Bill aims to curb homebuilding cost disputes

Posted: Tuesday, May 20, 2003

ANCHORAGE (AP) Liability insurance for Alaska homebuilders has gone up nearly 400 percent in some cases. A bill pending in the Legislature could give them relief.

House Bill 151 is designed to assist construction professionals and homeowners in resolving construction defect issues quickly before going through costly court battles.

The measure sponsored by Rep. Kevin Meyer, R-Anchorage, passed the House unanimously and was headed for a Senate floor vote as the Legislature moved into its final week.

''This is a win-win situation,'' Meyer told the Alaska Journal of Commerce. ''It helps the builders, but it also helps the consumer, because now the consumer has a mechanism in place so that they don't have to go directly to litigation.''

The new law would establish a formal process for a homeowner to notify a contractor of construction defects. The bill calls for a 90-day time frame for the construction professional to address the defect.

If that fails, Meyer said, the homeowner's right to sue remains intact.

Meyer said most people do not want to go to court.

''I think most people just want their cupboard doors fixed, or their roof fixed, or whatever the problem is and they want it done as quickly as possible,'' he said.

Ninety-five percent of the time, Meyer said, homeowners have a good working relationship with contractors. The other 5 percent can cause a lot of costs to be passed on to the rest.

Meyer said the rising costs of insurance for home builders resulting from hefty awards and settlements has driven up the price of an average homes as much as $4,000.

Similar laws have been enacted in three states and 16 others are considering such action. The legislation is in response to a surge of litigation, mostly in rapid-growth states.

Some defective construction cases involve mold. In those cases, building materials stored at the job site get wet, contractors are in a hurry, and homeowners find out later they are living in a microbial breeding ground.

Chuck Spinelli, owner of Spinell Homes, the largest homebuilding company in Anchorage, said mold is not a problem in Alaska but the lawsuits in the Lower 48 are driving up costs here.

Spinelli said repairs usually can be accomplished at reasonable expense.

''When you get a lawyer involved, the amount of litigation it takes to get that done could be ten times the value or a hundred times the value of the fix,'' he said.

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