46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO CIVIL ACTIONS; IMPOSING CONDITIONS AND RESTRICTIONS ON BRINGING AN ACTION AGAINST A CONSTRUCTION PROFESSIONAL BASED ON DEFECTS IN CONSTRUCTION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. SHORT TITLE.--This act may be cited as the "Construction Defect Claims Act".

Section 2. DEFINITIONS.--As used in the Construction Defect Claims Act:

A. "action" means a civil action for damages or indemnity brought against a construction professional that asserts a claim based on a defect in the construction of a residence or in the substantial remodel of a residence, but "action" does not include an action in tort alleging personal injury or wrongful death resulting from a construction defect;

B. "construction professional" means a person providing the design or construction of a residence or supervision, inspection or observation of the construction of a residence;

C. "homeowner" means a person that contracts with a construction professional for the construction, substantial remodel, construction and sale or substantial remodel and sale of a residence;

D. "residence" means a single-family dwelling;

E. "serve" or "service" means personal delivery or delivery by certified mail to the last known address of the addressee; and

F. "substantial remodel" means a remodel of a residence, the total cost of which exceeds one-half of the value of the residence as determined for property taxation purposes for the year in which the contract for the remodel work was made.

Section 3. CONSTRUCTION DEFECT ACTION--NOTICE OF CLAIM--RESPONSE--COMMENCING AN ACTION.--

A. In every action against a construction professional, a homeowner shall serve a written notice of claim on the construction professional no later than forty-five days before filing an action. The notice of claim shall state that the homeowner asserts a construction defect claim against the construction professional and shall describe the claim in sufficient detail to determine the general nature of the defect.

B. Within fourteen days after service of a notice of claim, a construction professional shall serve a written response on the homeowner. The written response shall:

(1) propose to inspect the residence that is the subject of the claim and to complete the inspection within a specified time frame and shall include a statement that, based on the inspection, the construction professional shall offer to remedy the defect, compromise the claim by payment or dispute the claim;

(2) offer to compromise and settle the homeowner's claim without inspection by:

(a) monetary payment; or

(b) purchase of the homeowner's residence that is the subject of the claim and payment of the homeowner's reasonable relocation costs; or

(3) state that the construction professional disputes the claim and will neither remedy the construction defect nor compromise and settle the claim.

C. If a construction professional disputes a claim or does not respond to a homeowner's notice of claim within the time stated in Subsection B of this section, the homeowner may bring an action against the construction professional for the claim described in the notice of claim without further notice.

D. If a homeowner rejects an inspection proposal or settlement offer made by a construction professional, the homeowner shall serve written notice of the homeowner's rejection on the construction professional. After service of the rejection, the homeowner may bring an action against the construction professional for the claim described in the notice of claim.

E. If, within thirty days after a homeowner's receipt of a construction professional's response, the construction professional has not received from the homeowner either an acceptance or a rejection of the inspection proposal or settlement offer, then at any time thereafter the construction professional may terminate the proposal or offer by serving written notice to the homeowner, and the homeowner may thereafter bring an action against the construction professional for the claim described in the notice of claim.

Section 4. INSPECTION PROCEDURE--OFFER--RESPONSE--COMMENCING AN ACTION.--

A. If a homeowner elects to allow a construction professional to inspect a residence in accordance with the construction professional's proposal, the homeowner shall provide the construction professional and its contractors or other agents reasonable access to the homeowner's residence during normal working hours to inspect the premises and the claimed defect. Within fourteen days following completion of the inspection, the construction professional shall serve on the homeowner:

(1) a written offer to remedy the construction defect at no cost to the homeowner with a timetable for the completion of construction together with a report of the scope of the inspection, the findings and results of the inspection and a description of the additional construction necessary to remedy the defect described in the claim;

(2) a written offer to compromise and settle the claim by monetary payment that may include an express offer to purchase the residence that is the subject of the claim and pay the homeowner's reasonable relocation costs; or

(3) a written statement that the construction professional will not proceed further to remedy the defect.

