so many cases are either being resolved
in court or builders are resolving them outside of court.
Nevertheless, insurance companies are having to pay claims and
rates are going up as a result.
CHAIR BUNDE inserted that he has never known insurance rates to
go down, but this bill might slow the rate of increase.
REPRESENTATIVE MEYER added that it's getting out of control
nationwide.
MR. CHUCK SPINELLI, Alaska Home Builders Association, supported
HB 151 and said the problem came from condominium construction
in the Lower 48 states where teams of attorneys sue condo
associations who in turn sue builders and do discovery for years
without ever fixing anything. The project then gets traumatized
because of the pending litigation and bankrupts the builder and
the condo association. He said his general liability insurance
is increasing from $55,000 last year to a quote of $435,000 this
year. A lot of people who are building condominiums are not
getting insurance. He thought this bill is a good first step to
having a healthy building industry.
CHAIR BUNDE closed public testimony.
SENATOR STEVENS moved to pass SCS CSHB 151(L&C) from committee
with individual recommendations and its zero fiscal note.
SENATORS STEVENS, DAVIS, FRENCH and BUNDE voted yea and it was
moved from committee.
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