1.1                          A bill for an act 
  1.2             relating to real property; statutory home warranties; 
  1.3             amending the exclusions for liability of the vendor 
  1.4             and home improvement contractor; providing for a 
  1.5             statutory cure of defects; specifying limitation of 
  1.6             actions based on breach; amending Minnesota Statutes 
  1.7             2002, sections 327A.01, by adding a subdivision; 
  1.8             327A.03; 327A.05, by adding a subdivision; 515B.4-115; 
  1.9             541.051, subdivision 4. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 327A.01, is 
  1.12  amended by adding a subdivision to read: 
  1.13     Subd. 12.  [APPROVING AUTHORITY.] "Approving authority" 
  1.14  means any city, county, town, or any other political subdivision 
  1.15  of the state or state agency that exercises official control or 
  1.16  regulation over physical development or construction within its 
  1.17  jurisdiction. 
  1.18     Sec. 2.  Minnesota Statutes 2002, section 327A.03, is 
  1.19  amended to read: 
  1.20     327A.03 [EXCLUSIONS.] 
  1.21     The liability of the vendor or the home improvement 
  1.22  contractor under sections 327A.01 to 327A.07 is limited to the 
  1.23  specific items set forth in sections 327A.01 to 327A.07 and does 
  1.24  not extend to the following: 
  1.25     (a) loss or damage not reported by the vendee or the owner 
  1.26  to the vendor or the home improvement contractor in writing 
  1.27  within six months after the vendee or the owner discovers or 
  2.1   should have discovered the loss or damage; 
  2.2      (b) loss or damage caused by defects in design, 
  2.3   installation, or materials which the vendee or the owner or the 
  2.4   approving authority supplied, installed, or directed to be 
  2.5   installed; 
  2.6      (c) secondary loss or damage such as personal injury or 
  2.7   property damage; 
  2.8      (d) loss or damage from normal wear and tear; 
  2.9      (e) loss or damage from normal shrinkage caused by drying 
  2.10  of the dwelling or the home improvement within tolerances of 
  2.11  building standards; 
  2.12     (f) loss or damage from dampness and condensation due to 
  2.13  insufficient ventilation after occupancy; 
  2.14     (g) loss or damage from negligence, improper maintenance or 
  2.15  alteration of the dwelling or the home improvement by parties 
  2.16  other than the vendor or the home improvement contractor; 
  2.17     (h) loss or damage from changes in grading of the ground 
  2.18  around the dwelling or the home improvement by parties other 
  2.19  than the vendor or the home improvement contractor; 
  2.20     (i) landscaping or insect loss or damage; 
  2.21     (j) loss or damage from failure to maintain the dwelling or 
  2.22  the home improvement in good repair; 
  2.23     (k) loss or damage which the vendee or the owner, whenever 
  2.24  feasible, has not taken timely action to minimize; 
  2.25     (l) loss or damage which occurs after the dwelling or the 
  2.26  home improvement is no longer used primarily as a residence; 
  2.27     (m) accidental loss or damage usually described as acts of 
  2.28  God, including, but not limited to:  fire, explosion, smoke, 
  2.29  water escape, windstorm, hail or lightning, falling trees, 
  2.30  aircraft and vehicles, flood, and earthquake, except when the 
  2.31  loss or damage is caused by failure to comply with building 
  2.32  standards; 
  2.33     (n) loss or damage from soil movement which is compensated 
  2.34  by legislation or covered by insurance; 
  2.35     (o) loss or damage due to soil conditions where 
  2.36  construction is done upon lands owned by the vendee or the owner 
  3.1   and obtained by the vendee or owner from a source independent of 
  3.2   the vendor or the home improvement contractor; 
  3.3      (p) in the case of home improvement work, loss or damage 
  3.4   due to defects in the existing structure and systems not caused 
  3.5   by the home improvement~~.~~; 
  3.6      (q) claims or actions brought against any vendor for 
  3.7   defects discovered after one year from the warranty date for 
  3.8   defects described in section 327A.02, subdivision 1, paragraph 
  3.9   (a); 
  3.10     (r) claims or actions brought against any vendor for 
  3.11  defects discovered after two years from the warranty date for 
  3.12  defects described in section 327A.02, subdivision 1, paragraph 
  3.13  (b); 
  3.14     (s) claims or actions brought against any vendor for 
  3.15  defects discovered after ten years from the warranty date for 
  3.16  defects described in section 327A.02, subdivision 1, paragraph 
  3.17  (c); 
  3.18     (t) claims or actions brought against any contractor for 
  3.19  defects discovered after one year from the warranty date for 
  3.20  defects described in section 327A.02, subdivision 3, paragraphs 
  3.21  (a), clause (1), and (c); 
  3.22     (u) claims or actions brought against any contractor for 
  3.23  defects discovered after ten years from the warranty date for 
  3.24  defects described in section 327A.02, subdivision 3, paragraph 
  3.25  (a), clause (2); and 
  3.26     (v) claims or actions brought against any contractor for 
  3.27  defects discovered after two years from the warranty date for 
  3.28  defects described in section 327A.02, subdivision 3, paragraph 
  3.29  (b).  
