Changes to Arizona’s Construction Defect Laws: Recent Revisions to Arizona’s Purchaser Dwelling Act

Changes to Arizona’s Construction Defect Laws:

Recent Revisions to Arizona’s Purchaser Dwelling Act

Arizona Society of Civil Engineers Newsletter, April 2015

By Roger Owers, Ph.D., P.E., J.D.

 

In 2002, Arizona enacted the “Purchaser Dwelling Act.”  This group of statutes sets forth the law relating to residential construction defects.  In general terms, the Act describes the steps that purchasers and sellers of residential properties are to take in repairing or replacing alleged construction defects.  One aim of the Act is to require the purchaser to give the seller notice and an opportunity to fix any legitimate defect before taking legal against the seller.

But, on March 23, 2015, Arizona Governor Doug Ducey signed into law House Bill 2578, significantly changing the Purchaser Dwelling Act.  Though there are many timeframes and tasks required for complying with the Act and its new provisions, in a nutshell, the Bill expanded the scope of people subject to the Act, while narrowing the types of defects allowed to be addressed under the Act.

Under the revisions, the term “Construction Professional” in the Act includes an “architect, contractor, subcontractor, developer, builder, builder vendor, supplier, engineer or inspector performing or furnishing the design, supervision, inspection, construction or observation of the construction of any improvement to real property.”  And “Sellers” governed under the Act now include these Construction Professionals.

So, under the revisions to the Act, a Purchaser who alleges construction defects can now file a claim against not only the contractor, but also against “Sellers” which now include the architect, engineer, and inspection professionals.

Meanwhile, the Bill narrows the types of defects that may be pursued by a Purchaser.  Now a “Construction Defect” means a “material deficiency in the design, construction, manufacture, repair, alteration, remodeling or landscaping….”  The key phrase here is “material deficiency,” which is a deficiency “that actually impairs the structural integrity, the functionality or the appearance of the dwelling,” or is reasonably likely to do so if not repaired or replaced.  The Bill also requires that the “Construction Defects” are to have resulted from either: (a) a code violation, (b) defective materials, products, components, or equipment, or (c) a failure to adhere to generally accepted workmanship standards in the community.

So, under this revision to the Act, an actionable Construction Defect must have been a material deficiency resulting from one of the three causes above.

After receiving a claim from a Purchaser, the Seller has the right (but not the responsibility) to repair or replace any alleged construction defects after notifying the Purchaser of the Seller’s intent to do so.  The Purchaser can ask that the repairs be made by a third party who is agreed to by the Seller and Purchaser.  A Purchaser cannot sue the Seller until the Seller’s intended repairs and replacements are complete.

The Bill also removes the automatic award of attorney’s fees and expert costs to the winning party.  However, if the trier of fact chooses to award them, attorney’s fees and costs may still be recovered under other statutes (e.g., A.R.S. § 12-341.01) or pursuant to contract language.

So in summary, the Bill changes the way that residential construction defects are to be handled.  While architects and engineers can now be subject to claims involving construction defects, a Purchaser must now show a material deficiency resulting from a code violation, defective materials, products, components, or equipment, or a failure to adhere to workmanship standards.

Arizona’s Purchaser Dwelling Act statutes are found in A.R.S. § 12-1361 through A.R.S. § 12-1366.  A PDF of House Bill 2578 can be found at http://www.azleg.gov/legtext/52leg/1r/bills/hb2578h.pdf.

This article is intended for general information only.  It should not be construed as legal advice with respect to any particular situation.  Readers should not act upon information contained in this article without first consulting their lawyer.

Roger S. Owers is a commercial real estate professional with Keyser LLC and is a lawyer with the Kaibab Law Offices of Roger S. Owers LLC.  Roger holds a Ph.D. in civil engineering, is a registered professional civil engineer, holds a real estate license, and is a licensed attorney.  He can be reached via e-mail at rowers@kaibabllc.com or www.kaibabllc.com.  He can also be found on LinkedIn at http://www.linkedin.com/in/rogerowers/.

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