SC Lawyer, March 2004, #3. The new construction disputes law cooling off or chilling out?.

• Author: By Roger Jellenik

South Carolina Lawyer

2004.

SC Lawyer, March 2004, #3.

The new construction disputes law cooling off or chilling out?

The new construction disputes law cooling off or chilling out?By Roger JellenikResidential construction contractors build new homes for homebuyers and additions to existing homes for homeowners. Because contractors are human and humans are imperfect, omissions and errors often occur in the course of construction. The result is the so-called "punch list." A builder routinely may go back to a job to complete punch list items even after a certificate of occupancy is issued to make sure that the homeowner is satisfied, punch list items are addressed and any remaining payments have been earned. Nevertheless, every so often, major or minor problems may persist, communications may not work well and the contractor or the homeowner may get upset enough to consider litigation.

Typically, thoughts of litigation come after unsatisfactory written or face-to-face communications that have left issues unresolved and the parties frustrated. Rightly or wrongly, the homeowner may perceive that the builder is trying to evade responsibilities, or the builder may perceive that the homeowner has unrealistic expectations. At such times, a pause for rational "give and take" or help from a third party mediator may help.

Advocates of tort reform see here the opportunity to keep unnecessary lawsuits out of court by fostering an environment in which settlements are encouraged by allowing the builder a right to cure construction defects. Following this logic, as of September 2003, 15 states had enacted legislation requiring a "right to cure" before construction defect lawsuits could be prosecuted to completion. See Lawyers Weekly USA, 2003-20, 14, 17 for a review and status of state legislative initiatives. The legislatures in at least four other states were considering similar bills. One of the enacting states was South Carolina. The purposes of this article are to summarize important provisions of South Carolina's new legislation, discuss some issues it presents and offer a suggestion or two.

As one part of tort reform in South Carolina, the Legislature passed and the Governor signed S. 433, The South Carolina Notice and Oppor-tunity to Cure Construction Dwelling Defects Act (Act). The Act became effective July 2, 2003, for causes of action arising on or after that date. 2003 South Carolina Laws Act 82 (S.B. 433), Section 2.

The Legislature's basic concept was to promote non-judicial dispute resolution by requiring the homeowner to list and, if needed, clarify the nature and extent of alleged defects. The builder gets a chance to respond and fix real defects and to explain why other complaints are not real defects. The parties may agree to a resolution consisting of corrective work, payment, refund or some combination of the options.

Of course, this process takes some time, and the Act provides for this time in the form of a 90-day "cooling-off" period. The effect of this "cooling off" period is to furnish a contractor with limited protection from a homeowner's lawsuit. If a claimant - for example, a homeowner - files an action without first following the procedure set forth in the Act, a party to the action may move the court to stay the...