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HF 1683

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:53am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/12/2009

Current Version - as introduced

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A bill for an act
relating to real property; statutory warranties; providing for notice and
opportunity to repair with certain conditions; providing remedies; amending
Minnesota Statutes 2008, sections 327A.01, subdivision 7, by adding
subdivisions; 327A.02, subdivision 4; proposing coding for new law in
Minnesota Statutes, chapter 327A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 327A.01, subdivision 7, is amended to
read:


Subd. 7.

Vendor.

"Vendor" means any person, firmnew text begin ,new text end or corporation deleted text begin whichdeleted text end new text begin thatnew text end
constructs dwellings for the purpose of sale, including the construction of dwellings on
land owned by vendees.new text begin Vendor does not include a vendor's subcontractor or material
supplier.
new text end

Sec. 2.

Minnesota Statutes 2008, section 327A.01, is amended by adding a subdivision
to read:


new text begin Subd. 12. new text end

new text begin Inspection. new text end

new text begin "Inspection" means either or both of the following: (1)
a visual inspection; or (2) an invasive inspection if any damage caused to the property
during the invasive inspection is patched or repaired so as to prevent further damage.
new text end

Sec. 3.

Minnesota Statutes 2008, section 327A.01, is amended by adding a subdivision
to read:


new text begin Subd. 13. new text end

new text begin Insurer. new text end

new text begin "Insurer" means an insurance company with a duty to defend the
vendor against general or specific liability for the alleged damage, notwithstanding the
theory of liability.
new text end

Sec. 4.

Minnesota Statutes 2008, section 327A.02, subdivision 4, is amended to read:


Subd. 4.

Response from vendor to notice of claim.

(a) deleted text begin Following notice under
section 327A.03,
deleted text end The vendee must allow an inspection deleted text begin and opportunity todeleted text end new text begin for purposes
of the preparation of an
new text end offer to repair the deleted text begin knowndeleted text end new text begin alleged new text end loss or damagenew text begin pursuant to
section 327A.09
new text end . deleted text begin Upon request of the vendee, a court may order the vendor to conduct the
inspection.
deleted text end The inspection must be performed new text begin by the vendor or a designee or designees
new text end and deleted text begin anydeleted text end new text begin an new text end offer to repair must be made in writing to the vendee within deleted text begin 30deleted text end new text begin 45new text end days of deleted text begin the
vendor's receipt of the written notice required under section 327A.03, clause (a), alleging
loss or damage
deleted text end new text begin the notification required by section 327A.03, clause (a), or commencement
of suit, whichever occurs first. The vendor's insurer may also participate in the inspection
for purposes of preparing an independent offer of repair
new text end . The applicable statute of
limitations is tolled from the date the written notice provided by the vendee is postmarked,
or if not sent through the mail, received by the vendor until the earliest of the following:

(1) the date the deleted text begin vendee rejectsdeleted text end new text begin vendor gives written notice to the vendee ofnew text end the
vendor's offer to repair;

(2) deleted text begin the date the vendor rejects the vendee's claim in writingdeleted text end new text begin rejection of the claimnew text end ;

(3) failure by the vendor to make an offer to repair within the deleted text begin 30-daydeleted text end new text begin timenew text end period
described in this subdivision; or

(4) 180 days.

For purposes of this subdivision, "vendor" includes a home improvement contractor.

(b) Upon completion of repairs as described in an offer to repair, the vendor must
provide the vendee with a list of the repairs made deleted text begin and a notice that the vendee may have
a right to pursue a warranty claim under this chapter
deleted text end . Provision of this statement is not
an admission of liability. deleted text begin Compliance with this subdivision does not affect any rights
of the vendee under this chapter.
deleted text end

new text begin (c) Within 45 days of notice of injury or commencement of suit, the vendor must
give written notice of the claim to its insurer. The vendor is liable to the insurer in the
amount of $50 for every business day this notice is not given unless the vendor has more
than one insurer and at least one of the insurers received the written notice required by
this subdivision.
new text end

Sec. 5.

new text begin [327A.09] RIGHT TO REPAIR.
new text end

new text begin Subdivision 1. new text end

new text begin Scope and cost of repair. new text end

new text begin (a) Within 15 days of the inspection
authorized by section 327A.02, subdivision 4, the vendor must provide to the vendee and
the vendor's insurer an offer of repair. The offer of repair must include, at a minimum:
new text end

new text begin (1) the scope of the proposed repair work;
new text end

new text begin (2) the proposed date on which the repair work would begin and the estimated
date of completion; and
new text end

new text begin (3) the estimated cost of the repair, including the amounts of the specific bids from
subcontractors the vendor intends to use, if any, and the amounts included in the estimated
cost for overhead and profit.
new text end

new text begin (b) Nothing in this subdivision prevents the vendee from obtaining the information
in paragraph (a) from another contractor or from negotiating with the vendor for a different
scope of work provided that the negotiation does not extend the time for notifying the
insurer.
new text end

new text begin (c) If the vendee and vendor agree to a scope of work and no objection is received
pursuant to paragraph (d), the vendor must begin the repair work in accordance with
the offer of repair, and the vendor's insurer must pay for this work subject to a right of
subrogation.
new text end