B. If a construction professional does not proceed further to remedy a construction defect within an agreed timetable, or if the construction professional fails to comply with the provisions of Subsection A of this section, a homeowner may bring an action against the construction professional for the claim described in the notice of claim without further notice.

C. If a homeowner rejects an offer made by a construction professional pursuant to Subsection A of this section to either remedy a construction defect or to compromise and settle claim by monetary payment, the homeowner shall serve written notice of the homeowner's rejection on the construction professional. After service of the rejection notice, the homeowner may bring an action against the construction professional for the construction defect claim described in the notice of claim.

D. If, within thirty days after a homeowner's receipt of a construction professional's offer pursuant to Subsection A of this section, the construction professional has not received from the homeowner either an acceptance or a rejection of the offer, then at any time thereafter the construction professional may terminate the offer by serving written notice to the homeowner, and the homeowner may thereafter bring an action against the construction professional for the construction defect claim described in the notice of claim.

E. A homeowner accepting an offer of a construction professional to remedy a construction defect pursuant to Paragraph (1) of Subsection A of this section shall do so by serving the construction professional with a written notice of acceptance within thirty days after receipt of the offer. The homeowner shall provide the construction professional and its contractors or other agents reasonable access to the homeowner's residence during normal working hours to perform and complete the construction by the timetable stated in the offer. The homeowner and construction professional may, by written mutual agreement, alter the extent of construction or the timetable for completion of construction stated in the offer, including repair of additional defects.

F. Nothing in this section prevents a homeowner from commencing an action on a construction defect claim described in a notice of claim if a construction professional fails to perform the construction agreed upon, remedy the defect or perform pursuant to an agreed timetable.

Section 5. DISMISSAL WITHOUT PREJUDICE--AMENDMENT OF CLAIMS.--

A. An action commenced by a homeowner prior to compliance with the requirements of the Construction Defect Claims Act shall be subject to dismissal without prejudice, and may not be recommenced until the homeowner has complied with the requirements of that act.

B. Prior to commencing an action, or after the dismissal of an action without prejudice pursuant to Subsection A of this section, a homeowner may amend a notice of claim to include construction defects discovered after service of the original notice of claim. The homeowner shall comply with the requirements of the Construction Defect Claims Act for the additional claims. The service of an amended notice of claim shall relate back to the original notice of claim for purposes of tolling statutes of limitations and repose. Claims for defects discovered after the commencement or recommencement of an action may be added to the action only after providing notice of the defect to the construction professional and allowing for response as required under the Construction Defect Claims Act.

Section 6. CONSTRUCTION PROFESSIONAL'S RIGHT TO OFFER TO CURE DEFECTS--NOTICE TO HOMEOWNER.--

A. Upon entering into a contract for sale, construction or substantial remodel of a residence, a construction professional shall provide notice to each homeowner of the construction professional's right to offer to cure a construction defect before a homeowner may commence an action against the construction professional. Such notice shall be conspicuous and may be included as part of the underlying contract signed by the homeowner.

B. The notice required by this section shall be in substantially the following form:

"Chapter __, Article __ NMSA 1978 contains important requirements you must follow before you may file a lawsuit for defective construction against the seller or builder of your home. Forty-five days before you file your lawsuit, you must deliver to the seller or builder a written notice of any construction conditions you allege are defective and provide your seller or builder the opportunity to make an offer to repair or pay for the defects. You are not obligated to accept any offer made by the builder or seller. There are strict deadlines and procedures under state law, and failure to follow them may affect your ability to file a lawsuit.".

C. Notice under this section must be provided to the homeowner in order for the Construction Defect Claims Act to apply to construction defect claims in relation to that residence.

Section 7. NO EFFECT ON CERTAIN RELATIONSHIPS AND RIGHTS.--The Construction Defect Claims Act does not affect the employment, agency or contractual relationship between and among homeowners and construction professionals during the process of construction or remodeling, nor does that act preclude the termination of those relationships as allowed under law or negate or otherwise restrict a construction professional's right to access or inspection as provided by law, covenant, easement or contract.