CHAPTER 74 Substitute for HOUSE BILL No. 2294* An  Act concerning civil procedure; relating to the filing of lawsuits concerning construction defects. Be it enacted by the Legislature of the State of Kansas:

      Section  1. As used in this act:

      (a) ``Action'' means any civil action or arbitration proceeding between
a claimant and a contractor for damages or indemnity asserting a claim
for injury or loss to a dwelling or personal property caused by an alleged
defect arising out of or related to the construction or a remodel of a
dwelling.

      (b) ``Association'' means a non-profit homeowners organization as de-
fined in K.S.A. 60-3611, and amendments thereto.

      (c) ``Claimant'' means a homeowner, including a subsequent pur-
chaser, or association who asserts a claim against a contractor concerning
a defect in the construction or in the remodel of a dwelling.

      (d) ``Construction defect'' or ``defect'' means a deficiency in, or a de-
ficiency arising out of the specifications, planning, supervision or con-
struction of residential improvements that results from any of the follow-
ing:

      (1) Defective material, products or components used in the construc-
tion of residential improvements.

      (2) Violation of the applicable codes in effect at the time of construc-
tion of residential improvements.

      (3) Failure to construct residential improvements in accordance with
accepted trade standards for good and workmanlike construction at the
time of construction.

      (e) ``Contractor'' means any person, firm, partnership, corporation,
association or other organization that is engaged in the business of con-
structing dwellings.

      (f) ``Dwelling'' means a single-family house, duplex or multifamily
unit designed for residential use in which title to each individual unit is
transferred to the owner under a condominium or cooperative system
and shall include common areas and improvements that are owned or
maintained by an association or by members of an association. A dwelling
includes the systems and other components and improvements that are
part of a single or multifamily unit at the time of construction. For the
purposes of this act ``dwelling'' does not mean manufactured home as
defined in K.S.A. 58-4202, and amendments thereto.

      (g) ``Serve'' or ``service'' means personal service or delivery by certi-
fied mail, return receipt requested, to the last known address of the ad-
dressee.

      (h) ``Subcontractor'' means a contractor who performs work on behalf
of a contractor in the construction of a dwelling.

      Sec.  2. (a) If a claimant files an action against a contractor without
service of notice under this act, the action shall be dismissed without
prejudice upon motion of the contractor filed within 60 days of service
of process. An action against a contractor cannot be refiled until the par-
ties have complied with the provisions of this act. A dismissal pursuant to
this subsection shall not count as a dismissal for purposes of subsection
(a)(1) of K.S.A. 60-241, and amendments thereto.

      (b) If the statute of limitations would expire during the time period
necessary to allow the parties to comply with the provisions of this act,
the statute of limitations shall be tolled if the claimant gives notice of the
claim to the contractor within 90 days of entry of the order of dismissal
of the action without prejudice pursuant to subsection (a).

      (c) If the statute of limitations would expire during the time period
necessary to allow the parties to comply with the provisions of this act,
the claimant's notice of claim shall serve to toll the statute of limitations
for 180 days after the latest of the following three dates: (1) The date the
claimant personally serves or mails the notice of claim; (2) the date agreed
upon for the contractor to make payment under subsection (c)(3) or (g)(2)
of section 4, and amendments thereto; or (3) the date agreed upon for
the contractor to completely remedy the construction defect under sub-
section (c)(2) or (g)(1) of section 4, and amendments thereto.

      (d) Nothing in this section shall be interpreted to shorten the statute
of limitations under K.S.A. 60-501 et seq., and amendments thereto, oth-
erwise applicable to a claimant's action against a contractor.

      Sec.  3. (a) Nothing in this act shall apply to actions arising out of
claims for personal injury or death or where the defect or damage to the
dwelling is so substantial that it is not habitable.

      (b) This act shall not supersede express warranty, implied warranty
or other provisions of a contract between the contractor and the claimant.

      Sec.  4. (a) Before the filing of an action brought against a contractor
arising out of the construction of a dwelling, the claimant shall serve
written initial notice of claim on the contractor. The initial notice of claim
shall state that the claimant asserts a construction defect claim and the
notice of claim shall describe the claim or claims in detail sufficient to
determine the general nature of any alleged construction defects.