new text begin (d) If the vendee accepts the vendor's offer of repair, but the insurer objects to the
scope of the proposed repair work, the insurer must complete the inspection required by
subdivision 2 within 30 days of receipt of a copy of the vendor's offer of repair.
new text end

new text begin (e) If the vendee accepts the vendor's offer of repair, but the insurer objects to the
vendor's estimated cost of repair, the insurer must:
new text end

new text begin (1) hire a contractor and subcontractors, subject to the approval of the vendee which
shall not be unreasonably withheld, to repair the loss or damage at the insurer's expense
subject to the insurer's right of subrogation; or
new text end

new text begin (2) pay the insurer's estimated cost of repair directly to the vendee, in which event the
vendee shall have a direct cause of action against the insurer for any additional damages.
new text end

new text begin Subd. 2. new text end

new text begin Failure to agree. new text end

new text begin (a) If the vendor and the vendee cannot agree on the
scope of work within 15 days after the offer of repair is presented to the vendee, the
vendee must allow an inspection of the loss or damage by the vendor's insurer for purposes
of preparing an independent offer of repair. The vendor's insurer must complete its
inspection no later than 30 days after receiving notice of an impasse between the vendor
and vendee. The vendor's insurer has 15 days after an inspection to present the vendee
with an offer of repair containing the information in subdivision 1, paragraph (a).
new text end

new text begin (b) If the vendee accepts the insurer's offer of repair, the insurer must pay for all
work done pursuant to this scope of work, subject to the insurer's right of subrogation.
The insurer may select a new contractor to complete the repair work if it determines, in
good faith, that the vendor is incapable of completing the work or if the insurer determines
in good faith that the vendor is responsible for the loss or damage.
new text end

new text begin (c) If the vendee rejects the insurer's offer of repair, the insurer must pay the insurer's
estimated cost of repair directly to the vendee, in which event the vendee shall have a
direct cause of action against the insurer for any additional damages.
new text end

new text begin (d) In the event the insurer fails to comply with its obligations under paragraph (a),
the insurer is liable for a civil penalty of $500 in addition to actual damages.
new text end

new text begin Subd. 3. new text end

new text begin Recovery. new text end

new text begin (a) If the vendee commences an action pursuant to subdivision
1, paragraph (e), clause (2), or 2, paragraph (c), and prevails in the action, the vendee
must, in addition to the other costs and disbursements awarded, recover reasonable
attorney fees from the insurer. For purposes of this subdivision, a vendee prevails in the
action if the vendee proves damages existed at the time of the insurer's offer of repair that
exceeded 110 percent of the insurer's estimated cost of repair and proves that the insurer
acted in bad faith.
new text end

new text begin (b) If the vendee commences an action pursuant to subdivision 1, paragraph (e),
clause (2), or 2, paragraph (c), and the vendor's insurer prevails in such action and the
court determines that the vendee acted in bad faith, the insurer must be awarded reasonable
attorney fees, in addition to other costs and disbursements rewarded. For purposes of
this subdivision, an insurer prevails in the action if the vendee proves damages existed
at the time of the insurer's offer of repair that are less than 90 percent of the insurer's
estimated cost of repair.
new text end

new text begin (c) If the vendor fails to perform the inspection required by section 327A.02,
subdivision 4, the vendor is deemed to have breached the warranty provided in this
section. In that event, the vendor's insurer may cure the breach by completing the
inspection and providing the offer of repair required by subdivision 2.
new text end

new text begin (d) An insurer may not refuse to insure the vendor or substantially raise the vendor's
insurance premiums solely as a result of the insurer having to pay for repairs pursuant
to this section. An insurer may not avoid its duty to defend or its duty to indemnify
solely as a result of the vendor's failure to timely provide the notice required by section
327A.02, subdivision 4, paragraph (b). Nothing in this section precludes an insurer from
maintaining an action in subrogation or to recover damages from the vendor as a result of
the vendor's conduct or lack of conduct.
new text end

new text begin Subd. 4. new text end

new text begin Stay. new text end

new text begin If a suit is commenced on a claim for an injury arising from an
improvement to residential real property, the suit is stayed until the process required by
this section has been complied with or breached.
new text end

new text begin Subd. 5. new text end

new text begin Effect of certain actions. new text end

new text begin (a) Nothing in this section shall be construed
to make an insurer that pays for repair work pursuant to this section a vendor or home
improvement contractor.
new text end

new text begin (b) Nothing in this section shall be construed to make a subcontractor or material
supplier retained by the vendor or vendor's insurer a home improvement contractor.
new text end

new text begin (c) A vendor does not become a home improvement contractor by complying with
its obligations under this section.
new text end

Sec. 6. new text begin EFFECTIVE DATE; APPLICATION.
new text end

new text begin Sections 1 to 5 are effective the day following final enactment and apply to notices
of injury given, and actions commenced, on or after that date.
new text end

new text begin Nothing in this section shall be construed to revive claims already barred or to
extend any applicable statute of limitations or repose.
new text end