  3.30     Sec. 3.  Minnesota Statutes 2002, section 327A.05, is 
  3.31  amended by adding a subdivision to read: 
  3.32     Subd. 13.  [STATUTORY CURE.] (a) At least 90 days before 
  3.33  filing a cause of action, the vendee or owner shall give written 
  3.34  notice by certified mail, return receipt requested, to the 
  3.35  vendor or home improvement contractor specifying in reasonable 
  3.36  detail the basis of the cause of action. 
  4.1      (b) In a multiunit cause of action, at least 90 days before 
  4.2   filing a cause of action, the vendee or owner shall serve the 
  4.3   vendor or home improvement contractor, together with the 
  4.4   complaint, a written notice by certified mail, return receipt 
  4.5   requested, to the vendor or home improvement contractor 
  4.6   specifying in reasonable detail the basis of the dwelling 
  4.7   action.  The notice in a multiunit dwelling action involving 
  4.8   alleged defects that are substantially similar in multiple 
  4.9   residential units may comply with this section by providing a 
  4.10  reasonably detailed description of the alleged defects in a fair 
  4.11  and representative sample of the affected residential units. 
  4.12     (c) After receipt of a notice described in paragraph (a) or 
  4.13  (b), the vendor or home improvement contractor may inspect the 
  4.14  dwelling to determine the nature and cause of the alleged 
  4.15  defects and the nature and extent of any repairs and 
  4.16  replacements necessary to remedy the alleged defects.  The 
  4.17  vendee or owner shall ensure that the dwelling is made available 
  4.18  for inspection no later than ten days after the purchaser 
  4.19  receives the request of the vendor or home improvement 
  4.20  contractor for an inspection.  The vendor or home improvement 
  4.21  contractor shall provide reasonable notice to the vendee or 
  4.22  owner before conducting the inspection.  The inspection shall be 
  4.23  conducted at a reasonable time.  The vendor or home improvement 
  4.24  contractor may use reasonable measures, including testing, to 
  4.25  determine the nature and cause of the alleged defects and the 
  4.26  nature and extent of any repairs or replacements necessary to 
  4.27  remedy the alleged defects.  If the vendor or home improvement 
  4.28  contractor conducts testing pursuant to this paragraph, the 
  4.29  vendor or home improvement contractor shall restore the unit to 
  4.30  its condition before the testing. 
  4.31     (d) Within 60 days after receipt of the notice described in 
  4.32  paragraph (a) or (b), the vendor or home improvement contractor 
  4.33  shall send to the vendee or owner by certified mail, return 
  4.34  receipt requested, a good faith, written response to the vendee 
  4.35  or owner's notice.  The response may include an offer to repair 
  4.36  or replace any alleged defects, to have the alleged defects 
  5.1   repaired or replaced at the expense of the vendor or home 
  5.2   improvement contractor, or to provide monetary compensation to 
  5.3   the vendee or owner.  The offer shall describe in reasonable 
  5.4   detail all repairs or replacements that the vendor or home 
  5.5   improvement contractor is offering to make or provide to the 
  5.6   dwelling and a reasonable estimate of the date by which the 
  5.7   repairs or replacements will be made or monetary compensation 
  5.8   will be provided.  
  5.9      (e) If the vendor or home improvement contractor does not 
  5.10  provide a written response to the vendee or owner's notice 
  5.11  within 60 days, the vendee or owner may file a cause of action 
  5.12  without waiting for the expiration of 90 days as required by 
  5.13  paragraph (a) or (b), or a stay, if entered, shall be lifted to 
  5.14  allow the action to proceed. 
  5.15     (f) Within 20 days after receipt of the offer made pursuant 
  5.16  to paragraph (d), the vendee or owner shall give a good faith, 
  5.17  written response to the offer.  A vendee or owner who accepts 
  5.18  the offer made pursuant to paragraph (d), shall do so in writing 
  5.19  by certified mail, return receipt requested.  A vendee or owner 
  5.20  who rejects the offer made pursuant to paragraph (d), shall 
  5.21  respond in writing by certified mail, return receipt requested.  
  5.22  The response shall include the basis for the vendee or owner's 
  5.23  rejection of the offer and may include a counteroffer.  Within 
  5.24  ten days after receipt of the response of the vendee or owner, 
  5.25  the vendor or home improvement contractor may make a best and 
  5.26  final offer to the vendee in writing by certified mail, return 
  5.27  receipt requested. 
