By Brooks Schott
Coeur d’Alene, ID — July 16, 2017. For first-time homebuilders and renovators, it may come as a surprise to learn that you might not be able to immediately sue a contractor for defects discovered in your newly constructed or remodeled home. This may be true even when the contractor knows that there is a defect in the home and refuses to fix it. If the home falls under the Idaho Notice and Opportunity to Repair Act (“NORA”), the homeowner must consider and act upon the requirements of NORA prior to filing suit.
NORA applies to disputes about the construction or the “substantial remodel” of a residence. NORA defines a “residence” as “a single-family house, duplex, triplex, quadraplex, condominium or a unit in a multiunit residential structure in which title to each individual unit is transferred to the owner under a cooperative system.” I.C. § 6-2502(7). “Substantial remodel” is defined as “a remodel of a residence, for which the total cost exceeds one-half (1/2) of the assessed value of the residence for property tax purposes at the time the contract for the remodel work was made.” I.C. § 6-2502(9).
In other words, NORA applies to almost every residential new construction and major residential remodel. When NORA applies but is not complied with first, Idaho courts will dismiss any action brought against a construction professional. This can be an infuriating and costly result for a homeowner[ii] who is simply trying to get the home or remodel they thought they purchased.
Notice to the Construction Professional
NORA requires that before filing an action against a builder, contractor, or other construction professional[iii] for a construction defect, the claimant[iv] must serve written notice of claim on the construction professional. I.C. § 6-2503(1). That notice of claim must state that the claimant asserts a construction defect claim against the construction professional and must describe the claim “in reasonable detail sufficient to determine the general nature of the defect.” Id. If the homeowner files suit against a construction professional for a construction defect without first serving the written notice of claim outlined above, the suit will be dismissed until the plaintiff has served the notice of claim to the construction professional. Id.
NORA provides a time frame for the construction professional to respond after being served the written notice of claim, and for the claimant to reply depending on the construction professional’s response. Under NORA, the construction professional must respond to the claimant within twenty-one (21) days. I.C. § 6-2503(2). If the construction professional does not respond or disputes the claim, then the claimant may file suit. I.C. § 6-2503(3)(a). However, if the construction professional does respond, their response must be in writing and either propose to inspect the residence, offer to settle without inspection, or state that the builder disputes the claim. I.C. § 6-2503(2).
If the construction professional disputes the claim, then the homeowner may sue immediately. I.C. § 6-2503(3). If the construction professional offers to remedy the defect or inspect the residence, then the homeowner may decide to sue or to accept the construction professional’s offer. I.C. § 6-2503(3)-(4). The homeowner must send their decision to the construction professional in writing within thirty (30) days. However, if the construction professional does not receive a response within thirty (30) days, they may treat their offer as rejected. I.C. § 6-2503(3)(b).
If the construction professional is permitted to inspect the home, then they must, within fourteen (14) days of the inspection, send a written offer to fix the defect, send a written offer to settle the claim by paying money, or send a written statement that the professional will not do any more to fix the defect. I.C. § 6-2503(4)(b). If the homeowner lets the construction professional attempt to remedy the construction defect, then they must allow the construction professional and its contractors or other agents reasonable access to the residence. I.C. § 6-2503(4)(a). After a construction professional inspects the defect, the homeowner can accept or reject the construction professional’s offer to remedy the defect. I.C. § 6-2503(4)(b). But a rejection may limit the damages the homeowner can recover. I.C. § 6-2504(3).
Limitation on Damages
In addition to requiring the homeowner to notify the construction professional before filing suit for a construction defect, NORA also caps the damages the homeowner may recover. Normally, damages under NORA are limited to the reasonable cost of repairs, the cost of temporary housing, the reduction in market value, if any, and reasonable and necessary attorney fees. I.C. § 6-2504(1).
That changes, however, if the homeowner unreasonably rejects the construction professional’s offer to remedy any defects. I.C. § 6-2504(3). In that situation, the homeowner cannot recover damages exceeding: (1) the reasonable cost of the offered repairs; or (2) the amount of a reasonable monetary settlement offer made under Idaho Code section 6-2503 and the amount of reasonable and necessary attorney’s fees and costs incurred before the offer was rejected or considered rejected. I.C. § 6-2504(3). On the other hand, if the construction professional fails to make a reasonable offer to fix the defect, make a reasonable attempt to complete agreed-upon repairs, or fails to complete such repairs in a workmanlike manner, these limitations on damages do not apply. I.C. § 6-2504(2).
Importantly, the total amount of damages awarded in a NORA suit may not exceed the greater of the claimant’s purchase price for the residence or the current fair market value of the residence without the construction defect. I.C. § 6-2504(4). This is important because it encourages homeowners to allow construction professionals to remedy construction defects.
Understanding NORA can save a homeowner with defects in their newly constructed or remodeled home a lot of time and money on what would otherwise be failed attempts to have the court force the builder to fix the defects. Following the required procedures for notice and opportunity to fix defects will prevent a construction professional from using NORA to dismiss the suit or significantly reduce an award of damages. Although no one wants construction defects in their projects, knowledge of how NORA applies to your case will come in handy should you find a defect in your new construction.
Note: This post is not legal advice, and should not be relied upon as such. Different sets of facts will likely lead to different legal conclusions. If you need assistance with real property matters, call Bristol George, PLLC for a one-hour, no charge consultation to see if we can help.
[i] “Construction professional” is defined by the Idaho Notice and Opportunity Act as “any person with a right to lien pursuant to section 45-501, Idaho Code, an architect, subdivision owner or developer, builder, contractor, subcontractor, engineer or inspector, performing or furnishing the design, supervision, inspection, construction or observation of the construction of any improvement to residential real property, whether operating as a sole proprietor, partnership, corporation, limited liability company or other business entity.” I.C. § 6-2502(4).
[ii] “Homeowner” means: (a) Any person who contracts with a construction professional for the construction, sale, or construction and sale of a residence; and (b) An association as defined in this section. “Homeowner” includes a subsequent purchaser of a residence from any homeowner. I.C. § 6-2502(5).
[iii] As previously noted, The Idaho Notice and Opportunity Act collectively refers to contractors, builders, and other individuals involved in the construction process as “construction professionals.”
[iv] “Claimant” means a homeowner or association that asserts a claim against a construction professional concerning a defect in the construction of a residence or in the substantial remodel of a residence. I.C. § 6-2502(3).