      (b) Within 15 days after service of the notice of claim, the contractor
shall serve a copy of the notice to each subcontractor who may be re-
sponsible for a defect specified in the notice and include with the notice
the specific defect for which the contractor believes the subcontractor
may be responsible.

      (c) Within 30 days after service of the notice of claim by claimant,
each contractor that has received such notice shall serve a written re-
sponse on the claimant. The written response shall:

      (1) Propose to inspect the dwelling that is the subject of the claim;

      (2) offer to remedy the alleged construction defect at no cost to the
claimant including a description of the additional construction necessary
to remedy the defect, a specification of the date when the contractor
proposes to commence the work and the date the work will be completed;

      (3) offer to compromise and settle the claim by monetary payment
without inspection including a specification of the amount of the payment
and the date the payment will be made; or

      (4) state that the contractor disputes the claim and will neither rem-
edy the alleged construction defect nor compromise and settle the claim.

      (d) If the contractor refuses service under subsection (a), disputes
the claim pursuant to subsection (c)(4), does not respond to the claimant's
notice of claim within the time stated in subsection (c), does not com-
mence or complete the work on the alleged construction defect on the
date specified in subsection (c)(2) or does not make the payment in the
time specified in subsection (c)(3), the claimant may bring an action
against the contractor without further notice.

      (e) If the claimant rejects the inspection proposal or the settlement
offer made by the contractor pursuant to subsection (c), the claimant shall
serve written notice of the claimant's rejection on the contractor. After
service of the rejection, the claimant may bring an action against the
contractor without further notice. The claimant may alternatively elect an
arbitration process pursuant to K.S.A. 5-201 et. seq., and amendments
thereto. Failure to give the notice required by this subsection shall not
require the dismissal of the action under subsection (a) of section 2, and
amendments thereto.

      (f) If the claimant elects to allow the contractor to inspect the dwell-
ing in accordance with the contractor's proposal pursuant to subsection
(c)(1) the claimant shall notify the contractor and shall provide the con-
tractor and its agents access to the claimant's dwelling during normal
working hours to inspect the premises and the claimed defect to deter-
mine the nature and cause of the alleged defects and the nature and
extent of any repairs or replacements necessary to repair the alleged de-
fects. Such inspection shall occur within 30 days of the claimant's notifi-
cation to the contractor under this section.

      (g) Within 30 days following completion of the inspection, the con-
tractor shall serve on the claimant a written:

      (1) Offer to remedy the construction defect at no cost to the claimant,
including a report of the scope of the inspection, the findings and results
of the inspection, a description of the additional construction necessary
to remedy the defect, a specification of the date when the contractor
proposes to commence the work and the date the work will be completed;

      (2) offer to compromise and settle the claim by monetary payment
including a specification of the amount of the payment and the date the
payment will be made; or

      (3) statement that the contractor will not proceed further to remedy
the defect.

      (h) If a claimant accepts a contractor's offer made pursuant to sub-
section (g)(1) or (g)(2) and the contractor does not proceed to remedy
the construction defect or make the monetary payment within the agreed
timetable, the claimant may bring an action against the contractor without
further notice.

      (i) If the contractor does not respond within the time period specified
by subsection (g) or a claimant receives a written statement that the con-
tractor will not proceed further to remedy the defect, the claimant may
bring an action against the contractor without further notice.

      (j) If the claimant rejects the offer made by the contractor to either
remedy the construction defect or to make the monetary payment, the
claimant shall serve written notice of the claimant's rejection on the con-
tractor. After service of the rejection the claimant may bring an action
against contractor without further notice.

      (k) Any claimant accepting the offer of the contractor to remedy the
construction defects shall do so by serving the contractor with a written
notice of acceptance no later than 30 days after receipt of the offer.

      (l) If a claimant accepts a contractor's offer to repair a defect de-
scribed in a notice of claim, the claimant shall provide the contractor and
its agents reasonable access to the claimant's dwelling during normal
working hours to perform and complete the construction by the timetable
stated in the offer.