  5.28     (g) The applicable statute of limitations, within which a 
  5.29  vendee or owner must bring a claim or action under this chapter, 
  5.30  shall be suspended from the time of commencement of procedures 
  5.31  under this subdivision until the offer made pursuant to 
  5.32  paragraph (d) has been rejected. 
  5.33     Sec. 4.  Minnesota Statutes 2002, section 515B.4-115, is 
  5.34  amended to read: 
  5.35     515B.4-115 [STATUTE OF LIMITATIONS FOR WARRANTIES.] 
  5.36     (a) A judicial proceeding for breach of an obligation 
  6.1   arising under section 515B.4-106(d), shall be commenced within 
  6.2   six months after the conveyance of the unit. 
  6.3      (b) A judicial proceeding for breach of an obligation 
  6.4   arising under section 515B.4-112 or 515B.4-113 shall be 
  6.5   commenced within ~~six~~ two years after the cause of action 
  6.6   accrues~~, but the parties may agree to reduce the period of~~ 
  6.7   ~~limitation to not less than two years.  With respect to a unit~~ 
  6.8   ~~that may be occupied for residential use, an agreement to reduce~~ 
  6.9   ~~the period of limitation must be evidenced by an instrument~~ 
  6.10  ~~separate from the purchase agreement signed by the purchaser~~. 
  6.11     (c) Subject to subsection (d), a cause of action under 
  6.12  section 515B.4-112 or 515B.4-113, regardless of the purchasers 
  6.13  lack of knowledge of the breach, accrues: 
  6.14     (1) as to a unit, at the earlier of the time of conveyance 
  6.15  of the unit by the declarant to a bona fide purchaser of the 
  6.16  unit other than an affiliate of a declarant, or the time the 
  6.17  purchaser enters into possession of the unit; and 
  6.18     (2) as to each common element, the latest of (i) the time 
  6.19  the common element is completed, (ii) the time the first unit in 
  6.20  the common interest community is conveyed to a bona fide 
  6.21  purchaser, or if the common element is located on property that 
  6.22  is additional real estate at the time the first unit therein is 
  6.23  conveyed to a bona fide purchaser, or (iii) the termination of 
  6.24  the period of declarant control. 
  6.25     (d) If a warranty explicitly extends to future performance 
  6.26  or duration of any improvement or component of the common 
  6.27  interest community, the cause of action accrues at the time the 
  6.28  breach is discovered or at the end of the period for which the 
  6.29  warranty explicitly extends, whichever is earlier. 
  6.30     Sec. 5.  Minnesota Statutes 2002, section 541.051, 
  6.31  subdivision 4, is amended to read: 
  6.32     Subd. 4.  [~~APPLICABILITY~~ STATUTORY OR EXPRESS 
  6.33  WARRANTIES.] (a) This section shall not apply to actions based 
  6.34  on breach of the statutory warranties set forth in section 
  6.35  327A.02, or to actions based on breach of an express written 
  6.36  warranty, provided such actions shall be brought within two 
  7.1   years of the discovery of the breach of an express written 
  7.2   warranty or as otherwise provided in this subdivision.  
  7.3      (b) Except where fraud is involved, no action by a vendee 
  7.4   may be brought against a vendor for defects discovered after one 
  7.5   year from the date of the warranty for defects described in 
  7.6   section 327A.02, subdivision 1, paragraph (a). 
  7.7      (c) Except where fraud is involved, no action by a vendee 
  7.8   may be brought against a vendor for defects discovered after two 
  7.9   years from the date of the warranty for defects described in 
  7.10  section 327A.02, subdivision 1, paragraph (b). 
  7.11     (d) Except where fraud is involved, no action by a vendee 
  7.12  may be brought against a vendor for defects discovered after ten 
  7.13  years from the date of warranty for defects described in section 
  7.14  327A.02, subdivision 1, paragraph (c). 
  7.15     (e) Except where fraud is involved, no action by an owner 
  7.16  may be brought against a contractor for defects discovered after 
  7.17  one year from the date of the warranty for defects described in 
  7.18  section 327A.02, subdivision 3, paragraphs (a), clause (1), and 
  7.19  (c). 
  7.20     (f) Except where fraud is involved, no action by an owner 
  7.21  may be brought against a contractor for defects discovered after 
  7.22  ten years from the date of the warranty for defects described in 
  7.23  section 327A.02, subdivision 1, paragraph (a), clause (2). 
  7.24     (g) Except where fraud is involved, no action by an owner 
  7.25  may be brought against a contractor for defects discovered after 
  7.26  two years from the date of warranty for defects described in 
  7.27  section 327A.02, subdivision 3, paragraph (b).