      (m) Absent good cause, the contractor's failure to respond in good
faith to the claimant's notice of claim shall preclude the contractor from
asserting that the claimant did not comply with the provisions of this act.

      Sec.  5. (a) A contractor who receives a notice of a construction defect
pursuant to this act, may present the notice to an insurer who issued a
policy of insurance covering all or part of the conduct or business of the
contractor or subcontractor.

      (b) Such notice provided to an insurer:

      (1) Constitutes the making of a claim under the policy; and

      (2) requires the contractor, subcontractor and the insurer to perform
any obligations or duties required by the policy upon the making of a
claim.

      Sec.  6. (a) Upon entering into a contract for construction or remodel
of a dwelling, the contractor shall provide notice to the potential claimant
of the contractor's right to offer to repair construction defects before a
claimant may commence litigation against the contractor. Such notice
shall be conspicuous and may be included as part of the underlying con-
tract.

      (b) Such notice shall be in substantially the following form: Kansas
law contains important requirements you must follow before you may file
a lawsuit for defective construction against the contractor who con-
structed your home. Ninety days before you file your lawsuit, you must
deliver to the contractor a written notice of any construction conditions
you allege are defective and provide your contractor the opportunity to
make an offer to repair or pay for the defects. You are not obligated to
accept any offer made by the contractor. There are strict deadlines and
procedures under state law, and failure to follow them may affect your
ability to file a lawsuit.

      Sec.  7. Each contractor who constructs a new residential dwelling
shall, within 30 days after the close of the sale, provide in writing to the
initial purchaser of the residence:

      (a) The name, license number if applicable, business address and tel-
ephone number of each subcontractor who performed any work related
to the construction of the dwelling; and

      (b) a brief description of the work performed by each subcontractor
identified pursuant to this section.

      Sec.  8. (a) A person shall not provide or offer to provide anything of
monetary value to a property manager of an association or to a member
or officer of an executive board of an association to induce the property
manager, member or officer to encourage or discourage the association
to file a claim for damages arising from a construction defect.

      (b) A property manager shall not accept anything of value given in
exchange for encouraging or discouraging the association that such prop-
erty manager manages to file a claim for damages arising from a construc-
tion defect.

      (c) A member or officer of an executive board of an association shall
not accept anything of value given in exchange for encouraging or dis-
couraging the association of which such person is a member or officer of
the executive board to file a claim for damages arising from a construction
defect.

      (d) A person who willfully violates this section shall be guilty of a class
C nonperson misdemeanor.

      Sec.  9. (a) An association may bring an action to recover damages
resulting from construction defects in any of the units, common elements
or limited common elements of the common-interest community only:

      (1) Upon a vote of the units' owners to which at least a majority of
the votes of the members of the association are allocated; and

      (2) upon a vote of the executive board of the association.

      (b) An association or an attorney for an association shall not employ
a person to perform destructive tests to determine any damage or injury
to a unit, common element or limited common element caused by a
construction defect unless:

      (1) The person performing the tests is someone in the business of
performing such tests and analysis;

      (2) the person performing the tests has provided a written schedule
for repairs;

      (3) the person performing the tests is required to repair all damage
resulting from such tests in accordance with state laws and local ordi-
nances and codes relating thereto; and

      (4) the association or the person so employed obtains all permits re-
quired to conduct such tests and to repair any damage resulting from
such tests.

      (c) An association may commence an action only upon a vote or writ-
ten agreement of the owners of the units to which at least a majority of
the votes of the members of the association are allocated. In such a case,
the association shall provide written notice to the owner of each unit of
the meeting at which the commencement of an action is to be considered
or action is to be taken within 21 calendar days before the meeting.

      (d) In the absence of a contractual provision to the contrary, the ex-
ecutive board of an association, without giving notice to the units' owner's,
may employ a contractor and such other persons as are necessary to make
such repairs to a unit or common element within the common-interest
community as are required to protect the health, safety and welfare of
the units' owners.

      Sec.  10. If any provision of this act or the application thereof to any
person or circumstance is held invalid, the invalidity does not affect other
provisions or applications of this act which can be given effect without
the invalid provision or application, and to this end the provisions of this
act are severable.

      Sec.  11. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 14, 2003.
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